If Arsenal survive the coronavirus, will there be a massive power-shift?

Arsenal set for a change of perspective & power? by AndersS

The Coronavirus has proven to be the “Tunnel of Horror”. Very few countries can be said to have reached the halfway point of the outbreak and can realistically be looking for the light at the end of the tunnel. Most countries have really only just entered, and it is still very hard to accept the worst is to come, and any end not even in sight yet.

One obvious effect is the change of perspective it has brought to nearly all of us. Suddenly football and Arsenal are very small issues, as they should be, if you understand what I mean.

But if you even so will allow me to focus on the consequences for football in general and Arsenal in particular, I will try to explain how I see things changing.

In 2 previous articles, I have a pointed to the economic crisis we could be facing very rapidly because of the Coronavirus and how those economic realities will affect football.

We are now seeing he first few very serious signs surfacing. Clubs suggesting pay-cuts to players etc. As explained earlier, this may very well be just the first few ripples in front of what can be a virtual tsunami. And it is coming fast, if it isn’t stopped by something. We may soon need a miracle to stop it, i.e. a quick cure for the coronavirus.

Let me be provocative…
Our most important defence right now are not the likes of Sokratis, Luiz, Bellerin etc, and our most important “player” is not Auba. The most important defence is our owners and our board, and our most important “player” is our CEO.

Any qualified board and CEO will now be looking at possible scenarios of the future. From best case to worst case. I have absolutely no detailed knowledge of Arsenal as a business, but I feel confident in assuming a rough description could look like this.

1) The “delay scenario” – best case
In this scenario this season will be finished by playing the remaining games, it could even be with a finish in the autumn. But with all games played, and the next season to start at a later date and also completed.

This scenario will most likely result in a revenue loss of maybe less than 10% for the year, but for most, the remaining revenue for the rest of the season, which at the moment is not coming in, will come at a later date. I would expect most clubs in the Premier League, if not all, to be able to sustain this.

The big problem is, this scenario is almost gone as a possibility, and I don’t think many CEO’s and owners are planning according to this. They expect worse.

2) The “limited loss scenario”

In this scenario the rest of the season is called off, but next season will be played in full. If not from the planned starting date, then from a later date and with a more crammed schedule.

In theory the revenue losses are then limited to losses on TV revenue, ticket sales, matchday sales and reduction in sponsorship revenue for this season. Let’s just say, as we are missing roughly 25% of the games, it will be a loss of 25% in revenue for the year. The correlation is not that precise, but nevertheless. This is very serious. Don’t make the mistake thinking, it is 25% of the revenue for the rest of the season, we are talking about. No, it is 25% of the revenue for the whole year. Compare it to what could be your own situation. For this year, you are expecting 12 monthly salaries. But in September, you are told; sorry, there will be no more payments this year. Totally unexpected and not something you could possibly have foreseen and taken measures to guard against.

I think it is quite obvious that this scenario will hit all clubs very hard. They will immediately have to make huge cuts in expenses in order to get through this. I will suggest this is what we are seeing right now. Temporary pay-cuts are suggested to the players in the hope, they will realize the seriousness of the situation and help the clubs to survive, also for their own sakes. Whether these measures will actually be accepted by anything near all the players, is up in the air, and whether those measures, and other cost reducing measures can save all bigger clubs, remains to be seen. It is unlikely they can save all smaller clubs.

3) Worst case scenarios
There is no doubt in my mind all CEO’s are now preparing for scenarios worse than number 2).
This will include:
– This season not finished and a loss of maybe 25% of revenue for this year.
– Next season being shortened both domestically and in Europe for those clubs with revenue from Europe.
– Sponsors having gone bankrupt or cancelled contracts, due to lack of fulfilment.
– TV revenue drastically reduced not only because of fewer games, but also because of renegotiated contracts.

– Ticket sales reduced etc. etc.
In this case, we are looking at big clubs going under, for sure. The loss in revenue going forward could easily amount to 50%. To combat this, clubs will not only slash wages, they will simply try and release players for nothing. Only, there might not be many clubs able to take them on.

The above is why I have in previous articles declared you can forget all about transfers for now etc. etc. At the moment clubs are simply looking at how, they can hold onto their current players and not be facing lawsuits for missing salaries etc. Hardly any club in Europe will at the moment be looking at signing a new player, at a time where they may have to ask their current squad to take a pay-cut.

This is the harsh reality, and these are the challenges Arsenal’s CEO and owners hopefully can get us through. That is why, we at the moment all should very much hope they are the shrewd businessmen, they are “accused” of being at other times. A change of perspective, which we hadn’t seen coming.

The above is also a huge and sudden change in power.

