Coronavirus shutdown has 'exposed the weakness' of football finances... but it could be a catalyst to rebuild

English football must use the current crisis to look itself in the mirror and assess how clubs have been left so vulnerable during the coronavirus shutdown, a leading sports finance adviser has said.

Clubs in all divisions are facing a perilous few months ahead, with no revenue coming in and sky-high costs still pouring out. Greg Clarke, chairman of the Football Association, warned this week that "football faces economic challenges beyond the wildest imagination of those who run it."

The Premier League has told its clubs that they could face a cumulative loss of more than £1billion if the season cannot be finished, with more than £700million potentially owed to broadcasters.

The broadcast rights deals have driven up spending to the point where half of the Premier League clubs spent more than 70 per cent of their income on player wages alone, according to accounts from last season.

Loss of matchday revenue to Premier League clubs is no longer a game-changing concern, but should the broadcasting revenue dry up this season and across following deals, clubs will face serious issues.

"Having this external shock has exposed the weakness of the business model of these clubs," Fausto Zanetton, chief executive of Tifosy Capital and Advisory, a sports investment group who work with clubs from the Premier League to League Two and across the continent, told Standard Sport.

"If, on average, 60-70 per cent of you revenues are fixed costs to players [wages], if you have that plus low cash flows and a lot of debt on your balance sheet, it doesn't take long before you are going to get into trouble in case your revenues are not there."

With football, like many industries, left reeling by the current lockdown, Zanetton has called on clubs and leagues to use this time to work towards devising more sustainable business models.

"The weakness has been exposed: now the big question is whether this will be a catalyst to think about a better business model, putting some financial rules in play that will lead to a more stable system," he said.

"If these revenues over the next two or three months don't come, there are going to victims, there are definitely going to be bankruptcies and clubs that won't be able to pay their bills.

"It remains to be seen whether the industry has the internal strength to reorganise itself and make use of this very violent shock to the system."

Football, especially in the Premier League, is an industry like no other, even in sport. Of the 18 Premier League clubs to have published their financial results for last season - Newcastle and Crystal Palace are the two still to do so - only seven have posted a pre-tax profit.

The pressure to avoid relegation and the financial chaos that can come with it results in many clubs spending beyond their means on talent and agents fees in order to compete. Zanetton suggests that for clubs to begin on a more financially sound path, they need only to look to American sport, a suggestion which might not sit too comfortably with many.

"If you look at the US system - which is a closed franchise system [with no promotion or relegation], with wage caps and a draft - you have a much more even competition," Zanetton said.

"Football is not like that, the fans love the promotion and qualification for the clubs, but it leads to very unstable business models and behaviour which is quite risky from a financial point of view.

"It might be an opportune time to look at what makes most sense, how do we look at the whole football pyramid. Should we put wage caps in or make it more difficult to get relegated? Should we cap agent costs?"

A move to a less romantic and more business-driven model is perhaps a fantasy in English football, but that so many have been left so exposed in recent weeks, means something must change come the end of this crisis.

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