There have been a number of different theories (which are really just guesses) regarding how the EPL will handle their coronavirus interrupted season, and whether Liverpool will indeed be crowned champions. But there is only one educated theory of the actual path forward, and as always, it all comes down to the money: the EPL will play the remainder of the season behind closed doors and finish their 38 game schedule. Bank on it.
There seem to be many potential options for the EPL to proceed with however the potential pitfalls of each option means that only one scenario is truly possible. And that scenario absolutely must include finishing the season.
Cancelling or Ending the Season is Too Expensive
Cancelling the season seems like it could be a viable option however the cost would simply be too much for the EPL to bear. And it’s more than just about the revenue which would be lost, there would be significant costs associated that are lurking below the surface.
Football is no longer just about the pure sport, it has become a big money adventure. And the money doesn’t get any bigger than Champions League and the EPL.
Lost Revenue
To put it simply, the EPL makes money when games are played. And a lot of money. The EPL makes £9.2 billion in TV revenue alone. That’s about a quarter of a billion for each game week. And that doesn’t include all the additional revenue (matchday, promotional, etc.) that is generate from games. To simplify, that amount is just too much to give up for any business if it can be avoided. Additionally, there may be clauses in the broadcast agreement that would be triggered and could cost as well.
And for those additional revenues from promotional partners, the EPL has 7 commercial partners according to the BBC, Barclays, Carling, Cadbury, Nike, Tag Heuer, EA Sports and Coca-Cola. Those are big players who would (again, dependent on their agreements) stop payments and would probably look to recoup money should the games not be played and the EPL season integrity be called into question. Or at the very least the potential future agreements could be less lucrative with the fear that a future season could be tainted as well.
Significant Expenses
There are expenses that are clear such as salaries for players, payments on stadiums and other fixed expenses that cannot be avoided. But there are other additional expenses that could be just as dire and could be more damaging, lawsuits by teams and players.
Taking a look at Champions League first, currently Liverpool, Man City (if they are not suspended), Leicester City and Chelsea would qualify. Sitting on the outside would be Man U in fifth place. If the season is ended with the current standings, then Man U would lose a lot of potential money that would come from champions league qualification. Likewise, Man U players have a 25% rider in their contracts that is only paid out if they are in champions league. That’s a lot of individuals who stand to lose a lot of money.
And the issue of relegation and promotion would lead many more teams to potentially lose out on money. And it’s not a small amount: 24 Championship teams make a total of less than £1 billion in a season in revenue which averages out to around £42 million, while the lowest earning EPL team in 2017-18 made £125 million, so three times the average. That is a significant number for teams who are in the relegation zone but are hoping to win a few games and stay in the EPL, and it’s significant for teams in the Championship who are at the top of the league hoping for promotion.
And on top of that there are the players who play for those teams to whom playing in the EPL provides greater visibility and therefore greater potential for earnings. If you’re not convinced of that, think of players like Teemu Puuki and Todd Cantwell who are now being discussed as players who clearly have to move teams to stay in the EPL, whereas last year nobody was mentioning anything about them.
In all, there are a lot of parties who stand to potentially lose financially. And so it would not be surprising if at least one proceeded to sue the EPL, but more likely, there would be numerous parties who would sue. Win or lose that would be a costly proceeding for the EPL, both financially and in terms of image, making a decision to end the season early too costly to truly consider.
The financial choice, the “safe choice”
If games are played, the season ends as it should so nobody can complain or sue. Additionally, some of the lost revenue will be recovered and the advertising partners will have no complaints as their brands will be well represented and the integrity of the EPL will remain in tact. So knowing that the games must be played, now the EPL will be forced to make a choice as to how to proceed. But in reality, it is not much of a choice, because the money will decide how they proceed.
One of the best parts of the game is the live crowd, cheering on the home side and providing an advantage. Liverpool fans are keenly aware that Anfield has become a fortress, and other teams would also feel the loss of the fans keenly. But the spread of coronavirus has made perceptions change and congregating thousand of people in one stadium is dangerous right now and for the next few month.
And so while it might be weird (but safe) to play in empty stadiums or on pitches that aren’t even in stadiums, total matchday revenue in the EPL is £720 million for the season, working out to less than £19 million per game week. That’s about 7.5% of the broadcast revenue, and that percentage translates into corporate speak as: “it doesn’t matter”. Yes businesses want every last penny, but the risk of coronavirus spreading through the crowd or the EPL looking guilty of not following quarantine procedures is not worth that small a percentage. And remember that on top of matchday revenue is the advertising partner revenue, so that 7.5% shrinks into even less importance.
The complications
There are some clear complications that exist and would need to be overcome, but they are manageable.
- Player contracts end in June and with the season extending beyond that date there would need to be some tweaks
- Marketing contracts like player contracts run until June usually which will not be a significant issue for most teams, but for teams like Liverpool who are switching from New Balance to Nike, this could pose an issue, but most likely New Balance would be worn until the season is finished (again, depending on the specific wording in the agreement)
- The Olympics was a complication until the decision was made to move it until 2021 meaning that no EPL players will be pulled away for their country (including Salah for Egypt)
- Venues to play in could be a problem as team stadiums could be booked for other events, but again, given the coronavirus issue most likely those other events will be cancelled
- Logistics would be a problem as there would be a desire not to spread coronavirus through the EPL teams so a form of isolation would have to occur
Finishing the season
Adding it all together means there isn’t much of a choice. Not continuing the season would mean loss of revenue from broadcast, advertisers, matchday and others as well as potential costly lawsuits from teams and players adds up to the fact that the 38 game season has to be played.
There are complication to overcome, and safety would dictate that fans cannot be present to watch in large number. But playing the rest of the season behind closed doors for 92.5% of the revenue (more when you throw in advertiser revenue) means it’s not a big financial hit, and as mentioned earlier, it’s all about the money. And Liverpool is winning the premiership. That’s money too.
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.