After the Bosman case a few years back, you could say the power has very much been in the hands of the star players. Over the years since the case, we have seen a big increase in the number of clubs’ star players represent during their career. They change clubs to make huge sums of money for themselves and for their agents, to get new life experiences in different countries and leagues, and of course also to chase the best possibilities of winning trophies and more stardom. I am not blaming them. They are young and seem happy, and the possibilities are (were?) there. Why not use them? The only ones I will blame are the ones that have been using their power to force moves in the middle of their contract period, by only giving 80-90% etc. until the clubs give in and let them go. I find this behaviour highly immoral, and I have often wished the clubs would stand together against this, and simply not sign players behaving this way. I think these times are over, at least for now.

The sudden new economic realities have made the power change hands, at least for a period. Soon no clubs can afford to pay the current salaries. Yes, it will be a breach of contract, if a club unilaterally slashes the salary of a player, and the player can possibly leave immediately.

However, they will have very few places to go. Soon there could very well be a realization with the players that they may have to accept huge pay-cuts in order to have any salary at all in the future. In fact, there might even be much more club loyalty to come from this.
But how this will eventually land, we shall see.

Anders Sorensen

8 Comments

  1. Kenny Rolfe says:

    Feel the only way around this is for the Governments around the World to pass laws and put everything back a year. Contracts, wages frozen, world economy. Start again in a years time as if it was January 2020. Radical and probably impossible, even possibly change the calendar date. LOL. I can see people out there saying “Don’t know about that. that’s a crazy idea” but these are crazy times. There’s never been anything like this in history of the planet, not even 1929 Wall St crash or The South Sea Bubble

  2. jon fox says:

    What bliss, even though a chilling and sombre bliss – if you can have such a concept, which I much doubt, but let that pass – to read the most thoughtful and fully worked out article on here in simply ages, if ever in fact. Anders, I salute your brain and your real ability to set out your thoughts clearly.

    I am bound to say that all of what you outline comes well within the range of possibility, even probability and is so far removed from the “mundane, say nothing tsunami of shallow articles on here”. Were I able, I would award you, Anders, a medal. A gold one!

    1. AndersS says:

      Thank you, sir 🙂
      Rest assured, it is not my intention to put depression into anyone’s head.
      Even at the bottom of Pandoras’ Box, there was hope.

  3. Uwot? says:

    Lets not forget the £200 million cash reserves we have on the bank.AFC ain’t going under anytime soon.Trust me.

  4. ken1945 says:

    it is being forecast that another peak in cases is expected this weekend, due to those who ignored the governments previous advice.
    These selfish people should be right at the back of the queue and I bet they will be shouting the loudest about unfair treatment.

    NHS workers, while risking their lives, are still not 100% protected with masks etc etc and the whole system is very close to collapsing – yet here we are, with the government now saying they will start arresting these selfish morons – arrest them and throw away the key until this virus is beaten I say.

    Football is a very distant priority in the minds of most people, I suggest.

    Only the very strongest teams, in financial terms, will come out seemingly unscathed, those with owners who have unlimited wealth…and are prepared to spend and support the club they own.

    As an asset, it will have been diminished greatly, perhaps to the point where the roubles, dollars and dirham valuation of said clubs will have plunged down enough that these owners might want to sell.

    No more sky high salaries for players and transfers alike – could it be that football returns to its roots as a “working mans game” – every cloud may have a silver lining!!!

    Than goodness we are now only paying £15,000,000 a year of interest for our new stadium, spuds must be ***** a brick,
    just another aspect to look at.

    1. jon fox says:

      Ken, another sober minded and thought through post in reply to this superb article. More fans everywhere are becoming ,each passing day, sadly aware of the huge and long lasting changes that football will be undergoing from now on!
      Your “silver lining” sentence is highly likely in my view and that could well be the best possible long term outcome for morality and fairness returning to at least the business aspect of our sport. So do I expect it to cure cheating during the game them? Of course not!
      I also see it changing social attitudes to many other human attitudes, such as health insurance, as this may be just tHe first of the many viruses to follow which may one day finish us all off! On that “cheery” note, I need a drink. Stay safe, Ken. BTW, have you read my second part of Nostalgia days yet?

    2. AndersS says:

      Good points. I don’t expect Arsenal to be anywhere near first to go down, if worst comes to worst.

  5. ahmad73 says:

    It’s scary for us as our business model is based on a self sustaining one. Maybe Kroenke will inject some much needed cash in the worst case scenario. If it plays out per the worst case scenario, we are likely to see a power shift with Chelsea, and City dominating; assuming that their owners do not suffer financially during these terrible times. I don’t think we will be much worse in footballing terms than we are currently. We are among the richest football clubs in the world. So I expect us to ride this wave. Clubs that have significant debts like Spurs and even Manure may have a lot to think about. As Ken pointed out, maybe this will bring football down to earth, and hopefully everyone escapes more or less unscathed. However, I will still expect the super rich to continue to dominate and if anything it might cement our status as an upper half club. Much like the mid seventies till the mid nineties. The outlier during that time being between 89-91.

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