Mrs Football Nerd and I desperately miss Orient, most of all our usual match day routine of heading up to the Leyton Star as early as is justifiable without being painted as the alcoholics that we probably are (although admittedly the Coronavirus lockdown and the apparent response of British society to drink through it suggests our approach to life might have been correct all along!), and the chips in beer cheese sauce (oh how we miss you!) before the match itself. Within the feeling of missing our usual football-based routine however has been a real and genuine fear with regard to the future implications of the current suspension of football and what it might mean for the game as a whole, but more importantly our beloved Leyton Orient.
The mainstream media has been awash with stories of how the uber-rich Premier League clubs are attempting to adapt their finances to survive what looks like a significant period of time denied their main sources of income: broadcasting payments, matchday revenue and commercial and sponsorship deals. It seems for the most part that pay cuts and other expenditure reductions are the main response even for those clubs owned by billionaires or indeed nation states. If the elite are struggling, further down the pyramid there is even greater source for concern about the future of our clubs.
Reading an article by Kevin Maguire (who teaches the Football Industries MBA at the University of Liverpool Management School) in the always excellent When Saturday Comes earlier this week, he suggested that: “the game’s shutdown will have a lasting impact on clubs at all levels with a cashflow crisis putting many in a desperate situation”; for all of us who genuinely love the game, especially in the lower tiers, that is worrying to say the very least.
In essence the precarious predicament that clubs across the country (and Europe and the world) now find themselves in is a result of their financial models being based on over-spending and operating at a loss with the perceived certainty that the income would continue to flow, until the day came that it was turned off. Figures for 2017-18 show that only 21 out of the 71 EFL clubs (Bury not included for fairly obvious reasons, their erstwhile owner Steve Dale not having published accounts since 2016/17) made a profit.
While the giants of the Premier League, and to a lesser extent the Championship had, at least until mid-March, the benefit of the income from mega TV deals, lower down the leagues it is a very different picture. Clubs in League Two receive what are termed ‘solidarity payments’ from the Premier League deals which equate to approximately £460K per season (a tenth of what clubs in the Championship receive).
Reportedly in the EFL and National League losses per club of around £40,000 – £50,000 per week(!) are not uncommon and that was while business and revenue were ‘as normal’. The situation in which we find ourselves is anything but normal and clubs are in a precarious position to be able to weather any negative impact on their income from ticket sales and other matchday revenue such as: catering, hospitality and merchandise sales, even in the relatively short-term.
Having been saved from the financial brink caused by you-know-who, Orient are on a sounder financial footing under Nigel and Kent’s ownership but also not exactly awash with spare cash to keep paying the bills through the shutdown. We already know that the vast majority of the staff have been furloughed to reduce ongoing expenditure with up to 80% of their wages (up to the maximum cap) being funded by the Government and the club committing to pay the remaining salaries above the cap for March and April. Sensible and welcome news no doubt, but the key question is how long all clubs will have to hold on and survive for? There must be genuine concern that some clubs won’t make it. Worrying times for all of us even if football remains most certainly less important than what is going on across the world and society.
Which is why it was so good to hear from Chairman Nigel Travis and Chief Executive Danny Macklin in the web-based Q&A yesterday evening, while they obviously couldn’t give us any clarity on when, or even how, football and our beloved O’s could return they were able to give some reassuring messages.
On the rumours of regional leagues being utilised as a way of getting the competitions going again, while this is not ideal or even welcome from us as fans given it would mark a change in the way we are used to watching our football, and actually wouldn’t save the clubs too much money in terms of reduced travel and overnight stay costs, Nigel suggested that the increased number of ‘local’ rivalry games and associated increased attendance (assuming the grounds are able to open) means it is an option that should, in his personal opinion, be considered.
With regard to the financial impact on our club of the loss of revenues brought by the suspension of football, Nigel spoke about “liquidity” (essentially how Orient are geared financially to survive the crisis) and suggested that Danny and the management of the club had done a good job of reducing expenditure through the use of the furlough scheme, further cost reductions due to inactivity and the relationship with our ‘landlord’ who thankfully is continuing to be very supportive, so in terms of short-term liquidity “we are fine”.
In terms of longer term “solvency” there is a real worry that some clubs might not make it especially if we have to play the whole of the next campaign behind closed doors or in front of very limited attendances, depriving clubs of their lifeblood matchday revenues. However, the hope is that football in general will emerge from this crisis in better financial shape by redressing the balance and by necessity changing the way that clubs operate, in other words by operating within their means and not grossly overspending as a matter of course. A financial reset if you will.
Obviously the desire for everyone connected with football is for the current campaign to be somehow completed even if it is behind closed doors, yet before that can even be contemplated we need to be sure that it can be done so in a safe environment for the players and their families but if that was to be possible, Leyton Orient are in a better position than many other clubs at this level given we have our own digital platform on which to stream our matches. However, Nigel gave it a less than 10% chance that it could actually happen given the testing requirements and timescales involved. Thankfully from an Orient perspective as we were sitting in 17th at the suspension there are no concerns over relegation or promotion for us.
We are in unchartered turbulent waters going forward and no one can be certain of what the future may hold, however given what we have endured in the recent past we can be thankful that in the form of Nigel (and of course Kent) and Danny we have a steady hand on the tiller to guide us.
Up the O’s!