Sports Gazette

by sports journalism students at St Mary's University, London

Elite sport facing financial ruin in wake of Covid-19

Posted on 12 August 2020 by Sarah Glenton

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Elite sport in the UK could take years to recover from the financial hit of Covid-19, with rugby union set to suffer extreme losses.

A report published in July by the Department for Culture, Media and Sport (DCMS) Select Committee, examining the impact of the coronavirus pandemic, found that a continual lack of matchday revenue will leave the Rugby Football Union (RFU) in a worrying financial state.

Premiership rugby will resume on Friday 14th August, 151 days after all rugby was suspended in England because of the pandemic.

The RFU’s chief executive Bill Sweeney has given some insight into rugby union’s current plight.

Giving evidence to the DCMS Select Committee, Sweeney said: “Some 55% of our revenue comes from ticketing and hospitality, so the ability to get up to some form of normality around mass gatherings is key.

“If the autumn internationals go ahead, we will still lose something like £32 million in revenue through to the end of the next financial year. If the internationals go ahead but are behind closed doors, that will be a negative impact of £85 million. If the games are cancelled entirely, that will be £107 million on top of the £15 million we have already lost.”

While Premiership clubs have benefitted from the Job Retention Scheme and PAYE deferral schemes put in place by the government, the RFU have not been so fortunate.

On 5th August, rugby’s governing body announced that they would be cutting more than 100 community-based jobs, due to the financial hole they are in.

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In his evidence to the DCMS Select Committee, Sweeney emphasised the need for the RFU to make substantial savings in the next few years.

“When we realised that we were going to lose something like £50 million of revenue through to the end of the financial year, we implemented a series of cost reductions,” Sweeney said.

“We have managed to claw back about £13 million of that, but that has gone now. As we look forward to the next year, we are looking to target somewhere between £20 million and £25 million of savings as we manage our way through the crisis.”

Despite the measures already taken by the RFU in order to secure their future, Sweeney believes that it could take a long time for rugby union to recover.

“I hear a lot of people saying, “We’ll get back to rugby. We’ll get back to playing sport later in the year, and things will be fine and we’ll have the Six Nations next year, and off we go”, but we’re working in terms of a four-year, five-year or maybe even six-year recovery plan to get us fully back on our feet,” Sweeney told the DCMS Select Committee.

Unfortunately, rugby union is not the only sport which has hard times ahead.

The Select Committee’s report found that the English Football League (EFL) has also taken a financial hit since the sport was suspended in March.

While the Championship resumed in June, League One and Two clubs voted to end the season on 9th June and 15th May respectively.

With so many EFL clubs already facing financial difficulties prior to the Covid-19 pandemic, the EFL’s chairman Rick Parry believes they may need a bailout.

“We are heading for a financial hole of about £200m by the end of September, a cash hole that we will need to fill, and clubs are stacking up creditors as well,” Parry told the DCMS Select Committee.

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“We have a great deal of uncertainty around next season, of course, the great undetermined matter being when we will return to playing in front of crowds, which for the EFL is absolutely critical.

“We are much more dependent on crowds for revenue, and indeed we are much more dependent upon the atmosphere generated by crowds potentially than the Premier League.”

Playing games behind closed doors is certainly not ideal, and Parry told the DCMS Select Committee that it could end up actually costing EFL clubs to do so.

“Without spectators, the clubs are hurting. We are looking at ways of streaming our product via iFollow, which is a hugely successfully EFL streaming platform, so we would be able to recoup some money that way, but it wouldn’t make up the whole shortfall,” Parry said.

In their report, the DCMS Select Committee concluded that “the Covid-19 crisis has shone a stark light on the financial issues within football, specifically in the leagues below the Premier League.”

The Committee also said that the EFL’s financial model is not sustainable and recommended that the Premier League step in to ensure that more EFL clubs do not follow Bury FC in going bust.

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With other elite sports also feeling the pressure – the British Horseracing Authority has announced expected losses of over £100m, as have the England and Wales Cricket Board – the Select Committee have called upon the DCMS to do more to support elite sport.

“With no clear messaging from the Government about when spectators can expect to return to sporting events, we support calls from elite sports organisations for the Government to extend its financial assistance for those organisations that are unable to generate revenue until mass gatherings are permitted.

“We recommend that DCMS works with HM Treasury to identify organisations within the professional sport sector that remain unable to generate revenue until mass gatherings are permitted again, and to ensure that the systems that have helped them survive the crisis thus far, such as the Coronavirus Job Retention Scheme and the VAT and PAYE deferral period, are extended beyond the current cut-off dates, and backdated where they have already come to an end (such as the VAT payments deferral scheme).”