Club Football

Quick overview of post-COVID-19 football

From cash-flow pressures to mitigation

When the full impact of the coronavirus (COVID-19) struck across the world and many countries rapidly started introducing restrictions and closing down, the football industry had to very quickly grasp the scale and depth of the crisis prompted by the health emergency. Not only did the virus cause the immediate suspension of games and leagues and the postponement of major tournaments, it also revealed the fragility of the football system and drastically exposed the existing problems.

Clubs, member associations and confederations have been working together with governments and health authorities when the vast majority of football leagues have had to go on hiatus, and beyond the dramatic health crisis, the impact on the football economy has been substantial. Our initial estimate based on a mechanism including revenue sources generated through matchday, sponsorship and commercial activities, which have seen a significant reduction, forecast a potential loss of earnings of 6.24% per month, amounting to a total of EUR 1.3 billion across the European continent. That estimate does not take into account the transfer market because it is obviously an irregular revenue source, although the expectation is that the transfer market will also suffer a downward pressure.

In the meantime, as cash-flow pressures began to mount, major solutions were needed fast in order to preserve the structural integrity of the football industry. Without having a thorough crisis-plan scenario, many clubs and stakeholders felt the need to find an appropriate direct solution other than aiming to reduce costs, while in parallel trying to find ideas for new sources of revenues. The heightened uncertainty created a lack of action, precisely because a large part of our football industry was not prepared for such a shock and there was therefore no ready-made mechanism to avert huge losses. In the midst of the health crisis, FIFA announced a support package, but ultimately the situation raised discussion within clubs and leagues about long-term issues such as economic and business models, value chains, social impact and ways to protect themselves from future crises.

The following table aims to summarise the short-, mid- and long-term effects of COVID-19 on football entities, which need to be carefully assessed at every organisational level. This overview is specifically from a club perspective, but certain aspects can similarly be extrapolated to member associations.

First-order effects

Second-order effects

Third-order effects

Moving forward in the post-COVID-19 reality

Whilst the COVID-19 crisis is not over yet, it is clear that the football industry’s existing business model has been subjected to an extreme stress test. In the medium term, what is going to be significant for the football industry is not the impact of COVID-19 itself, which has been painful but generally manageable, but rather the double impact of the health crisis and the economic one, which is building up to a wave that is about to hit the shore, but as yet is uncertain in terms of size, scope and duration. As mentioned in the LTT Sports COVID-19 analysis, for business strategists at football clubs, it is now vital to assess all inputs on the developing economic situation while trying to have a clear picture of potential future developments. Technology-related areas, developing portfolio activities and increased engagement in a wider range of social activities could enable clubs to tap into fresh revenue sources through community health and social services. This could eventually strengthen the economic stability of the organisation, if wise choices are made, with a balance between business potential and resilience in mind. 

Olivier Jarosz, Managing Partner at Club Affairs