Clubs stretching every sinew to cope with pandemic challenges

Results from the first two League of Ireland clubs to file financial returns for 2020 suggests that they survived the first phase of the pandemic in better shape than might initially have been expected.

However, Sligo Rovers treasurer David Rowe describes the particular mix of circumstances as "extraordinary" and says that clubs across the league still face huge uncertainty in advance of Friday night's kick off of the new campaign.

With crowds excluded from games, turnover at Rovers was down by around 20 per cent but the club will report a surplus of €134,362 to its members at its AGM on Monday, the 22nd of this month. When the likes of depreciation and other accounting provisions are excluded, the cash surplus is actually about €200,000.

The club received just about that much more in funding from the FAI and Uefa in 2019 than it had the year before with the bulk of the additional money their share of the deal struck last summer to get the league going again behind closed doors. It also received €280,000 from the Government’s wage subsidy scheme.

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Rowe points out that the club benefited from supporters having already paid for season tickets but declining to seek a refund despite only getting to watch two games and the fact that fundraising around the town also held up incredibly well.

“We didn’t have a single person look for a refund of their season ticket money which is pretty extraordinary, and the other major factor was that fundraising held up at about €400,000 so the supporters dug deep,” he says.

“It was a pretty extraordinary combination of circumstances and what it has meant is that while we usually have to use season ticket money to pay the Revenue and assorted other liabilities from the previous year, this season we are sort of starting from scratch.”

Rovers will repay a small part of the favour to its community by announcing today that all babies born in the town for the remainder of the year will receive a free jersey.

With clubs being told to budget on the basis of there being no fans allowed into games at all in 2021, the club has marketed a scaled back season ticket but sales are substantially down. It remains to be seen, meanwhile, how fundraising will go and whether the wage subsidy scheme will be extended beyond the end of June.

“There is a fair bit of uncertainty for everyone going into this season,” says Rowe.

"We should be okay in that having qualified for Europe gives us that bit of an underwrite and that put us in the position of setting a reasonable budget but I suspect a lot of other clubs will have been cutting back because they really don't know how much money they will have over the course of the year as a whole."

Clubs continue to receive substantial help from the Government with paying their wages and those in the Premier Division have been guaranteed between around €225,000 and €350,000 from the association to help get them through the season.

Parent company

Season ticket revenue, and the fact that fans generally forgave it, was a positive factor across the league and without supporters being allowed back into grounds before the end of the campaign, that revenue is expected to be very significantly down this time around.

St Patrick’s Athletic, meanwhile, which is ultimately owned by Garrett Kelleher, has reported a loss of just under €50,000 for last year although the club provides less detail in its returns than Sligo Rovers and the situation is complicated by its ownership structure. In 2020, the accounts state, its parent company, Mancar Ltd, wrote off €350,000 of the club’s debt to it.

The figures highlight the sort of gap that generally exists between member -owned clubs and those supported by wealthy individuals or their business interests.

The support provided by Peak6 (Dundalk), the likes of Ray Wilson and Dermot Desmond (Shamrock Rovers) Lee Power (Waterford) Philip O'Doherty (Derry City) Niall O'Driscoll (Bray Wanderers) and Kelleher or by companies they control has helped to maintain stability at clubs that would have otherwise been trading at a substantial collective loss even before the pandemic struck.

Financial returns suggest a collective deficit of around €7 million over the course of four seasons from 2016 to 2019 before these contributions

The supports received include the likes of Wilson writing off €1 million owed to him by Shamrock Rovers in 2019, O'Doherty providing much the same in backing for Derry City over the wider period and Pat O'Sullivan putting substantially more into Limerick, much of it through a company called Paramek.

Looking beyond the pandemic, there is some optimism around the clubs that they can operate in a more sustainable way although substantial investment in required in order to improve revenue streams.

Uefa’s most recent club football benchmarking report, which covers 2018, suggests that sides here are particularly reliant on gate receipts (28 per cent of combined top tier revenues of €15 million), and owner/supporter backing while the just 16 per cent of revenue that year earned from European competition highlights the difficulties encountered on that front.

Dundalk did better last season with the club likely to have grossed around €4 million from its participation in Champions League qualifying and the group stage of the Europa League and the prospects of League of Ireland clubs being able to generate significant sums should improve with the introduction this year of the Europa Conference League.

There is, as ever these days, uncertainty about the longer-term future of the club competitions, however, as the continent’s richest sides repeatedly look to change formats in order to maximise their own returns and the current structures are only certain to be in place for the next three years.

Better relationship

More timely payment to clubs of the prize money involved is one benefit of a better relationship between clubs and the FAI, one that it is hoped will also yield more revenue from commercial deals over coming years.

Improving the transfer landscape is critical to future growth, though, with recent moves for the likes of Luke McNally and Aaron McEneff, which yielded low six-figure fees for St Patrick's and Shamrock Rovers respectively as well the triggering of a sell-on clause for Matt Doherty which is believed to have earned Bohemians a net figure of around €1.2 million, demonstrating the potential of clubs to substantial sums from sales.

With Brexit ensuring that many young players will stay at home for a couple more years, there is clearly an opportunity for clubs to change the basis on which they ultimately send them away.

Developing talent here requires substantial investment, though, and whatever about 2020 not having been the disaster that many initially feared, coronavirus will continue to generate challenges and uncertainty meaning that any widespread overhaul of infrastructure will require the backing of the association and, somewhat inevitably, the Government.