As football comes to terms with the effects of the coronavirus, some of the most renowned players are now having to accept salary cuts. Many more will probably have to do so.
Like any other industry, football is now effected by the global pandemic. Leagues are suspended and some matches have been played with no supporters, resulting in no gate receipts.
Financial security, particularly for smaller clubs, is now threatened.
JUVENTUS THE LATEST TO ANNOUNCE PAY CUTS
Juventus have revealed that they have reached an understanding with its first team squad over pay cuts.
Players will lose their entire salaries for a period of four months (through 30 June). The Turin giants have anticipated that they will save 90 million euros due to the cuts.
If or when Serie A resumes, there will be a renegotiation of salary commitments the club said in a statement.
BARCELONA ALSO TO CUT SALARIES
After much deliberation in response to the situation, Barcelona have now decided to slash the wages of all staff at the club.
The club’s board of directors met on 26 March, and made the decision to implement cuts. The measures that are to be taken are motivated by the need to adapt contractual obligations.
A statement from Barca read: “Basically it is a reduction of the working day, imposed by the circumstances and the protection measures carried out, and, as a consequence, the proportional reduction of the remuneration provided for in the respective contracts.”
Lionel Messi, the club’s highest paid player, has revealed that the first team squad will take a 70% pay cut. The Argentinean though has voiced his displeasure on how Barcelona have reacted to the situation.
The record six time Ballon d’Or winner has accused his employers of placing the players “under the magnifying glass,” over the virus’ outbreak. Discussions first took place last week between the board of directors over the effects of coronavirus. Every situation and worst case scenarios were analysed. Several measures were also discussed to minimise the most damaging outcomes of the virus.
Barcelona were thought to be the only club in La Liga discussing a reduction in players’ wages.
Yet Atletico Madrid and Barca’s neighbours Espanyol have now announced that they will be introducing pay cut measures to deal with the crises.
BARCA COULD FACE TUMBLING REVENUES
Barca President Josep Maria Bartomeu recently said that the decision to play their Champions League second round tie against Napoli behind closed doors cost the club 6 million euros.
In January, Barcelona finished top of the annual Deloitte Money League for the first time. Overall, revenue reached over 800 million euros. No club has managed to do that in the financial league so far.
KPMG’s annual The European Champions Report found that commercial and matchday proceeds had climbed to 366.5 million euros and 174.9 million euros respectively, for the 2018/9 season.
They are two of the main three revenue streams, alongside broadcasting rights.
The report revealed that the club’s staff costs have spiralled to an eye watering 70% of its turnover. It’s a consequence of having one of the highest paid players in the world on their books in Lionel Messi.
And some of the lavish transfer activity that has been sanctioned in recent years, with the club having to pay more high salaries. The signings of Philippe Coutinho, Ousmane Dembele and Antoine Griezmann have cost a total of $434.2 million.
As commercial and matchday revenue streams are certain to be trimmed by the coronavirus, it’s a basic business principle that salaries will fall. Many organisations across the world will unfortunately force employees to suffer the same fate.
BUNDESLIGA CLUBS FIRST TO ACT
Bayern Munich and Borussia Dortmund were the first high profile clubs to announce that players and directors are to take temporary pay cuts.
Bayern’s first team squad will face a wage reduction of 20%. Dortmund said that players would “waive” a part of their salaries.
The Bundesliga giants are following the actions of Borussia Monchengladbach, who became the first club in Germany to slash costs. To their credit, it was the players themselves who decided to forgo their pay for now.
The executive committee of the German Football League has recommended that the suspension of matches should last until 30 April at least.
As with Barcelona, the suspension of the top two divisions in German football is bound hit clubs for matchday and commercial revenue.
NO ACTION FROM PREMIER LEAGUE CLUBS YET
A meeting between the Premier League, the English Football League and the Professional Footballers’ Associated took place on 27 March over the coronavirus.
There was no defined outcome from the talks. However, it was concluded that clubs will have to make “difficult decisions” in order to mitigate the effect of the virus.
More meetings are planned to iron out a broad response to the situation involving all parties.
It would seem to be inevitable that Premier League clubs will follow clubs in other major leagues across Europe by introducing salary cut requirements. There is nothing too specific in the Premier League Handbook that would cover an event such as coronavirus.
Each club would of have to submitted its accounts by 1 March this year as usual. But that was before the virus took its grip in the UK.
Yet all clubs can notify the Premier League of adverse circumstances, such as future financial information. Assessments can be made by the Premier League board on a ‘Prior Year Basis’ to evaluate short term cost control. The terms and conditions are that a club can be assessed on this basis if a club’s player services and image contract payments have not increased by more than £7 million.
To be assessed on the 2012/13 base year basis, any club’s player services and image costs cannot have crept over £33 million in the 2018/19 season.
In the second tier Championship, Birmingham City have asked players to defer half their pay. Leeds United players, who currently are in line for promotion to the Premier League, have already agreed to reschedule salary payments.