High Stakes coronavirus Poker by AndersS
I readily admit to the following being based only on my own presumptions, and it is entirely up to you as a reader to make up your own mind about whether there is any merit to it or not. Although, I guess it may only be a matter of days before we could see stories in the press, that will enlighten us all.
As mentioned in earlier articles, I am of the opinion football could be facing an unprecedented economic crisis very soon. A crisis, which can be so severe even top clubs like Arsenal will be fighting for survival. Also as mentioned earlier, the problem is not only the difficulties arising directly from the loss of revenue if this season can’t be finished, but even more so the follow-on effects that could be waiting.
At the moment the Premier League, and for that matter other leagues in the UK, all over Europe and in the rest of the World, aren’t delivering the product they have sold to TV companies, sponsors, spectators and fans. For the time being this is being “presented” by the football authorities just as a delay, with an implied promise to deliver “soon”. It is clear to most people that this isn’t a sustainable position, as it is very doubtful anything like the promised product can in fact be delivered anytime soon.
But they have to make it look like it is possible, because if the football authorities admit they can’t deliver, it will have a domino effect:
– TV companies and sponsors have no longer the obligation to pay for the rights for this year
– As most contracts are for several years, it will also legally mean TV companies and sponsors can get out of future obligations to pay the sums they have committed to..
– The loss in ticketsales, matchday sales etc. are on top of these problems
So why is it that TV companies and sponsors aren’t already tearing up the contracts and telling the Premier League and others, that they want out?
As for TV companies, they are also stuck in a difficult position. If it becomes absolutely clear this is not just a delay, but they in fact can’t deliver the product (world class football) to their subscribers and program sponsors etc. they have paid for, the TV companies are in even bigger trouble than the football clubs. So for the moment, to the outside world the football world and the TV companies both have an interest in saying they expect to deliver “soon”, but internally, they are trying to work out, if there is a way, they can reach some kind of agreement which will save their “lives”, if worst comes to worst. This is one type of high stakes poker, we are seeing at the moment.
As for the sponsors, it is similar, but not quite the same. As soon as it is clear the likes of Arsenal, can’t deliver the product sponsors like the Emirates have paid for, primarily TV exposure around the World, they are not only entitled to get their money back, but also to get out of future obligations to sponsor, if they want.
The same principle applies, if Arsenal can say to their sponsors that this is only an unfortunate delay and they will get the promised product, they may be able to keep the sponsors for now. The sponsors on their part, will at the moment be reluctant to pull the plug on their sponsorship deals, because it could produce bad-will and also prevent them from having a future relationship with the club, which they probably have been content with up until only a few weeks ago.
However, this could change in an instant. Against continuing their current deal are a numerous of “hard” facts and some more “soft” considerations.
The hard facts are, the sponsors will also feel the severity of the economic crisis and they will want to slash costs. Marketing budgets are usually first in line. Also, it is very doubtful sponsoring a top football club like Arsenal and other top clubs in the foreseeable future will have anything near the value in TV exposure etc. as it used to have. The sponsors will most likely already be applying some pressure on the clubs to reduce the amount they are paying. Those are the “hard” realities, but I have no doubt sponsors are also considering something else. Can we as a company be seen to put millions into football clubs at the same time, as we are sacking employees in bundles? Can we be seen to sponsor football clubs, when the “whole world” is suffering and our money could do much more good elsewhere?
I have no doubt these are the more “soft” deliberations that the likes of Emirates are doing right now. Only, they can’t be open about it.
As mentioned in earlier articles, I believe most football bosses in charge of football authorities and in charge of big clubs, are clever people. They know what is at stake and their duty is to act in this reality.
So while it, on the surface, may seem like the official message is ‘this will just be a delay with losses that can be off-set’, they are probably all well into crisis mode preparing for much worse. And so they should.
Cutting costs is paramount. We have already seen a club like Barcelona asking players to take huge pay-cuts. Similar is coming very soon to the PL and Arsenal. Indeed, I would expect the possibility, or rather the threat, has already been mentioned as a possibility to our players. Maybe not directly as a demand yet, but maybe as an “idea”.
As football players aren’t “regular” employees, which the owners to a certain degree can force into a pay-cut with a threat of getting the sack, it is a slightly different situation. The football players can each be described as a small business entity with a contract, where they as a business deliver their product/service (playing football) and the club as the other contract partner and business, and it pays for this product/service. The business contract is usually binding for a number of years. If one contract partner, in this case the club, can’t fulfill their end of the bargain, the other partner is no longer obliged to deliver their product/service. In short, the players can leave. This could soon be exactly what the clubs want a number of their players to do, as this will cut costs.
Only, it is not that simple, because most players, if not all really do not want to leave. They can’t go anywhere to get a new contract, as all clubs more or less will be looking to cut costs this way. The players can of course sue the clubs for breach of contract and claim their full salary, But that may just be in theory as clubs could soon be unable to pay anyway. A lawsuit could then be meaningless.
Every day that passes puts more and more power into the hands of the clubs in relation to their players. They need to use this power before it is too late to save the club. That is why we are seeing the first clubs “asking” their players to take huge pay-cuts. But it is a Poker game, where it can also be fatal to show your hand too early. That is one reason why some clubs haven’t simply told their players to accept the pay-cut with immediate effect or leave. If you act too early and before your main competitors, you risk a number of things. If the crisis actually by some miracle turn out to be only short term, you may have lost players you wanted to keep. You may also be facing lawsuits from players, which you will have to pay eventually.
You also risk that players and agents, who haven’t grasped the severity of the situation and sue the club, will indeed be the ones that eventually bring the club down.
So, at the moment Arsenal’s management are thinking hard about how and when to break the silence on this. They will want an agreement where all or nearly all players accept a huge pay-cut, simply because they have to. I would be very surprised, if many top clubs aren’t talking and trying to work out some kind of coordination on this.
We shall see.