A good crisis shouldn’t be wasted. There are many lessons to learn from the coronavirus apocalypse, but FC Bayern and German football need to get out of it before we can come to firm and lasting conclusions.
I advocate restarting matches behind closed doors as soon as health authorities give leagues the green light. Why? Financial and economic logic must be explored to understand this stance.
Stability in Munich
Let’s start by reassuring anxious fans of the Bavarian club. The state of FCB’s finances is solid. The company that runs the team turns a profit and puts money in the bank. A behaviour that many find disturbing comes in handy today.
Potential loss of revenue from ticket sales, television rights, commercial activities and sponsorships is not about to make the club less competitive since other European giants are taking the same hit with more precarious finances. The Reds may actually be in a better position than others when getting out of the crisis due to what follows.
It’s the economy, stupid
Football clubs are run differently than households, but financial health is financial health. Whether you are a person or a corporation, your habits will make you escape safely or collapse in miserable times.
In normal circumstances, you can afford to take risks and borrow money. Such short-term management can help fulfill ambition. Clubs use multiple streams of income such as ticket sales, TV rights, merchandising and sponsorships to keep the boat afloat. Ordinary people generally need jobs to achieve the same. As long as they bring the bacon home, they can afford interest payments and refinancing rounds.
What happens when income dries up? The state of the balance sheet determines in what shape you will get out of the crisis… if you do so at all.
FC Bayern may have to use cash reserves to handle any obligation that remains until matches resume. Saving in sunny days helps them shine in stormy weather. The same happens to any person who has plenty of savings. A financial cushion helps them ride it out during a crisis.
The same cannot be said about those who are fragile or in debt. It’s only a matter of weeks or months before they depend on bank forgiveness and government schemes to avoid going bust. Some may be bankrupt even if they receive help.
German clubs face that predicament. Many are too small to have a stash of cash. Some owe money instead. Employees have the same problems than anyone who has been laid off in the wake of the crisis.
Make no mistake there: not everyone in football receives the weekly wages of a Thomas Müller. A regular worker who gravitates around the sport is anything but rich, and that includes players outside of the top flight. Such people need business to return to “normal” as soon as governments say “go ahead.”
Not the same but…
Arguably, fans and pundits alike will argue that holding Bundesliga, Champions League and DFB-Pokal matches in empty stadiums would be a pity.
Correct. Without atmosphere, matches don’t feel the same. Part of the soul of the game has been sucked out.
However, the very survival of that soul is at stake because we cannot skate around economics. It’s always the smallest and most vulnerable who take the biggest knockdowns when the you-know-what hits the fans. Some won’t get up at all.
German football prides itself on having a soul: local clubs in a multi-tier system of regional and national leagues, from the fifth division to the Bundesliga. There are also youth ranks at small clubs, women’s leagues, and so on. Most of them are not as financially secure as the first team at FC Bayern, which earns TV money and generates more commercial sales. They need a show of solidarity.
If we want the soul of German football to survive, matches and revenue have to come back to the fore as soon as it can be done safely. Atmosphere be damned.
Hard lessons and solidarity
We should learn four lessons from the crisis.
- Clubs need to run the business as sustainably as possible. Acting as if there would never be a crisis means paying the highest price when one hits;
- A form of temporary revenue sharing from the upper tier to the lower tiers should be considered if it gets dire. Large clubs could be involved since they largely feed on that system to find the young stars of tomorrow;
- Governments have mishandled the coronavirus situation. They didn’t take it seriously. When it became global, they took several weeks to act and failed at telling people that even a cotton face mask can prevent spreading the disease. Hasn’t anyone learned anything from nearly 20 years of pandemic in Asian countries? Don’t be stupid; wear a mask;
- Pandemics have been around humanity forever and they are here to stay even if we inject more sustainability in the world economy. What do we do about that? Plan better for the future to limit the damage.
Don’t put your head in the sand. This crisis has exposed many shortcomings in sports and in the world at large. Now is a good time to reflect and get ready for action.