The German Football League (DFL) announced yesterday that matches of the Bundesliga and the second division should resume in May. The season should get finished with matches behind closed doors. However, to facilitate that, there’s a need for certain preconditions. For example, there’s a need for a standard operation procedure on how to deal with players who tested positive for the virus (this was already discussed in yesterday’s article). Thus, it’s still also likely that the season will be cancelled. But the aftermaths of a cancelled season are hard to predict. However, even to conclude with the season with matches behind closed doors comes with a high financial risk for some of the clubs.
(Cover picture by Peter Boehmer)
That the DFL is trying to finish the season, by all means, is partly explained with the fact that other options are a potential life threat for some clubs and that, in total, about 56.000 individuals are making a living from matches played in the first two divisions in Germany. Having this in mind, initial criticism by some that the DFL – even in the light of the dawn of the Coronavirus outbreak in Germany – is taking football too seriously can no longer be obtained when the DFL is considered as an economic company with 56.000 staff. However, the excessive focus on keeping the matches alive when the Corona-crisis started in Germany should also be taken into account with healthy criticism.
But which kind of impacts do the financial losses have for affected clubs and which possibilities do exist to fill the occurring financial gap? I do not claim to be able to completely explain the situation as I do neither have much knowledge about economics nor do I have inside knowledge about the financial situation of the clubs and their according thought experiments. Nevertheless, I’ll try to sort some things.
The financial impacts of football put on hold
To do that, we need to ascertain the current status quo first. How much is the financial loss at all? DFL-chair Christian Seifert was reluctant to inform about the exact sum (which is certainly not exactly to define) at yesterday’s press conference but the divisions somehow dropped a number of 770 millions of losses. A number which appears realistic. This sum originates from three different sources: the lack of income from broadcast revenues (about 370 million), the lack of missing ticket sales (on average, a club of the Bundesliga makes about 1.5 million per home match) and the lack of sponsorship money. Not taken into account are missing transfer sums some of the clubs expected in summer. There will for sure be some transfers but the transfer sums will certainly decline in summer.
So there’s a shitload of quid lacking. But even if the season can be finished regularly, there’s a huge financial loss due to matches played behind closed doors. However, the damage for the clubs of the first and second division will still be under control ( at least if the money made from tickets is compared against the broadcast revenues). But the lower the division, the more important will the money made from tickets become and the more threatening the current situation appears. This is at least the opinion of economy expert Henning Zülch and the scenario can be considered as realistic. While the Bundesliga will still get their broadcast revenues transferred with matches behind closed doors (which will also be the case for the third division even though their broadcast revenue is much lower ), the question remains whether matches behind closed doors in the regional divisions make sense or whether the expenses for such matches will still be higher than the according revenues. It’s obvious that the situation in the lower divisions is so much more precarious than in the first or second division.
The air gets thinner.
Nevertheless do clubs from the first and second division also face financial bottlenecks. Henning Zülch names four clubs from the first division which might get struggling to survive due to the Corona-crisis: Union Berlin, Fortuna Düsseldorf, 1. FC Cologne and Schalke 04. This list might even get bigger when the clubs announce their precarious financial situation at all. Rumours have it that approximately one-third of all clubs of the first and second division will not survive financially if the season would be cancelled.
To lower the pressure for some clubs, salary waivers of professional players, as well as short-time work for the staff, are discussed. Especially salary waivers are already set up at many clubs with some of them even publicly announced: At the FC Barcelona, players will not get paid 70% of their salaries. At the FCSP on the other side, the players themselves decide the amount of their salary they waive.
In the third division, short-time work is arranged comprehensively. Amongst others, also the SV Sandhausen, as well as the VfL Bochum, did announce short-time work. At latest since the DFL announced yesterday that football will earliest be resumed in May, many clubs from the first and second division might follow now.
