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CHIEF EXECUTIVE: Financial update

Nigel Clibbens responds to the latest announcements

24 September 2020

As the situation surrounding the return of fans continues to change almost on an hourly basis, chief executive Nigel Clibbens has provided a further update from a club perspective:

Club News

UPDATE; From the chair of the EFL

23 September 2020

Financial update

“I have previously explained about the importance of match income to the club, but it is worth recapping given the fact we now face income falling to next to nothing, perhaps for another six months.

“Our annual season ticket income is around £350k a year, and our walk-up match ticket income is around £550k. That’s £900k per season. 

“On top of that our commercial income is around £650k per year, with retail at £250k. In total that gives us a ‘normal trading income’ of around £1.8m.  

“With much of our retail coming on home match days, when fans come to the ground, and much of our commercial income from match activity such as hospitality, advertising and sponsorship, that means about £1.75m of our annual income comes directly from our 23 home match days. 

“That’s around £75k per game or £150k per month over the playing season.

“On 18 June, three months ago, I gave an update to fans. Click HERE to read the full update.

“In that update I said:

“Clubs moved on to discuss ... the impact of lost income from Behind Closed Doors (BCD) games. The EFL clearly understands the problem heading towards its clubs in 20/21, but there is no solution at present.”  

“Three months on there is still no solution even though talks are continuing, the losses are building up and cash is haemorrhaging away. However, it is now worse, because in June we had furlough support, cost minimised from lockdown and it was uncertain about BCD games, whereas we now know we face a lockout and BCD for some time to come." 

“I also said in June:

“Do we reduce our costs now for 20/21 to possibly absorb that potential ... loss of match income? How long for?  Three months ... or four, or five? How much do we target to save? Will £200k a month saved be enough? Can we possibly save four months’ worth of losses ... Every month of BCD also risks £150k of lost income, so the period of BCD games is crucial.”

“With the lockout possibly lasting until March 2021, that would leave just seven home games. It puts two thirds of that £1.75m matchday income at risk. Put simply that’s £1.2m of potentially lost income.

“However you look at the figures, we face a £1.2m hole in our finances if we are locked out until March 2021. The numbers haven’t changed since June, but the problems we talked about facing in June are now here.

“When commentators talk about clubs needing money, it can appear like scaremongering, talk of clubs failing, etc. 

“The reality is this – in May, during our initial financial planning for the 20/21 season, we forecast to have no match or ticket income and no fans at games until January 2021.

“That was to have no significant income except from EFL and PL, with corresponding reductions in retail sales and commercial income from BCD games for half the season. 

“Throughout we have believed it was highly optimistic to plan to have fans in for a full season in 20/21, given the experience since March, despite the season starting only a couple of weeks late and the CV-19 restrictions being relaxed.  

“Planning to lose half the season’s match income, up to Christmas, inevitably meant we faced a loss of over a million pounds and a cash hole to fund.

“As bad as that was, we believed we could get through using all the guaranteed cash from player sales in previous seasons and streaming income, along with other cost saving measures. We are one of the lucky ones. 

“This meant we didn’t need to generate emergency cash by selling season 20/21 tickets over the Spring and pre-season to survive, when we knew fans at games was very uncertain and, at best, remote.

“We now face a further three months to March 2021 of no match income even beyond what we forecast. This means there is a desperate situation ahead for clubs.

“To pay for these losses needs either cash that isn’t from ‘normal trading income’ (we haven’t got any) or for us to stop paying bills. 

“Because most of our payments each month are to footballers and HMRC tax, if you stop paying them, in football, the repercussions come very fast. They grow very quickly and the harm caused is deep and potentially catastrophic.

“Bury, Macclesfield and Wigan fans will testify to that. Like furlough, the excellent support from HMRC has gone away and they want the debts from 19/20 paid back and new bills paid on time.

“Other cash that isn’t from ‘normal trading income’ comes to the club from cup runs, player sales or external support.

  • Cash from cup runs is uncertain and will be hugely reduced anyway (even if you have a cup run). It would be reckless to base our future on that (even more so as with no crowds and gate money the income from cups now becomes simply prize money and TV income, which is in itself uncertain as you need to be picked for TV, even if you win those games).
  • During 19/20 we sold three players where cash was due to us in 20/21 - that is our current lifeline and it will disappear very quickly.
  • External support from the Government through the furlough scheme has been invaluable and made a huge positive difference in getting us to this point and mitigating the lost income from 19/20 season. However, its value to us has been minimal since the players returned to full-time training in August. It will have no impact on the £1.2m lost income in 20/21.
  • The reality is there has been no new money of any significance provided from either the EFL or the Premier League throughout the entire crisis. External support from the game has been almost entirely limited to providing cash we would have received anyway, but a bit earlier. I have consistently made this point. By bringing forward cash as a short-term fix during the summer, it builds up a large problem for later if CV-19 persists – and it will. For example, each League Two club receives around £465k each year from the PL (Solidarity), for a full year. We are two league games into the season and clubs have received 3/4 already, and the final 25% is expected in October to help fund October wages. After that there is no more PL cash due until August 2021. We receive around £50k a month from the EFL. The amount due in October was paid early in September to help with September wages. There is now no payment in October, the next payment is in November. These are very simple illustrations of the reality clubs are facing. The legacy debts from 19/20 have to be dealt with, cash from 20/21 has been received and spent, and the losses as being stretched even further into the future.

Clubs cannot withstand this. We are fortunate that we have a transfer lifeline, but once that is gone ... what then? I am encouraged by the statements from the government about helping – we need it even more than we needed it just a week ago.

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