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EFL: The Armageddon scenario is pretty close and that's why we're worried

The second part of our John Nixon interview

29 September 2020

Club News

EFL: The Armageddon scenario is pretty close and that's why we're worried

The second part of our John Nixon interview

29 September 2020

Speaking this afternoon, United’s co-owner John Nixon gave a further insight into the problems facing all clubs as talks continue to find a firm financial solution to the crisis facing the game at all levels, as Covid-19 continues to cause havoc.

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As an EFL board member, he was part of the decision-making process which saw vital payments brought forward at a time back at the start of the pandemic when they were most needed.

Many club owners and chief executives came out at that time to praise the quick action in bringing forward the payments from the EFL and Premier League, which helped many clubs to take a much more measured approach to the potential problems and pitfalls ahead.

“Those monies were advanced payments, not new payments, and we’ve said all along that the concern would always be that we were kicking the can down the road,” he confirmed. “It’s still very much a concern and we are still kicking that can down the road, if we’re being perfectly honest.

“That’s our biggest worry and that’s why the Armageddon scenario is pretty close, because down the road is now not too far away.

“For September, to get the season up and running, we all got the September and October payments brought forward. The Premier League money due in January 2021 - we all received half of that at the beginning of August. That got us through getting people back into training, and the second half of that PL money is what we will now get in October.

“What we’ve had was this holiday period of stuff, furlough and the like, which took us through the summer, but it’s now dropping off. The advanced payments which were brought forward don’t come again, we must remember that, but we should find that October is ok.

“The reason there’s so much concern now, with Oliver Dowden and everybody else, is that we’re nearly into October, so what comes to help us next? As we sit here now, we have no deal with the Premier League, and the Government have said that the family can look after themselves.

“Ministers have been saying that since June, and we understand that because the Government can’t put money into every industry. There is a perception out there that because of the amount of money players get paid at the top level that there’s a lot of money available.

“Actually they aren’t giving any of it up, which is fair enough, because that’s the marketplace. The Premier League are getting less money because they haven’t been able to perform against their Sky contract, so they have less cash available to help us out. They’ve already committed to doing these solidarity payments, so it’s asking them to give something up.

“I think they’re trying their best. I’ve dealt with the Premier League for years, and they’re pretty good at talking, but it is very difficult for them to give it up. They have 20 clubs who are their shareholders and they make their decisions.

“There’s a very strong core at the bottom of that Premier League, perhaps six clubs, who are stronger now than they’ve ever been. You’re talking about Aston Villa, Brighton, Southampton, Crystal Palace, and they have voices that are listened to.

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“It’s no surprise that any club at the bottom doesn’t actually ever want to give up its Premier League status and they’re fighting to stay there, even though they get the lower end of the income. At the top end, the really big clubs have bigger set-ups and more to play with, and you tend to get a more sympathetic ear.

“I think we’ll get help from them, and I think they will get there. The worry for us is that what clubs need at our level is a grant and not have to pay it back. Getting a loan is going to be a difficult thing because the terms of a loan mean that you have to pay it back at some point.

“I would say the Premier League will definitely come up with something, they’ve never let us down in the past. Whether it’s what we want, and as much as we want, we don’t know yet.

“We’ve asked them for £250m. That’s £50m lost last season, and £200m needed if it’s behind closed doors this season. Bear in mind if you’ve got that kind of money, you’ve then got to get into a situation of how do you share it out.

“You can rest assured that the 24 in the Championship will want the lion’s share. But they’ve got the lion’s share of costs. I don’t think the PL will come up with that cash at the end of the day, but I do think they will give us one piece. I would like to hope it’s a grant.

“Sky have supported us, I can’t see them giving us money, but they are supporting us by not taking it away. We’re really grateful to Sky for that.”

“Obviously it could be that any Premier League help will come with caveats,” he added. “There is nothing specific to that I would be prepared to talk about at the moment.

“In the past, when we’ve taken deals from the Premier League, they’ve been very good. The first one was to pick up the players’ contract, so we all have the same contract now. The next one was EPPP, the youth system, and that’s still causing us at the low levels a lot of hurt, because good players just disappear in the academy system.

