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