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CHIEF EXECUTIVE: Every club has its own approach

A further update from Nigel Clibbens

13 April 2020

With indications from the daily government briefings suggesting that the current lockdown period is about to be extended, chief executive Nigel Clibbens gave us an update from a club point of view this morning.

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General

It’s now four weeks since league games were stopped, and nearly three weeks since the game closed down completely. 

I hope you, your families and loved ones are all healthy. It’s a difficult and worrying time for everyone, but being safe and healthy is the number one priority. 

Thank you to all those heroes and heroines who are looking after us.

Last week all League Two clubs held a video-conference meeting with EFL chairman Rick Parry, and the club's 1921 director John Nixon [who is the League Two board member elected by League Two clubs to represent them on the EFL Board].

The clubs received a detailed update and were able to ask questions, raise issues and share ideas.

The meeting was followed up with a letter from Rick to all EFL clubs on Wednesday. You also may have seen reports on the BBC about EFL future plans. There’s a lot of speculation about what is happening, so here is an update of the facts, as they stand.

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Season 19/20 restart

The EFL reiterated that its primary objective remains to conclude the 2019/20 season, as and when it is safe to resume playing. 

The latest tentative indications from the EFL are as follows - but the options for a return are being kept under constant review:

  • No training activity is to take place with players until 16 May at the earliest.
  • Earliest EFL games could restart is early to mid-June.
  • Estimated to take two months to finish 19/20 season [including the play-offs] taking us past 30 June contract expiry, and dates of loan deals ending.
  • Length of a new pre-start training period is unconfirmed.
  • Timing currently assumes that remaining 19/20 games will be played behind closed doors.

Covid 19 update

All above timings will completely depend on how the national Coronavirus situation develops.

Everything will be determined by it being confirmed that we are safe to resume football activities. 

At present the number of people sadly losing their lives each day is still rising [Sir Patrick Vallance, the UK's chief scientific adviser, said the death toll would continue to rise for about two weeks in a recent government briefing], and there are still no public details of when or how the lockdown restrictions will be eased by the authorities. 

Clearly this situation remains complex, volatile, unpredictable and highly uncertain, and not controllable. It is also worth noting that making estimates and plans in these extreme circumstances generally tends to lead to over-optimistic assumptions.

Even setting aside these uncontrollable issues, and assuming they all become favourable towards a restart of the 19/20 season, the timing is still dependent on solving many operational issues, for example; staging games, existing player contracts, the transfer window and new contracts, loan deals expiring … and that excludes dealing with the huge and accelerating financial pressures on clubs.

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Operational issues

This timescale would certainly take us past 30 June, and possibly into August, and therefore could push the 20/21 season back [uncertain how far] as there will need to be a season break for transfer activity, etc, to be conducted.

If a 19/20 restart is to include waiting for long enough to enable fans to be in attendance at the games, and together as normal, that will inevitably push those timings back even further, and that will make the already complex issues the game faces many times worse. Having said that, behind-closed-doors games create a whole range of issues too.

As mentioned, loan deals will expire before the 19/20 season restarts and, therefore, will need to be renegotiated. Player contracts expiring on 30 June need to be dealt with. Do all renew? Is it automatic, or do the parties have a choice?

FIFA has made some comment, but we are awaiting a final position from the EFL. It also impacts on offers of new deals, compensation for players under the age of 24, and there are numerous contractual issues to resolve, with every player contract being different and tailored to the individual.

Club Funding

Every club has its own particular set of financial circumstances, all of which are very different, depending on many club specific factors. But it is clear the general problems facing clubs are similar:

  • Loss of home match income and commercial match income for 19/20 (four or five games in League Two) and loss of retail sales.
  • At the same time clubs will save some payments on staging home matches, or travelling away.
  • High fixed payments to make [with very little cash coming in], mainly players, loan player payments, plus other staff and overhead payments.
  • Loss of 20/21 season ticket income, commercial and retail income, and less cash available with which fans and partners can support their clubs.
  • Clubs being unable to pay debts owed to other clubs.
  • Every club has its own approach to staff and player wage payments, deferrals and cuts, and furlough, depending on its own circumstances.

The severity of the problems at clubs differ, and the approach that owners and directors take to protect each club is different.

The EFL has provided short-term cash advances to League Two clubs of £164k, and loans of £119k [we have not drawn the loan so far, as we need to be sure we can repay it].

The government CJR scheme (wages funded 80% up to £2,500) is crucial [like all clubs, we have had no cash back yet, and are awaiting HMRC’s claim model]. 

The Premier League has offered help which, again, helps the short-term position [EFL has retained this cash as pending, while additional clarity is sought on other financial matters, so we have had no receipts from this as yet].

It’s clear clubs are also reliant on each other for loan payments and transfer fee payments in the coming months. It’s reported that approximately £4.5bn is owed by clubs across Europe in transfer fees to each other.

That includes £1.7bn by Premier League clubs, with some due to EFL clubs, which we will rely on in future. Almost all transfer fees receivable by EFL clubs originate directly or indirectly from the Premier League.

If EFL clubs can’t make transfer payments, or the Premier League clubs suffer, then the future hidden contagion will spread through the pyramid. Some of these deals have been financed by banks, and clubs now owe banks (not other clubs) and have spent the money. The ramifications of this are unknown.

We’ll have more from this update from Nigel Clibbens on the official website on Tuesday afternoon.


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