A sporting chance

This latest report from UK think tank Onward looks at the financial state of sports clubs across the UK.

This report is the latest release of Onward’s new research programme Repairing our Social Fabric, a cross party review into the state of community in the UK. The report investigates the financial state of sports clubs across the UK, and calls on ministers to act urgently “to protect the clubs that are the pride of many communities, which will be needed to bring the country back together again once the crisis is over.” Analysis of the financial accounts of the combined 92 clubs in the English Football League, Rugby Super League, Gallagher Rugby Union Premiership and County Cricket championship reveals the extent to which most clubs entered the crisis as loss-making and rely heavily on matchday income to shore up their balance sheets.  Of the 71 clubs playing in the English Football League this season, 47 posted an operating loss in their most recent accounts and six clubs are in serious financial trouble, according to the latest Begbies Traynor Football Distress Index, including established clubs such as Oldham Athletic and Notts County, the world’s oldest professional club. English Football League clubs, on average, rely on gate receipts and TV income for more than two-thirds (69%) of their revenue.  Rugby league clubs are particularly hard hit because their season only started in January, meaning they are set to lose receipts from more than two-thirds of matches (71%) compared to just a fifth (22%) of games for neighbouring football clubs. A number of Super League clubs were already in financial difficulties, with four top-tier clubs going into administration since 2011. Club chairmen estimate that clubs could lose up to £1 million each if the season is suspended. The Government has since stepped in to support Rugby League with a £16 million loan.  Rugby Union clubs receive 29% of their income from gate receipts and a further 25% from commercial revenue. This means that over half of club income – around £7 million – is vulnerable as a result of the crisis. Half of the clubs in the Gallagher Premiership posted an operating loss in their most recent season’s accounts.  County Cricket clubs are less reliant on matchday income than other sports due to a grant from the ECB. The average county club takes 12% of revenue from gate receipts and a further 24% from commercial, catering and hospitality. This means that just over a third of income is at risk from a prolonged lockdown. Of those clubs for which accounts are available, 50% posted an operating loss in their most recent accounts.  The report also finds that demand for grassroots sports and exercise is increasing to support people’s physical and mental wellbeing during lockdown, but access to services is limited and declining. Recent research found that 62% of adults in England say it’s more important to be active now, compared to before coronavirus and 65% also believe exercise is helping them with their mental health during the outbreak. The report calls on ministers to consider a number of steps to help sports clubs to weather the storm, including the following: Review the terms of the Coronavirus Business Interruption Loan Scheme (CBILS) to ensure it is appropriate for loss-making sports clubs. One option would be to offer sports clubs a similar arrangement to start-ups: the Government would offer loans that would be converted into equity at a discount and sold directly to fans if club owners did not repay.  If seasons are restarted behind closed doors, ministers could also make clear that additional broadcast revenue should be used to support lower-league clubs facing financial difficulty.  Explore the possibility for all schools, colleges and local authorities to make publicly owned sports facilities open for socially distanced exercise as lockdown eases. Support more clubs to become community-owned, including by launching the £150 million community ownership fund to support fan takeovers of clubs promised in the Conservative manifesto.  Subject sports clubs to stricter financial reporting requirements to improve transparency and reduce the risk of financial mismanagement. Temporarily designate stadia as “assets of community value” to prevent their sale without first consulting the local community.

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