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Premier League clubs 'unlikely' to go bust | Football finance lecturer Kieran Maguire

There will be a significant collapse in transfer fees post COVID-19, but top Premier League clubs...



Premier League clubs 'unlikely...
Soccer

Premier League clubs 'unlikely' to go bust | Football finance lecturer Kieran Maguire

There will be a significant collapse in transfer fees post COVID-19, but top Premier League clubs are set to survive and broadcasters are unlikely to quit.

That's according to Kieran Maguire, University of Liverpool lecturer on football finance.

Speaking on Newstalk Breakfast, Maguire says the deep pockets of Premier League owners will keep clubs afloat.

"I think in the Premier League, it's unlikely (they will go bust), although meeting the wage bill demands; the Premier League's wage bill is around £250 million sterling a month - is clearly going to be a challenge for those clubs. They do have the benefits that many of them are owned by billionaires who will effectively subsidize those wage bills in the short to medium term."

Maguire is not so sure how English Championship and lower league clubs are equipped to stem the tide without the certainty of gate receipts.

"As we drop through the football pyramid, the potential for bankruptcy increases, because clubs are far more reliant upon match day income and there's no evidence as to when that's going to return. Also, what you will find is many of the owners of clubs are less wealthy, or they have existing businesses which themselves are suffering financially, and they don't want to be seen to be giving priorities to a football club over their main form of income."

One consequence of the pandemic will be a bursting of the transfer bubble, which Maguire says is down to the fact that clubs cannot renege on legal contracts around player wages.

"I think we will see a significant collapse in transfer values when the market returns and that's partly due to the fact that in the Premier League, clubs will struggle to get players to agree to wage cuts because players are on long term contracts and the players and their representatives will be fully aware if the clubs unilaterally impose wage cuts, the players will actually be able to sue for breach of contract and walk away for nothing. So therefore the only thing that clubs can do on a short term basis when they are trying to recruit players is to pay lower fees."

Those that will benefit will be the top tier clubs such as Manchester United.

"What they'll be able to do, and Ole Gunnar Solskjaer commented upon this week, if a club is cash rich, it will be able to exploit the market. There's going to be plenty of distressed clubs all over Europe, all over the world in fact who will accept offers they might have previously rejected."

There has been much talk of a potential rebate of over £750 million to broadcasters if the season is deemed null and void and cannot be completed, or a partial rebate if the season is not completed as per the contracts.

Maguire is of the view that whatever happens in the immediate term, both football and broadcasting need one another.

"It's uncertain, but it looks as if the domestic broadcasters, which are SKY and BT Sport, they are reluctant to pull the plug in terms of continuing to fund the game, because there is a degree of mutual dependency. The subscription model of the broadcasters is very much based on sports broadcasting and the Premier League rights are the jewel in the crown."

Maguire added that the Premier League may have more of a challenge on its hands when it comes to collecting all of its international broadcast revenue.

"When it comes to the overseas rights, which are now worth around about £4 billion over the three year cycle, it's a mixed bag. We have seen the likes of DAZN saying that they won't pay their next installment. And some other broadcasters are looking at things a bit more cautiously as well because the broadcasters are also suffering significant cash flow problems as a result of so many subscribers cancelling in the short term, because they don't know when football is going to return."

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