I think we need to think about it for what it is mate, football is going into recession. As you eloquently put it, there are significant pressures on clubs, with footfall, Tv, commercial revenue all at risk. Before any of this really we were seeing a slow down in the exponential growth in Tv rights.
The pandemic has been hugely and subtlety unhelpful. even down to people pausing Sky sports for a few months and realised they can well live without and watch match of the day instead.
Its inevitable really, all industry's go through boom and bust and football is heading toward a recession.
What this means for Sustainability and Cost in the PL and FFP in Europe (which was in trouble any way) is anyone guess. For me i think its pretty nailed on that both will be shelved for the next couple of years, they were rules to regulate a boom, not a recession and i think in the next while, governing bodies will want clubs to get revenue in any way they can, PL and Uefa - dont forget they have their noses at the trough to.
I think the crash is happening, but its often in the months after the true effect is felt so in 6 months time you are going to start hearing tales of woe, we might even see the loss of transfer window so clubs can trade. It also begs the question for me, is with the loss of growth in the game that has always printed money will we see owners look for a return on their investment now and takeovers etc and values drop.
Its going to be interesting to see how it all unfolds, but i think we are definitely heading into the first football recession in a long time and many of the rules governing the boom, like sustainability and cost PL rules, FFP and maybe even transfer windows going out the window.
Good post. I'll try to take bit by bit.
Absolutely on the first point. We can go around the houses on what it means, and get complex, but it's just a recession. I suspect a very deep andsharp recession but a recession. The issue you have, is football fans, particularly in this country can't get their heads around what that means. They just assume the bubble can keep going forever and you can keep spending money- you can't.
The TV revenues is a good point. I saw that actually price per game was already reducing. They were getting around this by increasing the number of games. This is a foolhardy strategy for a couple of reasons. It doesn't seek to hold the value up so speeds up a devaluation process, and secondly the quality of games being shown goes down so again the value gets lower. The Covid situation just acts as a motor for those trends. The value in football was already decreasing. When people start cancelling sky subscriptions wait to see what happens next.
The crash has come but the after affects haven't. Football exists one step behind that. As people become unemployed, businesses downsize, investment in the country declines etc all the key income channels go down. Even small things like stadium tours become harder. Big pre-season lucrative friendly tours become harder. I know I go on about them, but clubs like Liverpool, or United will not just have been banking on pre-Covid levels of income (call it 100) but will have wanted 100 + 20. Liverpool are particularly guilty of this, they hedge massively on the growth, as venture capitalists tend too. Sometimes people will borrow money onthe back of never ending growth, and when the growth doesn't come you're in big trouble.
I think the era of big takeovers has gone really. The Newcastle takeover, whether or not it was a seismic takeover (which is highly doubtful) the PL have effectively put the message out countries aren't welcome to invest. You'll probably get a lot more spivs involved looking to make a quick buck, putting money up for a couple of years then dissappearing if it doesn't work. Essentially like throwing money on a roulette wheel and hoping to hit. So you worry for clubs really, I certainly wouldn't want to be taken over in this context.
I am watching with interest, you are seeing the freying at West Ham already. Other clubs are in that bracket but they probably keep it under wraps longer. You probably realise, that how well you can present to an investor, or a bank manager, or a creditor probably buys you some time this summer. It seems obvious that West Ham, with their owners just don't win any trust so they're not being given much credit. Others will.
As you say though, this is all perfectly normal in the real world. Recessions happen. One thing that does not happen in recessions is that the existing order and size of businesses emerges exctly the same as it did before the recession hits. We will see a major shakeup over the coming years.