The current lockdown and the outlook on matches behind closed doors contribute to an enormous uncertainty with regard to the finances of all clubs (while some still do not face such uncertainty, see below). The DFL already reacted to that uncertainty with adjusting their licensing regulations for the upcoming season. The liquidity situation of the clubs will simply no longer be checked. And if some clubs will go into administration, they will not face a deduction of points in the current season as well as a reduced deduction in the following season only (only three instead of nine) The fact that this has been precisely announced by the DFL simply shows that financial constraints of some clubs must be enormously already.
Time for (funds of) solidarity.
Even if this season will get finished with matches behind closed doors only, the clubs will miss out on a lot of money. And this lack of money will hit the clubs differently. An approach to support the struggling clubs could be funds of solidarity. Such a fund could mitigate the lack of ticketing and sponsoring revenues (in case of a season cancellation even the lack of broadcasting revenues) and with the money from this funds, staff working in fan shops or behind the ticket counter could be supported. Of course, here the wish is the father of the thought. Because it appears almost impossible that clubs won’t be forced to sack staff. As clubs will be short of money for almost everything. For example for loans and mortgages they’ll have to pay (e.g. for their stadiums). With matches behind closed doors, which could be enforced for even longer, the ticketing will be short of work anyway but the mortgage repayment will still need to be paid, thus, we can all imagine where the money will be saved instead. Bleak prospects.
But the question remains who will pay for a fund of solidarity? It is extremely unlikely that clubs which will better cope financially with the lockdown due to sound management in the past will spend money now for those clubs which didn’t. Hans-Joachim Watzke did already make clear statements in this regard (amongst others within the interview with 11Freunde). He clearly stated that he is not willing to pay for the mismanagement of some clubs during the last years and to support them in the crisis now. Even if members in key positions of other clubs did not state similar things so far, it is almost certain that many of these individuals (of wealthy clubs) share this view. And this view might be understandable at first sight and appear as reasonable. Why should the soundly managed FCSP support the rather badly managed neighbour of the town just because these guys are suckin’ at doing it? This is a reasonable question but also a little bit short-sighted.
Because I am quite eager to know whether Aki Watzke would think the same when this crisis would not have hit us now but 12-13 years earlier when the BVB was facing to get liquidated? Furthermore, it is very likely that the FCSP from ten years ago would face some really heavy-weighted financial problems too but isn’t now after years of sound management (with these thoughts I absolutely do not intend to belittle the current precarious situation).
In the long term plans of football clubs (provided they hopefully exist) many scenarios are for sure planned for but I rather doubt that there’s a single club which planned for the situation of “What’s going to happen when no matches could be played and the related revenues will not be gained?“ It’s pretty obvious that the Corona-crisis will for example for the hsv be the straw that breaks the camel’s back if there’s no support provided. In this case, the league has to interfere in a solidary way but not simply through dumping money on people but through finding a decent way to cater for the financial needs caused by the Corona-crisis only.
A possible fund of solidarity has thus to be shared fairly. And to ensure that the competition can continue, some clubs which are currently financially solid have to donate more money into this fund than those clubs which cannot afford it. In other cases, the whole competition might fail which could not even be in the interest of those financially solid clubs.
There’s a lack of money – who should pay for a fund now?
Nevertheless, professional football stays a competition which is also fought financially. Thus, it’s stupid to create a fund of solidarity from the capital of financially solid clubs only. This would massively distort competition and ruin the advantage of those clubs working solidly for the last couple of years. Accordingly, those clubs would oppose such a move. Thus, we have to think thoroughly about the sources from which to fund a fund of solidarity.
This is where the competition regulators aka the DFL comes into play. Because actually, to ensure fair competition, the source for a fund of solidarity has to be comprehensive. (Before I’ll start to elaborate on that thought: Yes, this is for sure not the be-all and end-all and especially not really in line with my fan soul. However, personally, I do not see any other option). Such a comprehensive source could be acquired through additional sponsoring revenues for the entire DFL for the next couple of years.
