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All about (saving) the money…

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By Andrew McGoff

As the COVID-19 pandemic went global, our favourite sporting codes slowly started to suspend their leagues. Whilst sport is considered a religion to some, or more important than life and death, Liverpool Football Manager Jurgen Klopp summed it up best when he said: “I’ve said before that football always seems the most important of the least important things. Today, football and football matches really aren’t important at all. If it’s a choice between football and the good of the wider society, it’s no contest. Really, it isn’t.”

Two football leagues I follow have handled this with contrasting styles. In England their hand was forced by the positive test of Arsenal manager Mikel Arteta on the 12th of March and then by Chelsea player Callum Hudson-Odoi who tweeted he had tested positive a day later. That same day a joint statement came out from the Football Association (FA), Premier League and English Football League (EFL) announcing that their leagues would be suspended. Premier League Chief Executive Richard Masters said “In this unprecedented situation, we are working closely with our clubs, Government, The FA and EFL and can reassure everyone the health and welfare of players, staff and supporters are our priority.” It was great to see them putting people ahead of money.

Around the other side of the world, the A-League rumbled on. There were rumours before the Wellington Phoenix played their home game on the 15th of March that it would be their last before heading over the Tasman to complete the season. Post-match Nix coach Ufuk Talay called on the Football Federation Australia (FFA) to suspend their league. Like Masters, he called on the FFA to put the health and safety of everyone involved first. However, a few days later FFA announced the Phoenix would be heading to Australia to complete a 14 day isolation period before attempting to finish the A-League season. Nix fans, including myself, had massive concerns about the unnecessary risks the Nix players and staff were going to be subjected to. Rumours circled that the FFA were holding out for the Fox Sports TV payments due at the start of April to avoid some clubs going bust. On the 23rd of March the NZ Government announced that our international borders would close on the 25th March. This forced the A-League’s hand and they made the call to suspend their league. The A-League was the last sporting league in Australasia to make this decision.

Both the Phoenix and Liverpool have owners who pride themselves on running the club as a financially sustainable business, so I was intrigued to find out what financial decisions they would make and what the fan reaction would be.

Liverpool were one of the first Premier League clubs to announce that their matchday staff would continue to be paid in full until the end of April, which is when a decision would be made about whether to extend the suspension. This would cost the club in excess of £750,000. The announcement was applauded by fans as the club were seen to be doing the ‘right thing’. It did not take long for the goodwill to be undone when at the start of April the club announced they would join Newcastle, Tottenham, Bournemouth and Norwich (Sheffield United have since joined) in taking advantage of the UK Government wage subsidy scheme whilst placing some non-matchday staff on furlough, a form of forced leave.
The UK Government wage subsidy scheme covers 80% of staff wages, up to a monthly cap of £2,500 per person. Whilst Liverpool would continue to pay their highly paid players and key staff members wages they were slammed by ex-players, pundits, the media and their fans. Many felt the taxpayer money should be left for more essential businesses that had been severely impacted by the pandemic, that there was no way a club that had turned a huge profit the year before (~£42m) should be using the scheme, even some saying that it was morally repugnant and direct contradicted the clubs values.

I have puzzled over the decision to slam Liverpool for their decision. How could we laud them one minute for being such good businesspeople, making such sound financial decisions, but then complain that they are running the club as a business and applying for a scheme they are entitled to apply for. Still, the right call was made. The club backed down and reversed their decision on taking up the Government wage subsidy. They listened to fans, ‘read the room’ so to speak and made a call to again do the ‘right thing’.

I am not sure why so much focus was put on Liverpool’s decision and we did not hear much backlash about other clubs taking up the Government subsidy. Although it was probably not much of a shock for Newcastle fans to hear Mike Ashley dodging payments or the frugal Daniel Levy at Spurs finding a way to save a penny. It should be noted that on the same day as Spurs announced they were placing staff on furlough and players and coaches were asked to accept lower pay it emerged that their chairman, Daniel Levy, earned £4m plus a deferred £3m bonus in the last financial year!
After seeing Liverpool back down other fanbases started to protest their club’s decision to use the government subsidy for staff. Spurs and Bournemouth have since reversed their decisions.

