Sport's darkest hour - £740m black hole in governing bodies' budgets

Jeremy Wilson
The Telegraph
Ben Stokes hangs his head - DAVID GRAY/AFP via Getty Images
Ben Stokes hangs his head - DAVID GRAY/AFP via Getty Images

The damage to sport from the coronavirus pandemic was laid bare on Tuesday as leaders from football, cricket, rugby union, the Olympics and Paralympics revealed a potential £740 million financial black hole.

In extraordinary evidence to MPs, sports warned that a combination of cancelled events, lost sponsorship, possible legal turmoil and uncertainty were causing unprecedented damage and an untold future threat. In a hearing before the Digital, Culture, Media and Sport Select Committee, the executives told MPs: 

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On a day when Crystal Palace chairman Steve Parish warned that football could follow the devastated airline industry, Rick Parry, chairman of the English Football League, called for the biggest reform of the national game’s financial and regulatory structure in a generation. Parry, who was also the Premier League’s first chief executive, said that the current crisis must lead to greater balance in the football pyramid and changes that include salary caps, restricted squad sizes and an end to the “evil” system of parachute payments to relegated Premier League teams.

“The cash hole to autumn looks grim,” Parry said. “We need a rescue package but we also need to address the longer term. We can’t go from one bail-out to another. We need to look at the structure, root and branch.” Parry then cited an extraordinary series of statistics, including how Championship wages had been running at 106 per cent of the league’s turnover. “Ridiculous,” he said. “Perhaps one benefit of going through this pain is we will be shocked into going into a more sustainable model.” Parry has been EFL chairman for less than a year but, in comments which suggest he is prepared to stand up to the Premier League, he directly warned top-flight clubs that things would get “very messy” if they try to prevent relegation and promotion when football resumes.

The idea of voiding relegation for the 2019-20 season has been discussed as a compromise to concerns over playing the remaining 92 Premier League matches at neutral venues. “I think you can expect lawyers will get wealthy if that happens,” Parry said. “It would be a breach of the tripartite agreement between us, the Premier League and the FA.”

Parry also questioned the viability of playing matches behind closed doors next season in the EFL, whose business model depends so much more heavily on match-day income than the Premier League. “We have to look long and hard at how we go about restarting next season or indeed whether we restart next season without crowds,” he said.

The EFL wants urgent government clarity about the viability of plans to restart football and whether their clubs can confidently bring players and staff out of furlough. With 1,400 EFL players out of contract this summer, it was also stressed that July 31 would be the absolute cut-off to complete the season.

Parry was followed in his evidence by Tom Harrison, the England and Wales Cricket Board’s chief executive, who upped an earlier estimation of £300 million losses and also revealed that the sport faces a deficit of £100 million even if England are able to play international cricket behind closed doors this summer. “Unquestionably, it’s the most significant financial challenge cricket has ever faced,” said Harrison, who refused to reveal how much money the ECB would lose from postponing the Hundred. He did, however, launch a staunch defence of the tournament and denied it was a gamble despite being told the “casino has closed” by one MP. 

The ECB is still examining the logistics of playing matches behind closed doors, but is working towards starting the Test series against West Indies on July 8. Harrison was unable to give guarantees that women’s cricket would be protected from cuts and, although there are plans for children to resume coaching under social-distancing rules, he warned of a £32 million hit to the club scene if the season were to be wiped out.

The Rugby Football Union is also facing huge losses and its chief executive, Bill Sweeney, admitted that it could even follow rugby league in requesting a government bail-out in the “catastrophic” scenario of no international rugby before next summer. If the matches against New Zealand, Argentina, Tonga and Australia are played behind closed doors at Twickenham the losses would be £85 million. The RFU has already lost £15 million because of the lockdown and is set to lose a further £32 million even if November’s matches go ahead. Sweeney conceded that, if the 2021 Six Nations were also affected, “we would have to come to the Government for support”.

The Government has already granted £16 million in loans to rugby league. The RFU has around 60 per cent of its employees on furlough and believes it could take up to six years to recover financially from the pandemic. The financial impact also makes it more likely that the Six Nations will leave free-to-air television.

UK Sport has requested £53.4 million in exceptional government funding to ensure that Olympic and Paralympic sports do not face potentially “quite disastrous” decisions ahead of next year’s Tokyo Games.

Dame Katherine Grainger, the chair of UK Sport, which is the funding body for high-performance sport, stressed the need for a quick decision on a funding rollover so that sports could plan with some certainty for the postponed Olympics and Paralympics.     

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