As the government continues to brief daily on Coronavirus developments, the latest update from chief executive Nigel Clibbens club covers a wide range of issues:
19/20 Season fixtures
On Friday [3 April] the EFL made the decision to postpone its football competitions until it is safe to resume - previously the postponement was until 30 April. The postponement is now open-ended, as detailed in the EFL press release HERE.
The EFL confirmed that it remains focused on securing a resumption of the 2019/20 season as and when it is safe to do so. The club’s position remains unchanged in that we want see all the 19/20 season fixtures completed.
The circumstances of what actually represents a ‘safe to do so’ environment in practice is the key issue to be resolved for players and all other participants, before we can then move to getting the fixtures played. With the position still worsening and the peak not yet reached, the prospect of a resumption remains a long way off.
The EFL will continue to keep clubs updated as to future developments as they occur. We are presently getting EFL updates almost daily. We will continue to update as a club when there is something significant to pass on.
Premier League financial support
In the update on 20 March I said that if normal income flows didn’t start up again, by means of a return to league action, then more funding would be required for clubs at all levels.
The announcement on Friday 3 April from the Premier League confirmed that monies are to be advanced to EFL clubs, and this announcement is very welcome. It gives every club more short-term help.
It confirmed that "measures are to be put in place to immediately deal with the impact of falling cash flow. Critically, the League [Premier League] unanimously voted to advance funds of £125million to the EFL and National League."
The key point to take away again is that this new Premier League package is existing money borrowed from the future. It isn’t new money. That’s why, here at Carlisle United Football Club, we have to remain cautious.
The monies to be advanced to EFL clubs is in respect of Solidarity, Parachute Payments and Academy Grants. Further details are awaited from the Premier League.
As a League Two club we normally receive two equal Solidarity Payments from the Premier League each season, in August and January. For the 20/21 season, we were due to receive £225,000 in August 2020 and the same again in January 2021.
As a Category 3 Academy club, for 20/21 we receive a grant of £430,000. We are due to receive £125,000 in August 2020, followed by 10 monthly instalments of £30,000.
These have a combined total circa of £850,000 cash. The exact details of how much is to be advanced and when is to be received is to be confirmed. We will update with further information when available.
As with the previous package of EFL financial support, these are advances of money we were due to receive during 20/21 anyway. This gives cash-flow for everybody in the short-term, to cover lost ticket, commercial and retail income in April, and through the closed season. It therefore provides further immediate relief, which is very welcome and appreciated.
The stress of the Coronavirus has exposed the fragility of the game and its finances. The connected nature and inter-dependence of clubs and leagues is clearer than ever before. Most club costs are fixed. They can’t be easily or quickly reduced.
Most club’s operate with little cash in reserve. The fragile financial model of football requires stability. Unexpected and unpredictable events can cause huge blow-ups. We have seen it before with the ITV digital shock, clubs failed and the loss of jobs that followed, especially players, was very large.
Regardless of Coronavirus, at this time of year in the normal funding cycle of many EFL clubs, we are approaching the closed season where we plan to have no games and no match income for a quarter of the year.
Current season match income and costs end in April anyway (except for Football Fortune play-offs). Advance season ticket sales and commercial renewals then become critical for summer funding, as well as new season retail sales and transfer receipts. Any remaining normal funding gap is filled with funder support.
CUFC normally starts to receive season ticket cash in May each year (we intentionally try to avoid selling early and using the cash early), so Coronavirus has had no impact on these cash flows, as yet.
Our commercial renewals also tend to be from June, again this has had no impact on our cash flows so far. We will see an impact from May, so the EFL and PL funding will help balance that.
Even before the impact of the Coronavirus, the colossal combined losses of EFL clubs across the league means that huge amounts of cash normally needs to be provided to clubs by funders.
Additionally, the requirement for those funders to inject that cash is also already heavily biased towards putting the money in during the quarter of May to July (as there are normally no games). The impact on the businesses that provide cash to those funders to, in turn, fund clubs is therefore a critical factor for clubs too.
We have seen the impact on clubs like Bury and Notts County when the owners’ businesses couldn’t support the club any longer. At precisely the time where most funder cash is normally required, there is a need for even more to combat Coronavirus, and this is at a time when the funders are finding that their own businesses are also suffering. This inevitably will add more pressure the longer this carries on. Those clubs relying most on funder money will suffer fastest.
