3 financial effects of the coronavirus outbreak on European football
- An analysis of how the widespread coronavirus pandemic is affecting the footballing world financially.
Football and other sporting activities continue to be affected by the coronavirus outbreak. Last night, the Italian Olympic Association took a huge decision by suspending any kind of footballing activity in the country till April 3, 2020 - a date that might be pushed further if the situation is not contained by then.
The decision was taken in the aftermath of the entire northern region of Italy going into a tailspin, with millions of people quarantined due to the danger of the epidemic. Even the much-awaited between Juventus and Inter Milan was played behind closed doors on Sunday night.
With such chaos, there is bound to be an effect not only on the schedule of football games but also on the financial aspects behind the scenes. Without further ado, let's take a look at some of the financial effects the coronavirus outbreak has had on football in Europe.
#3 Revenue lost by clubs from tickets and hospitality
The ticketing, membership, and hospitality services at football clubs range from around 4% to a whopping 18.75% of their entire annual turnover, and this definitely makes it a big chunk of their revenue.
While the match-day revenue for smaller clubs like Bournemouth, roughly amount to one of their highest-earning player's weekly wages, the bigger clubs like Manchester United almost earn £4 million on their game-weeks, which could almost amount to the annual loan fee for a squad rotation player at the club.
While the figures do look relatively small compared to the other revenue generated from advertisement, sponsorships, branding, and professional contracts, the suspension of football activity or playing behind closed doors might start affecting the clubs financially if it goes on for a month or more.
(Figures from BBC)
#2 Insurance companies losing money due to broadcasting contracts
The suspension of footballing activity might also have a big impact on the revenue made by the broadcasting of games. Fortunately, as per BBC, the enormous broadcasting contracts of European clubs insure them against any natural disruptions. However, this means that the insurance industry will suffer in this agreement.
Though the insurance companies might be earning billions in premiums from their clients as a fee for protecting the risk of these broadcasting rights, they would have never thought that a situation of worldwide chaos might arise leading to an outflow of insurance claims. The football clubs are set to recover losses as they will be covered by the insurance companies for their loss of revenue.
#1 Financial impact of relegation and promotion after a suspension-hit season
The consequences on relegation and promotion of clubs in a season that has not reached its conclusion or has had matches suspended are extremely dire. An incomplete season will be detrimental. There are also a high number of monetary pre-requisites and clauses attached to a club winning the title, getting promoted or getting relegated.
According to a report from Consultancy.uk, a promotion to the Premier League is worth £170 million. This means it can change the fortunes of a smaller club who can then use the funds for the expansion of their club, both on-field (recruitment) and off-field.
On the other hand, Deloitte Sports Business Group estimates that relegation costs a club approximately £50m in Premier League distributions alone. Premier League clubs receive roughly a £90m share from the league each season from the money generated from TV revenues from domestic and foreign markets. While relegated teams receive a £40m parachute payment, there is still a large shortfall for clubs to make up.
Published 10 Mar 2020, 15:22 IST