Matt Howman: How long will the pain of financial hit last?
PUBLISHED: 06:00 18 June 2020
The shutdown of the UK economy in recent months is going to have ramifications which will likely be seen for years to come, and football as an industry is no exception.
For Norwich City and the other 90 clubs currently in the Football League, the future is now very uncertain.
What will attendances look like when stadiums are allowed to re-open? Will there be a step-change in the transfer markets as clubs lose their appetite to seek mega money deals for players? Will there be a decline in player wages as clubs face the reality of reduced income?
It will be an interesting next few seasons, that’s for sure.
There has been a lot of press surrounding the financial hit that clubs in the Premier League are facing as a result of “lockdown”.
Deloitte warned that the 20 Premier League clubs may face a permanent collective loss of £500million and City bosses have forecast a possible £18m hole in the balance sheet, although this will be reduced now the season will be played out.
While that may ring alarm bells for the future state of the football pyramid, it’s not often we see a Bury scenario whereby a club runs out of money to function and is disqualified from the league completely.
Simon Cooper and Stefan Syzmodics cover it well in Soccernomics where they explain that football clubs rarely go bust due to the nature of the industry. Every club needs opponents to operate and for the Premier League to thrive it needs the pyramid intact, which is where we have seen them vote to support the lower Football League divisions and National League clubs with a £125m support package.
The transfer market, however, is the area where we may see a step-change. Arsene Wenger was convinced that transfer fees would one day be a thing of the past as the top players’ valuations would become so high that they would simply run their contracts down and move on a free.
With the monumental growth of broadcasting income clubs are receiving, that may still be a way down the line. However, I suspect we will see a reduction in the volume of transfers and also a reduction in the amount clubs are willing to pay for players.
For Norwich this is something which could go against us. It’s not often we have a crop of young players that are highly rated and touted for moves to top clubs and if the club are forced to off-load one or two due to relegation then it would be a double-blow for the club as we lose a player with significant potential for a reduced fee.
The club were confident that there was no need to sell any player and building on the squad we have remains the priority. However, it is looking very possible now that there could be no full Carrow Road for months, perhaps even until 2021, and if they have no matchday income, reduced number of new shirt sales and the same wage bill to fulfil, cashing in on a player may be back on the table.
My hope for the future of football, and for Norwich City as a club, is that the controlling bodies review and bring in legislation that looks to protect football clubs from player wage growth crippling them.
In 2019, after bonuses for promotion, Norwich spent 5pc more than the entire turnover in that year on wages. Crazy.
Neither the club or the players are at fault, it’s the injection of cash into the game from broadcasters, sponsors, commercial entities and gambling firms which has created this inflated playing field, but it can’t be sustainable, now more than ever. All clubs need opponents, but there will come a point where there will be a ripple effect throughout the lower leagues where clubs will simply not be able to function and no one wants to see clubs go under.
In the short-term I believe the transfer market will cool off, but without a plan for the future to improve the sustainability of football clubs, the next phase could become a lot worse.
Can City survive?
Unfortunately, I think we’re destined for the Championship next season. Farke has done an excellent job with the resources available but I think 36 points will be needed and I can’t see us getting there.
Who will be relegated?
Norwich, Aston Villa and Watford.
Who is the most important player/person for City for the rest of the season?
No individuals, it’s all about the team moving in the same direction and working for each other. Chris Domogalla will have his work cut out though with the quick turnaround in matches.