The game and everyone involved is under huge scrutiny over their behaviour. Clubs are being given external help by Government, Councils, EFL and PL, fans and commercial supporters. It’s the responsibility of each club to ensure this support is not abused and that there is no opportunist behaviour. Certainly, it must not be used to mitigate the normal cash requirements funders have at this time of year to run their clubs. This existed even before the additional impact of Coronavirus. Every club is different, but all those connected with clubs that I have spoken to understand their responsibilities and are working to do what is right for now, and also the future.
Some clubs have launched and collected (and possibly used) 20/21 season ticket money already. Commercial renewals will be difficult, if not impossible, as businesses face their own survival problems. The ability of clubs to sell players to fund the normal cash gap will be reduced as available cash from buyers will be far less going forward.
With EFL and PL advancing other 20/21 cash flows it is easy to see an accumulation of issues ahead. As well as these problems facing clubs, there are other less obvious issues.
Firstly, as EFL clubs run out of their own cash, their ability to pay for their past transfer deals and loan players reduces. This impacts on those clubs due to receive that cash, and then pay for their own transfers, loans and other cost commitments.
The nature of football is that clubs sell, reinvest, and spend themselves. The potential contagion from that can spread from just a few clubs through the whole pyramid and could be very damaging. Given much of the cash originates from the Premier League purchasing EFL players, the EFL clubs need the solidarity of individual Premier League clubs, not just the Premier League itself.
The fundamental issue remains for all clubs is in the coming months that cash taken now will then be unavailable. I have said before, it creates an increasing problem if we don’t get to a position where the 19/20 season is able to restart.
If we don’t get to play our remaining fixtures it means that income and cash will not ever be recovered. Fans and sponsors may want the cash they have paid in advance back. The problem then worsens because the future 20/21 money has been taken earlier (and spent) and there is none for later, or to reimburse. In addition there may be loans to pay [like EFL and CBIL].
That’s potentially where the longer-term problem is. The more advances required now, the bigger the future problem becomes.
The Club remains closed for business. With effect from the enforced closedown of football on 14 March 2020 all players were furloughed. All support staff, with the exception of a very small number required to keep the club going, are also furloughed.
We have decided to put plans for the 20/21 season ticket launch on hold until the arrangements for 19/20 are certain and ticket office staff return from furlough. The future financial impact of the CJR scheme on the club remains to be confirmed, but it hasn’t impacted on our cash flows so far.
The EFL is continuing its dialogue with the PFA in conjunction with Premier League, FA and LMA. These discussions are set to continue over the coming days, after which the league should be in a position to outline to clubs the specifics of the arrangement we are attempting to secure on behalf of the membership.
As a club we are not undertaking contract discussions with any players at this time, and there are no plans to have any at present. The results of the PFA discussions with the players and EFL are important for everyone going forward, including our club. I can confirm all the players and staff were all paid on time, in full, in March as usual, and the normal PAYE was paid on time, in full, as normal.
The EFL is engaged in ongoing discussions with the FA and Premier League regarding contractual player registration matters, including season end dates, retain process and loan arrangements. It is awaiting advice from FIFA before it is able to provide further clarification on these matters.
We have player loans expiring in April and therefore this is a key matter in determining the arrangements and players we will have available for any restart.
It is also worth noting that the EFL is still continuing to determine its response to the failure of Bury, and how to change rules on club losses, sustainability, player costs covering Salary Cost Management in Leagues One and Two, and Profit and Sustainability in the Championship.
Before Coronavirus happened, the desire to tackle some of these issues had increased. With £275m to be injected into the EFL already, future loans to repay and losses mounting, it seems inevitable that this EFL review must bring radical reform to club finances.
Thank you from all of us, once again, for the support you are showing our club at this difficult time.
Please continue to keep an eye on the official website for future updates.
Remember that through all of this our main focus has to be on staying safe. Follow current guidelines on social distancing and isolation and together we will come through this.
Stay Safe. Stay Home. Follow government guidelines and advice. Help the NHS. Save Lives.
For up to date information on COVID-19 in your area, please go to cumbria.gov.uk/coronavirus/communities.asp