With the spread of the Corona virus, the 2019-20 football season has already started to be impacted, with matches being played in front of empty stadiums and in the case of the Manchester City-Arsenal match, being postponed due to the possibility of players having contracted the virus. Teams in general and Liverpool specifically need to make preparations and understand what the landscape will look like and be ready.
The damage that the virus can do to players and society as a whole cannot be minimized and is being carefully considered by governments around the world and by the football associations in many countries. While they are looking at appropriate responses and many have offered opinions on what should be done, from playing in empty stadiums to cancelling matches and seasons, here we will look at the financial impact to football teams and at Liverpool specifically.
Players
Football players for the most part will not see a huge effect in terms of payment. Players are usually paid on a weekly basis, not based on the number of games they have played, so if games are played normally, if games are played in empty stadiums or if games are cancelled, they will most likely still receive their payments.
The payment they won’t receive is if they have performance clauses in their contracts as well as the bonuses they receive for team achievements. For example if a player has a bonus for a certain number of goals and games are cancelled, they may not get to the required number. As for team bonuses, players have clauses in their contracts as well as payouts for reaching certain goals such as winning a title or making it to a final. If the season or the Champions League is cancelled, then players would have their final pay affect.
Likewise, commercial agreements for players with sponsors do not carry number of games played clauses so the money they receive would likewise not be affected. It is possible that some of the highest players have clauses regarding winning trophies or winning individual honors, and in those cases the players would potentially lose some money if games are not played.
Of course for many players these bonuses and team payouts would not affect them, however for Liverpool players, given they are the elite of the world and Liverpool is competing for both the EPL title and the Champions League title, they will be affected.
In terms of personal achievements, while we do not know individual contracts, it is unlikely that coach Jurgen Klopp and the Liverpool management who value teamwork and team achievement so highly would have individual achievements such as goals scored. However it should be noted that last year the Liverpool player payouts jumped due to contract renewals and the achievements of the team, so if the EPL or Champions League is cancelled, those number will come down.
On a bit of a side note for the players, it should be noted that viruses are actually more dangerous for high performance athletes than average people. The reason is that if you have “a very low body fat percentage can affect your immune system, you are more likely to suffer from infectious diseases as well”. So players will be healthy but could suffer from the virus more than the general population. Additionally, with low body fat, should the virus have a reaction where they cannot ingest and process calories, people with low body fat do not have stores of energy readily available in fat and so many will most likely require hospitalization as opposed to staying home.
Football
While it might not make sense to worry about football at a time like this, having a match to watch has always been a great escape for the real world, and there can be arguments made that the league should continue no matter what. At the same time it is important to not the danger to fans and players and realize that human life is more important than a game.
A kind of compromise would be to play in front of empty stadiums, so fans cannot give the virus to other fans. However players who make contact with each other can potentially infect other players and as seen with the Man City – Arsenal game, needed to cancelled as some of the Man City players had contact with an individual who tested positive for the virus. In order to avoid any spreading therefore, all games would have to be cancelled.
How long the cancellation would last and whether the season itself would be cancelled or replayed at a later date is a matter up for discussion. However it should be noted that all the major 5 leagues have previously missed seasons. England, Germany, France and Italy all stopped playing during the two world wars, and Spain (who played during the two world wars) suspended play from 1936-1939 due to a civil war. So stopping play would have a precedent.
In terms of fans, it would definitely be a blow to fans to whom watching soccer through a broadcast would in no way open them to contacting the virus, so the leagues must measure the potential risk to players, fans and the football brand when making a decision.
An interesting possibility is what would happen if some countries are hit worse than others. For example Italy is currently in lock-down while other leagues are playing normally or at least playing in front of empty stadiums. This potentially unbalanced situation could affect Champions League and Europa qualification and could lead to a never before seen situation.
It could also lead to potential fair play issues as teams will lose revenue and therefore have to operate at lower expenses. For leagues that play in empty stadiums or cancel games, those revenues would be gone. And since salaries are fixed, it would lead to the need to save money on transfers so the transfer market could be significantly weaker this summer. Again, this would be an interesting question that has yet to be addressed.
This could be a boon for Liverpool as they were not active in last year’s transfer market and therefore have more money to spend this summer when compared to other teams.
Teams
Costs
The simple truth is teams still have to pay the players. And for a team like Liverpool, that means a lot of money in salaries. The one savings they will have is that bonuses for team achievements (or if there are any unlikely individual achievements in contracts) will not need to be paid.
Compared to other top teams, Liverpool will be slightly better as their salaries are not at the level of Barcelona or the other teams above them in the top revenue listings. In the same vein compared to the teams below them in the standings, Liverpool have higher salaries and so will feel the need to pay even if games are cancelled more than those lower teams.
Revenue
Commercial Revenue
The good news is that most of the commercial revenue will continue whether games are played or not. This will help lighten the costs that teams will have to incur in salaries. What teams will miss out on are the performance payments in the commercial agreements that refer to winning competitions/matches. For Liverpool this will mean the additional money they receive from New Balance for winning Champions League or the EPL. And depeding on the exact agreement or the length of the EPL shutdown could bleed into the new season when Liverpool is switching sponsorship to Nike.
A large negative for Liverpool is how much more money the teams above them in revenue listing make from commercial revenue. Liverpool is well behind the higher revenue teams in this area so the difference in money received will be significant.
Matchday Revenue
The simple math is that if there are no matches or if matches are played in front of empty stadiums then teams will not receive this revenue. Again, comparatively this is a problem as Liverpool are behind only Manchester United in terms of matchday revenue, so while Man U would lost more than Liverpool, every other team in the EPL would lose less.
Broadcast Revenue
This math is also fairly simple, if games are played, whether to full or empty stadiums, they will be on TV so the broadcast revenue will flow. If games are cancelled then teams will lose money.
For Liverpool this will hurt more than others in the EPL as Liverpool have more games broadcast and therefore will loose the additional per broadcast money. In fact last year Liverpool had the highest broadcast revenue of any team so clearly this would hurt Liverpool more than any other team.
Overall
It is clear that teams are suffering, and the longer this goes and the more games are cancelled. From Liverpool’s point of view, given fact that commercial revenue would be the only one that would continue and they have a low commercial revenue compared to other top teams means Liverpool could have a harder time with salaries and would lose more when compared to other teams.
On the other hand, Liverpool have money for transfers given the lack of activity in the recent windows, and as such may have an advantage if there is money available to make bids on players and stay on the right side of the Fair Play rules.
Daniel is a professionally designated accountant who has spent 20 years in the finance and data analytics field which has skewed his view of the sporting world. Instead of seeing simply an athletic competition, he sees a financial exercise waiting to be unlocked by data analysis. He enjoys reading professional publications such as the annual deloitte football report and team financials as well as spending hours putting together and analyzing football data, which saves his readers from having to do it themselves.
