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COVID CRISIS 2020 IN FOOTBALL
Issue 3
Governance, Decision Making &
Football Economy
7 May 2020
Index
1 First Response
ā€¢ Introduction
ā€¢ FIFA Covid-19 Timeline
ā€¢ UEFA Covid-19 Timeline
2
Covid-19 recovery and lessons
from the unfolding crisis
ā€¢ Football economy and resilience
ā€¢ Thoughts on potential solutions to the
challenges in the football economy
ā€¢ Spotlight on state support
ā€¢ Disrupting the current revenue model:
Finding new ways to increase
revenues
4
Structure of the football industry
ā€¢ Covid-19 Response Phases
ā€¢ Football club quick Covid-19 stability
checklist
ā€¢ Challenges with how decisions are
made in football currently
ā€¢ Proposed solutions to meet the
challenges in governance
02
07
10..................
................
...............................................
Scenarios
3
...................................................... 15
ā€¢ Covid-19 return scenarios
ā€¢ Three possible strategic pathways for
the football industry post-Covid
First Response
Football has traditionally been organised as a self-governing and self-regulating
system. Everything is based on the acceptance by all participants of a general set
of arbitrary rules (e.g. laws of the game), recognition of the sole authority of the
vertically-organised governing bodies and a focus on consensus or acceptance-
based decisions by all participants in the ecosystem.
This development path has meant that football bodies have accumulated in-house
activities. Over time, with the industry growing in complexity and increasing its
commercial footprint, governing bodies have amassed many different functions
beyond the initial regulatory and competition organisation ones. On one hand this
means that the football industry generally has been able to attract many passionate
professionals driven by authentic interest in the game, while in some parts people
with less holistic expertise or narrowed to one specific area have taken control,
limiting perspectives for the sector as a whole.
Access to ordinary justice mechanisms for resolving internal football issues
is very much discouraged within the industry.
This is being prevented both by convention and regulatory means, but until recently
most conflict resolution and arbitration was done by football associations and leagues
for their own members. Some steps have been taken by the emergence of an
independent Court of Arbitration for Sport, untied from its links with the International
Olympic Committee, and the creation of domestic sport dispute resolution bodies, but
this is by no means prevalent across the world. Football governance systems in many
cases continue to be arcane and reflect realities of the first half of the 20th century at
best.
2
Very often, governance structures of football at national and international level
are lagging well behind optimal corporate or even association governance
practice.
Major football organisations have incorporated such disparate and even conflicting areas
of responsibility as competition organisation and administration, regulation, arbitration,
membership support, commercial rights management, education or licensing. One can
easily imagine someone writing the rules to a competition, organising it, controlling
access to it, solving conflicts, judging compliance, selling commercial properties,
improving quality of management and organisation within membership, and even carrying
out education and certification of compulsory personnel.
Introduction
Self-regulation and self-governance are considered critical pillars of the football
industry, enshrined in Articles 14, 15 and especially 19 of the FIFA Statutes, for
example, whereas the linear hierarchical organisational structure is explicitly
mentioned in Article 11.
This has not prevented football in general across the world of benefitting from third-
party financial support, including state sponsorship and large-scale investment.
Although associations in some countries have been more connected with their
respective national governments than others, it has always been done in such a
way that on the surface independence has been preserved. Otherwise, international
governing bodies have typically been very quick to issue warnings or even suspend
national associations deemed in breach of this fundamental principle.
External intervention in the football industry has been fairly rare over the years, but
when it has happened, it has usually produced momentous shocks to the system.
For instance like the Bosman ruling in the 1990s, or the move towards selling media
rights in packages rather than as a bloc to a single bidder, which was not a strategic
business choice but rather stemmed from an intervention by the European
Commission. Overall external intervention from authorities, sometimes without
accurate sports expertise and football knowledge, may have led to producing the
opposite effect than desired.
Nevertheless, the Covid-19 (SARS-CoV-2) crisis in 2020 has seen widespread
influence of national governments on the running of their respective football
systems, going as far as preventing football from functioning at all due to its non-
critical nature as part of the entertainment and leisure industry with a high degree of
inter-personal contact. The fall-out from this widespread influence is only now
beginning to receive fuller appreciation, whilst the effects of this extraordinary turn
of events will most likely not be completely understood until many years have
passed.
The ideas developed below are also related to womenā€™s football, but the Issue 4 will
specifically focus on womenā€™s football in greater detail, concentrating on specific
impacts of Covid-19 on the womenā€™s game, and potential development scenarios.