And for this, everything has to be checked and taken into account. For example, the English Premier league gathered another 50 millions of Euro per season through selling their name rights. This would probably only be a drop in the ocean, however, for sure it would also be some sort of support. Additionally, a general sponsor which could advertise on a certain area of every club’s shirt could provide additional funds for a fund of solidarity. Despite the Corona-crisis there should be ample applicants available, just think of some companies which are currently making huge profits due to the crisis (sadly I think of companies such as Amazon etc.). And for sure, there will be even more creative opportunities for the DFL to gain new sponsors for the leagues. These two examples just illustrate what is currently possible. And something similar would also be possible for the DFB-Cup. By doing this, the DFB could try to also flood the lower divisions with some money (although it has to be taken into account that there are already exclusive sponsors for the DFB-Cup so that additional chances to gather money are limited).
The first drop in the ocean was provided by the German Champions League participants of this season: They already donated 20 millions of Euro. This behaviour is honourable but also points to another basic problem which has to be taken into account when the decisions in the light of the Corona-crisis are made (which also appears as a pure mockery at the same time): The fact that these clubs are actually able to provide additional money now (and despite the statement of AkiWatzke see above) is not just due to the fact that those clubs were managed more solid than others. Nope, it’s also the unfair distribution of broadcasting revenues which is further adding to the divide of the first and the second division. This divide is, however, not the main cause but for sure a huge factor contributing to the current precarious situation of some clubs as they try by all means to aim for their fair share of the big pots of money. Furthermore, it needs to be clarified where the four clubs actually take this money from. The whole issue might have a little negative connotation.
(This might also turn into a little trip into my anger now. Because I am massively pissed off by the fact that some plastic clubs such as Wolfsburg, Leverkusen, Hoffenheim and Leipzig do have completely different planning security in the current situation. This is actually an unfair competitive advantage. To which club would a player potentially transfer to in summer when the financial situation is so uncertain as currently? Which club is actually already able to plan for the time after the Corona-crisis because of a solvent donor acting in the back? Right… and this is actually really going on my nerves!)
Who gets which piece of cake?
The distribution of the money originating from a fund of solidarity – if there’s really one – is a task for the executive committee of the DFL (this is at least what was stated by DFL-chair Seifert at yesterday’s press conference with regard to the 20 million donated by the CL-participants). A task, the executive committee can’t be envied for. Because how should the money be distributed? The same sum X for every club? This would be utter bullshit as the clubs have to deal with different amount of money not getting into their accounts now (To say it straight: The lack of money not gathered through ticket revenues is a different one if you compare Regensburg to Dortmund). If the season would be finished with matches behind closed doors, the distribution key has to be in line with the average numbers of spectators. But it should also be taken into account, that some clubs will lack more money because some of their sponsors can also no longer afford their sponsorship. A lot more difficult to take into account are cancelled transfer revenues with which some clubs might have already calculated. And it is also very likely that the funds of a fund of solidarity will be insufficient to cater for all needs of all clubs, especially when it would show impossible to finish the season. So, should those clubs which are more threatened to go into administration receive more financial aids than those ones which have sufficient money? I can almost already hear the moaning of Schmadtke and Völler and cannot take it any longer. To clarify all these aspects is nothing less than a mammoth task, especially as there wouldn’t be much time left. And anyway the distribution of such money would lead to some discussions between the clubs due to a variety of diverging interests.
The situation is nothing less than pretty fucked. It doesn’t matter if I like the clubs which would be hit hard now or not, the competition, which we all love so much, would be massively disturbed. And it makes me, as a fan who loves to be in the stadium both at home and away, to feel happy when the matches could be played behind closed doors from May on, simply to keep the competition alive and not risk its survival (and it also makes me consider it honestly as a reasonable option when the DFL would start to capitalize the leagues even more). Don’t fool ourselves, the Corona-crisis will eventually lead to the fact, that some clubs have to go into administration, even with solidary support.
// Tim (Translated by Arne)