Cash is king: Covid-19 leaves sports clubs scrutinising their business in pursuit of cash flow

The sports industry has been on an ever-upwards trajectory in recent years, especially at the top of the sports pyramid. KPMG recently valued[1] the top 32 European football clubs at €35.6 billion in aggregate. On the other side of the pond, Forbes values[2] the 32 U.S. National Football League (NFL) franchises at a staggering $91.4 billion. The growth in values has predominantly come from huge increases in income from broadcasting contracts and advertising. This has also been supplemented by an expansion in commercial sponsorship. For instance, 2017 saw the National Basketball Association (NBA) introduce jersey sponsors and the English Premier League (EPL) introduce a second sponsor to players’ shirts.

However, this growth has been predicated on there being sporting action. Income has largely evaporated as a result of Covid-19. This article identifies key weaknesses in the system and examines the potential repercussions, looking specifically at:

• Income/gate receipts
• Broadcaster and sponsor revenue
• Financial support from governing bodies
• Resisting cash flow insolvency
• Cutting playing staff costs
• Raising outside capital/financial fair play
• The monetary value of goodwill