Football clubs fear they will be punished for “doing the right thing” if they don’t make redundancies or ask staff to take pay cuts while all sport is suspended.
The coronavirus pandemic has slashed teams’ income, especially at those below the Premier League, who are more reliant on revenue from fans attending matches.
That has left clubs at increased risk of breaching so-called financial fair play (FFP) rules, as they must still cover their biggest outgoing, their players’ salaries.
While some clubs have applied pay cuts and furloughed staff, others are willing to sustain financial losses to keep all employees active and on full pay, but they want FFP regulations to be relaxed to take that into account.
Those clubs have grown frustrated at a lack of guidance from the English Football League (EFL), which is yet to issue any clarification on its rules.
“Teams want to do the right thing but worry that it will instantly put them in breach of financial fair play rules,” said a source close to a Championship club.
Clubs left waiting for guidance
The EFL’s inaction contrasts with the stance of European governing body Uefa, which has relaxed its own FFP rules.
Clubs playing in the Champions League or Europa League have been given extra time to file paperwork and assured by Uefa that the current crisis may be considered a mitigating factor in any eventual FFP breaches.
Some English teams have been waiting more than a week for guidance from the EFL on FFP.
The EFL declined to comment on the record but confirmed that its FFP rules remained the same. It is understood that the EFL will continue to review the impact of the pandemic on its regulations.
Football finance experts argue that the body, which runs the Championship, League One and League Two, should follow Uefa’s lead and relax its FFP rules.
“A relaxation would be beneficial,” Kieran Maguire, a senior teacher at the University of Liverpool and author of The Price of Football, told CIty A.M.
“FFP was introduced to deal with reducing club losses and overspending during the normal course of business.
“Covid-19 is an extraordinary issue that is having a huge impact upon the global economy and as such makes adherence to a set of financial control rules an irrelevance when survival is a far more important issue.”
One factor said to have delayed the EFL is that clubs disagree on whether FFP rules should be relaxed.
While some teams with deep enough pockets to cover any losses favour easing FFP this year, those not in danger of breaching the rules do not. Many clubs, meanwhile, are more concerned with mere survival at this point.
Why revenues have been hit
English clubs outside of the Premier League receive only a fraction of their television revenues and so rely to a greater extent on matchday takings.
At the same time, some cannot afford to lose revenue without going into the red. This is especially true in the Championship, where total wage spend exceeded revenue in 2017-18.
Birmingham City last week asked players to take a 50 per cent pay cut, while Leeds United’s squad agreed to defer some of their wage.
EFL FFP rules state that clubs may not lose more than £39m over a rolling three-year period and carry heavy punishments for those who infringe.
Birmingham received a nine-point penalty last year for breaching FFP limits, while QPR were hit with a £20m settlement in 2018 after a four-year legal battle.
Talks are ongoing between players’ union the PFA and league chiefs which could lead to a blanket pay cut or wage deferral.