Insights

The Covid-19 Impact Series : Match Day Outlook

By Julian Knowles, Head of Football – 23 Capital July 2021

The COVID-19 pandemic has had a profound impact on the global economy and football has not been immune. 23 Capital’s Covid-19 Impact Series examines how the pandemic has affected key areas of the sport. Ranging from its impact on broadcast rights and commercial revenue to wage costs, player transfers and ultimately club profitability, the second in the series examines how Covid-19 will impact on the outlook for matchday revenue.

It comes as no surprise that matchday income is the revenue stream that has been most relatively impacted by the pandemic, with club matches having been largely played behind closed doors across Europe since March 2020. However, of all the income streams, matchday revenue is the smallest contributor to total revenue for clubs. Deloitte’s Annual Review of Football Finance 2020 reports that matchday revenue represented 13.5% of total revenue across the ‘Big Five’ leagues in 2018/19, with broadcasting revenue generating 54% and commercial income a subsequent 32.5% of revenue. It is also the line item that has historically seen the least growth of all revenue streams for the ‘Big Five’ leagues at 2.3% CAGR between 2014 and 2019 (broadcasting at 12.2% and commercial 7.2%).

Nevertheless, clubs of all sizes will have felt this loss of revenue acutely; those with the biggest fanbases and stadiums in absolute revenue terms and those whose matchday income makes up a greater proportion of their earnings. Liquidity has been stretched, losses have been incurred and balance sheets impacted.

This loss in revenue has been and will likely continue to be somewhat offset by cost saving measures, most notably through cuts or deferrals to payroll costs, the largest cost line item of any football club. Many clubs have also had to perform capital increases, draw on new and existing credit lines and take on additional debt.

The immediate hope for clubs is that fans will return to stadiums without restriction as soon as possible. Uncertainty remains as to when this will happen, exacerbated by the slow progress of the vaccination roll out across mainland Europe, where it is likely that fans will return next season but with some restrictions. The Italian government, for example, recently confirmed that stadiums could open at 25% capacity from September 2021.

The UK’s vaccination programme, however, has progressed at a faster rate to that of its European neighbours and UK clubs have been provided a huge boost by Prime Minister Boris Johnson’s announcement that all lockdown restrictions will end from 19 July, in time for the start of the new 2021/22 season. 

Whilst we expect that many fans will want to return to old habits once restrictions are lifted, it remains unclear how quickly and easily the matchday revenue generating ability of clubs will return to pre-pandemic levels.  There is optimism that demand for live sports will be stronger than ever, driven by scarcity value and a pent-up demand from fans to attend live sporting events. This has already been evident at this summer’s European Championships, Wimbledon, and Ascot.

Challenges may remain for sales of season tickets and corporate hospitality as the sport waits for consumer confidence to grow. Consumer data has never been more valuable, and the information clubs have on non-season ticket holders will be essential in aiding clubs to sell more tickets and maximise associated revenue streams from in-person attendance. 

A well-executed digital technology strategy provides clubs with another opportunity to play catch up on lost revenue. With the possibility of fans spending longer in stadiums across Europe due to a potential for staggered entry and exit times, clubs need to carefully examine how digital technology can enhance the consumer experience and encourage increased spending on food, drink and merchandise.

Clubs have a lot of ground to make up, but opportunities exist to help them adapt to the new challenges presented by COVID-19. It is the prospect of a return to full stadiums, however, that provides the most excitement for fans and clubs alike. 

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