Grave impact of pandemic on English football laid bare by report but US investor appetite grows

A report published by accountancy firm BDO has displayed the impact of the Covid-19 pandemic on English football clubs.

The BDO report, which surveyed the finance directors from the top four leagues, found that more than 80 per cent of clubs accessed the furlough scheme, while 70 per cent deferred tax payments.

The impact of playing in empty stadia for the majority of the season hit a lot of clubs’ finances hard, with three quarters of them reporting financial difficulties.

Despite the obvious impact of the pandemic on the financial health of many clubs, encouragingly not one responding club reported that they were on the verge of administration.

Owing to the lack of gate receipts, clubs have been leaning on shareholders to stay afloat.

The report found that two thirds of clubs (66 per cent) were reliant on principle shareholders during the 20/21 season to fund operating losses.

For instance, Stan Kroenke, owner of Arsenal FC, announced last June that he was to put money into the club to ease the burden of the pandemic on the North London side.

This was done through redeeming bonds linked to the construction of the Emirates Stadium, which Arsenal moved into in 2006, financed by a loan from Kroenke Sports and Entertainment.

Ian Clayden, Head of Professional Sports at BDO, said: “During the course of the pandemic, the only certainty in football was that clubs would be turning to shareholders for increased support.

Support from the government, the Leagues and fans has been significant too but, in the main, it is shareholders that have funded clubs through the most disruptive period in the sport’s recent history.”

‘Football will rise like a phoenix’

Despite the uncertainty surrounding many of the professional football clubs in the UK, investors have not been put off.

BDO found in its research that just under half (43 per cent) of all Premier League clubs had been approached by prospective investors, all of them from the US.

Investors circling around the Premier League is a further mark of its continued dominance on the global sporting landscape.

European leagues are having to find innovative ways to maintain touching distance with the Premier League.

La Liga, Spain’s top league, recently signed a deal with CVC Capital Partners. The partnership, labelled “Boost La Liga”, is aimed at bringing the league on to a level playing field with the English top flight.

Clayden added: “US private equity, institutions and franchises have both the funds and expertise, which makes them a good fit for UK sport.

“Many have dedicated teams that lead advanced marketing and fan engagement strategies, often making hundreds of millions in revenue from their brand and commercial rights.”

In the Championship, England’s second tier, 75 per cent of investors that have approached clubs have been from the US. In leagues one and two, of the 50 per cent of clubs that have been approached, 33 per cent of investors were from the United States, and a further 33 per cent from Europe.

While the report stressed the importance of shareholders to the survival of various clubs, it also noted the need for “stakeholders” to be heavily involved going forward.

“Whoever takes football forward will need to be mindful of the need to accommodate fans, communities, regulators and so on, all of whom will have their say one how the business of football develops and how football finances are managed and reported,” Clayden said.