In these unprecedented times of difficulty, where lives are at stake and the economic future of the entire planet is on a knife edge, our attention has turned to the world of football and the all conquering English Premier League, or more importantly, how those involved in the PL are responding to the Coronavirus crisis.
This scrutiny includes the issue of the obscene wages that PL players earn, especially at a time when they are not working, which rightly breeds much contempt from a general public that are currently losing their jobs, under increasing financial pressure, and have an uncertain economic future. But I’m not going to debate the rights and wrongs of this, instead, my focus is on how THFC have reacted.
As I am sure you are all well aware, Daniel Levy issued a statement 3 days ago with regards to the Coronavirus, and how the club were reacting. The most relevant part of that statement is the following excerpt:
“Yesterday, having already taken steps to reduce costs, we ourselves made the difficult decision – in order to protect jobs – to reduce the remuneration of all 550 non-playing directors and employees for April and May by 20% utilising, where appropriate, the Government’s furlough scheme. We shall continue to review this position.”
There has been a significant reaction to this stance from the media, pundits, a government minister, and our own Flat Oeufers alike, condemning the actions of the chairman as greedy, unnecessary, and generally the wrong thing to do in the current climate. Amongst this, there has been the usual fabrication:
“To put it another way, the staff at the club who are paid the least amount of money, are taking pay cuts, while those on million pound contracts (including Daniel Levy) will lose out on nothing.” Football365 article
“Anyone furloughed who earn over 36k are getting capped at 2.5k per month max. Nothing else is being paid to any of them.” Flat Oeufer
“Levy ain’t taking a pay cut, he’s deferring payment on his obscene and disproportionate salary.” Flat Oeufer
To put these claims into context, at the time of writing, the only available evidence where such claims could be justified is the above excerpt from Levy’s statement. Read it again. Read the claims again. I cannot think of any reason why such unfounded claims would be made, other than to dramatise and whip up an emotional reaction over and above what is already being seen, but lets move on.
The negative reaction to the clubs actions centre around two core elements;
Should a company that earns millions in profit be taking advantage of the government scheme where taxpayers money is being used to cover 80% of furloughed workers wages up to a maximum of £2,500?
Should a company that earns millions in profit be cutting the wages of 550 members of staff by 20%?
Firstly, it has since been revealed by the Tottenham Hotspur Supporters Trust that 40% of the 550 members of staff discussed have been furloughed, meaning 220 employees. So at the very maximum, the government scheme is contributing 550k per month towards THFC staff wages.
Why does a company that earned £68.6 million last year need 550k per month in taxpayers money?
Lets put some context on that by way of comparison. Here’s a list of just some large companies that have taken advantage of the furlough scheme, and what profits they earned last year:
135,000 furloughed workers
$21.08 billion profit
43,000 furloughed workers
£102.5 million profit
38,000 furloughed workers
£246.9 million profit
30,000 furloughed workers
2.9 billion (euros) profit
30,000 furloughed workers
£913 million profit
This list could go on, and on, and on, and on, but I’m sure by now you get the gist.
Are THFC any different to these companies? Has their revenue been affected any less than these companies? Are THFC doing anything that other massive businesses that create staggering profit levels aren’t doing??
You could subsequently argue that all of these companies (and many, many others) shouldn’t be using taxpayers money either. Surely those profit levels mean that they don’t need to? That they can take the hit by themselves?
This brings into question exactly what financial impact the Coronavirus will have on the club. When trying to quantify this, you could easily estimate how much revenue they may be losing up to, say, the end of the season in May as is the norm.
Final league position prize money in the last financial accounts was £32.3m
Planned televised March and April games postponed (5) £1.13m earnings per televised game, so £5.65m
Matchday income, currently unknown, but putting a low estimate of £2m per home game, 5 home games left, £10m
Breach of broadcasting deal if season not completed 750m, £37.5m per club
So just on those four factors (there will no doubt be many more, such as paused sponsor payments), that’s £85m down. How is that £68.6m profit looking now? You could argue that our revenue has probably gone up since that £68.6m profit was realised, as that set of accounts had most of the season at Wembley, with just a few games at our cashcow new stadium. But that 68.6m profit included our run to the CL final, with earnings from that alone being around £90m, and this seasons exit in the round of 16 meant CL earnings of around 55m, so 35m down. I think this figure would more than account for any extra revenue we may have received up until fixtures were postponed, by comparison to the previous financial year.
A reminder that this is only taking into consideration any lost revenue to the end of the current season in May, around 6 weeks time. Should THFC, or any business come to that, assess the financial implications of the social distancing measures for 6 weeks? Especially a business run by Mr Levy, a well known ambassador of long term strategies? How uncertain is revenue after this period?
England’s deputy chief medical officer warned on Sunday that the UK’s coronavirus lockdown could last for “six months or more”.
“Some kind of distancing will likely be necessary for at least six months,” William Hanage, an assistant professor of epidemiology at Harvard University, told FRANCE 24. “The distancing measures already in place are stopping the establishment of new cases. Those already infected should be resolved for better or worse in two months, after which the goal will be to prevent the surge we have seen in the first wave happening again.”
“The German health institute’s idea that two years of restrictions could be necessary to deal with the coronavirus presents a “fairly likely” scenario, Hanage said, adding that it “depends on what is meant by restrictions; two years of the current state is unlikely, but two years without large gatherings is another thing”.
That last paragraph again.
TWO YEARS OF THE CURRENT STATE IS UNLIKELY, BUT TWO YEARS WITHOUT LARGE SOCIAL GATHERINGS IS ANOTHER THING.
I’ll put this another way.
Should the current lock down in the UK be lifted by say, June (very doubtful), how many of you chaps that regularly go to games would be happy to sit in a packed tube carriage, walk through Tottenham High Road amongst thousands of people, and sit crammed in a stadium with 62,000 other people in August? How about September? December?
If the 2 metre social distancing rules are still in place even after the lock down is lifted, as expected, would every football player be excluded from this to entertain us in what is a contact sport? Would these footballers agree to it, potentially putting themselves and their family at risk?
Based on this, in projecting potential losses, the following question must be asked.
How much revenue could THFC potentially lose over a longer period to say end of this calendar year? Or even to the end of next season?
It’s a shit load. A shit load that makes the £68.6m profit we enjoyed look insignificant.
So should THFC, a company that has paid millions in tax for it’s entire existence, be entitled to claim government help (like every other UK company) when faced with such losses?
Should THFC make tough cost cutting decisions (that in fact save jobs) when faced with such financial losses and uncertainty?
I’ve no doubt some of you have decided the answers to these questions already, and my above ramblings will have no bearing on your judgement.