“The rule of 50 miles, 100 miles, that’s disappeared. And the compensation level has gone as well. One of the last players to be transferred without the compensation level, where we had to bargain hard, and Alex Ferguson told me ‘I’ll never deal with you again’ if you don’t agree to Henderson going … that was one of the last deals that went through.

“So you’ve got to expect, like anybody that’s giving you money, there will be some caveats, it’s just how big the caveats are. I think that’s always going to be a dilemma for us.

“You can’t sell your future. You have to be careful. Or how much are you prepared to give to get what you want. We’re not in a great position because our back is up against the wall for the next 31 days. 

“If there are caveats it will be brought back to clubs and the clubs will have to decide whether to accept it. But I’ve been in meetings with clubs where Premier League money’s been coming and [it’s a case of] you can forget about the small print.”

But is there a moral duty for the Premier League to look after the pyramid?

“I wouldn’t call it just a moral duty,” he told us. “The Premier Leagye want to retain the pyramid and if they don’t, it’s just 20 teams playing against each other every season and it’s a dead duck.

“They want to retain the pyramid – which three are going up, which three going down, that’s where it’s all at. That’s what it is for supporters as well. You could be a Barnsley who’ve avoided relegation, and you just might get promoted to the Premier League the next season.

“They all know that and desperately want to retain that. But, being honest, there are some clubs in the Premier League who don’t really want to retain relegation.”

And it goes without saying that the decision to close down the season, minus the play-offs, was bringing with it another financial hit with at least four home games per club wiped off the calendar.

“Ending the season was actually the cheapest option because clubs couldn’t afford to open up,” he explained. “They couldn’t afford to put the stewarding or people in against the fact that games would be without crowds.

“Clubs were in a better position because of furlough. There was a period in May, June and July where clubs in League One and Two were getting furlough monies in against wages that they’d never had before during those same months.

“It’s a difficult thing to say, but once you’d got yourself sorted as a club it meant that the period of May to July was more stable because of that furlough money. You were letting people go and contracts were coming to an end.

“I think the marketplace has proven now that things were always going to get tougher, because a lot of players walked away saying they weren’t going to take what was on offer, because they felt they could do better, and that hasn’t turned out to be the case.

“They’re still wandering about and looking for a club. That’s a realignment of the marketplace that was bound to happen because clubs simply no longer have the budgets to play with, particularly with no crowds coming in.”

So are the EFL in a position to self-help, perhaps by taking a loan facility on behalf of all of its members?

“I would think they might have difficulty with banks,” he said. “But I would think there’s a lot of money out in the marketplace at cheap rates that they could get hold of if they needed to over a period of time, because they’ve got good collateral.

“I mean they’ve got massive TV contracts and all sorts of things going forward. You’re borrowing to lend to spend against your future, but who can tell what the future holds - that’s the problem.

“I would think there’s money they could get hold of, but how it gets paid back must be considered. The EFL have advanced money to clubs in the form of loans, and the repayment of the loan that was due back in October has been put back to April.

“If you applied for loans, you aren’t making your first payment until April, so the EFL have tried to help clubs out as well.”

A number of clubs have said openly that they face real problems, so we wondered if there was a timescale for when any type of package will be finalised.

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“We can see that some clubs are closer to the edge than others,” he confirmed. “If you’d asked me this question about Carlisle three or four years ago we would have been near that edge, but because of how we’ve operated in the last 12-18 months, and the money from Branthwaite and one or two others, we aren’t as close to the edge.

“Some clubs had a little bit of cash which they’ve spent, some clubs have said they’ll run out of money in February and others are very close to the edge already. Getting through is going to be difficult. I spent hours on the phone to one club working on getting them some cash.

“If we don’t get cash I think it’s inevitable that some may go. If we can’t find a way to get funds into clubs, it’s inevitable.

“Particularly in the lower leagues, around 30% of income in League One and League Two comes from fans. If we don’t have any crowds all season, that’s obviously almost a third of your business you lose out on. I think it’s inevitable that we will have some very difficult times.”

We’ll have more from John Nixon on the official website on Wednesday morning.

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