The financial impact on many clubs throughout English football will be severe, particularly those with high wage bills. Sunderland in League One and Crewe Alexandra in League Two have already confirmed all players and non-essential staff have been placed on furlough. Premier League club Burnley have confirmed they will go bust if the season does not start again by August.

Unlike English Football, the A-League uses a salary cap system. Clubs must spend a minimum of AU$2.88m on player wages, with a minimum wage for an under 20 player of AU$47,792 and AU$64,111for players 20yrs and older. There are a few exemptions to this which you can read about here https://www.a-league.com.au/salary-cap-system . At a minimum this would mean clubs are paying about AU$55,500 per week in wages for players alone. TV payments are received by clubs on a quarterly basis, for the Nix this is rumoured to be AU$900,000 every three months, which in essence covers the wage bill.
With income streams shut off it was Perth Glory that started the domino effect of standing down players without pay. Owner Tony Sage told media that he had to take drastic action to ensure the club remained solvent. It wasn’t long before Western United, Western Sydney Wanderers, Central Coast, Brisbane Roar, Adelaide United and Newcastle Jets joined Perth in standing their players and staff down. Players and staff at these clubs would have to apply for the Australian Government wage subsidy of AU$1,500 per fortnight in order to receive any income. Melbourne City and traditional big clubs Melbourne Victory and Sydney FC have so far managed to guarantee player wages for April.

As for the Wellington Phoenix, until a few days ago they were the only club yet to make comment. They finally broke their silence to fans last Friday, telling us that “this is a time of great uncertainty – not least financially – for all of us as we look to complete this season and beyond”, but there were no details regarding player payments. With wages rumoured to be at an all-time high this season, it was unusual that no comment had been made. Stuff journalist Andrew Voerman identified that the club had applied and received the NZ Government wage subsidy to help with wages for 47 employees. This scheme covers $585.80 per week for each employee over a 12 week period, which provides little support given the club must still try to pay 80% of the players wages.

On Monday, whilst the club still refused to comment (ironic given the clubs email to members said ‘good communication is vital right now’), more information came out from Newshub reporter Michael O’Keeffe that the club had asked staff and players to take annual leave in a means to help them pay their salaries for as long as possible. Should the club really be using the wage subsidy whilst asking players to take annual leave? I’m not sure that sits well with me…

NZ law is different to Australian, meaning the Nix can’t stand down their players and they cannot be forced to take paycuts. If Fox withhold the next TV Payment of AU$900,000, which seems almost certain, and players refuse as a collective to take paycuts then times could get very tough for the Wellington Phoenix. Things are on a knife edge right now. Is it time to discuss another Save The Nix style campaign?. It’s commendable that the club continue to pay wages, but this isn’t sustainable, even at 80% as per the NZ Govt subsidy scheme regulations. What are the chances of high earning players, who have no long standing connection to the club, being willing to take a pay cut? Players cannot be sacked to save money, but no doubt the club are working on it. Watch this space!

What is surprising is that there has almost been zero chat around this from fans. No one debating about the whether they should have applied to use the NZ government scheme to help pay salaries, or that they are removing future costs by asking players and staff to take their annual leave now. Is it because we buy into the rhetoric that we are just a small club trying to foot it with the big Aussie sides? Is it because we just think we should just be grateful we have a professional side and the owners are right to use whatever means necessary to stay afloat? How were the Sarpreet Singh transfer money and the previous Fox TV payments used?

As a way to get people talking, I put a bit of bait out in a twitter poll by asking people if they thought the Nix should be allowed to use the scheme. Talk they did:

Fingers crossed the club can work out a mutually beneficial way to keep players on their roster and also stay solvent. The next few weeks could be very interesting!

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