3
Timelines
30 January 2020 āˆ’ FIFA contacts
stakeholders about the impact of the
dislocation of Womenā€™s Olympic qualifier
matches from Wuhan to Nanjing and then
to Australia, including an extension to the
international period due to the 14-day
quarantine of the Chinese team
21 February 2020 āˆ’ The Chinese
national menā€™s team's World Cup
2022 qualifiers against the Maldives
and Guam is moved to Thailand
due to Covid-19 outbreak in China
11 March 2020 āˆ’ FIFA reschedules
its Congress from June to
September, and its Council meeting
from March to June/July 2020
13 March 2020 āˆ’ FIFA President
Gianni Infantino visits the World
Health Organisation to discuss
with its President how football can
help the fight against Covid-19
17 March 2020 āˆ’ FIFA President Gianni
Infantino issues a statement confirming
support to postpone major international
football competitions including Euro 2020,
Copa America 2020 and Club World Cup
2021, as well as announcing a monetary
contribution to WHO, a potential football
support fund and the start of a
consultation process concerning player
status and contract regulations
FIFA
3 April 2020 āˆ’ FIFA-Confederations
Covid-19 working group proposes to
suspend the June 2020 international
match window, organise
consultations on rescheduling of
qualifiers for WC2022, postpone
various women's tournaments and to
create a sub-working group looking at
the women's international calendar
21 April 2020 āˆ’ FIFA confirms
fulfilment of $1bn investment plan in
womenā€™s football for 2019-2022
7 April 2020 āˆ’ FIFA issues legal
guidelines on the consequences of Covid-
19, particularly focusing on player contracts
and transfer windows, encouraging players
and clubs to work together but highlighting
that solutions will need to be found
primarily on the national level
10 April 2020 āˆ’ FIFA President
Gianni Infantino issues a video to
member associations, identifying three
priorities for FIFA to support football
during and after Covid-19:
health comes first, FIFAā€™s help to
football and consultation regarding
future evolution of the sport
24 April 2020 āˆ’ FIFA announces it
will proceed immediately to issue
ā€œoperational fundingā€ due for years
2019 and 2020 to its member
associations, amounting to around
$150m
4
19 February 2020 āˆ’ Three days prior
to the first lockdown measures
werebeing introduced in Northern Italy
by the Authorities, Atalanta plays
Valencia in Milan in front of more than
40ā€™000 spectators. This becomes a
major source of infection, but nobody is
fully aware of this at the time, despite
news of the infection already circulating
in the media and society
24 February 2020 āˆ’ Inter
announces that their UEFA
Europa League match against
Ludogorets in Milan on 27
February will be played behind
closed doors, ā€œin accordance with
the requirements of the health
authorities in the Region of
Lombardy and the Municipality of
Milan and with the agreement of
UEFAā€
3 March 2020 āˆ’ UEFAā€™s 44th
Ordinary Congress is held in
Amsterdam. UEFA President
Aleksander Ceferin asks to be
ā€œoptimistic and not think of dark
scenariosā€ over the virus threat; UEFA
General Secretary Theodore
Theodoridis announces the creation
of a consultation group with European
Leagues but calls for a ā€œcase by caseā€
approach
UEFA
5
5 March 2020 āˆ’ It is announced
that the return leg of Valencia vs
Atalanta in Valencia is to be
played behind closed doors
following the demand of Spainā€™s
Ministry of Health
8 March 2020 āˆ’ UEFA bans
handshakes between players and
officials in all its competitions until
further notice
9-10 March 2020 āˆ’ Various
matches in Europa League and
Champions League are announced
to be played behind closed doors
11 March 2020 ā€“ UEFA announces
that Sevilla vs AS Roma and Inter vs
Getafe will not take place following the
imposition of travel restrictions between
Spain and Italy by the Spanish
Government
The Liverpool vs AtlƩtico de Madrid
Champions League match goes ahead
with spectators at Anfield in Liverpool
12 March 2020 ā€“ The second leg of
Manchester City vs Real Madrid in
Champions League on 17 March is
postponed, as Real Madridā€™s first
team squad is quarantined following
the positive test for Coronavirus of a
senior basketball player at the club
UEFA announces a meeting of
European football stakeholders on
17 March to discuss the developing
Coronavirus situation
UEFA announces the postponement
of all its elite U17 and U19
tournaments scheduled between
March and April 2020
12 March 2020 āˆ’ Ä°stanbul Başakşehir
vs FC Copenhagen and Glasgow
Rangers vs Bayer Leverkusen in the
Europa League are played with
spectators, all other matches of the day
are played behind closed doors
15 March 2020 āˆ’ UEFA
announces that all its club
competition matches scheduled
for the following week are
postponed until further notice
17 March 2020 āˆ’ UEFA announces a
joint resolution on Covid-19 response
together with ECA, EL and FIFPro,
including provisions to postpone
Euro-2020 to 2021, a commitment to
complete domestic and European
seasons by 30 June 2020 should the
situation allow it, and the creation of
two working groups: one on calendar
dislocation and another on economic,
financial and regulatory impacts
23 March 2020 āˆ’ UEFA
announces the postponement
of the finals of Champions
League, Womenā€™s Champions
League and Europa League to
an unspecified date
1 April 2020 ā€“ UEFA formally announces
the suspension of matches in all its
competitions, and agrees that the
ā€œcurrent exceptional circumstances
necessitate some specific interventions
to facilitate the work of national
associations and clubsā€
16 April 2020 ā€“ UEFA calls to an
ā€œinformation meetingā€ with General
Secretaries of its national associations
on 21 April and a UEFA Executive
Committee meeting on 23 April, where
the plans for the remainder of the
season are to be discussed
20 April 2020 ā€“ UEFA President
Aleksander Ceferin reiterates in an
interview with Corriere della Sera
that it is ā€œtoo early to say that we
cannot finish the [current] seasonā€
2 April 2020 ā€“ UEFA issues a
joint letter to all their national
associations also signed by
ECA and EL, confirming that it is
working on a plan to resume
competitions by July or August,
and saying that abandoning or
finalising domestic competitions
as they are would be
ā€œprematureā€ for the time being
23 April 2020
ā€¢ UEFA announces a new medical subgroup to look at health issues surrounding return to
play and link work already done by clubs and leagues. National associations are strongly
urged to try and complete their leagues and cup competitions and a Guideline on Eligibility
Principles for 2020/21 UEFA club competitions is issued It is announced that Euro 2020 will
keep its original name
ā€¢ UEFA announces early payment of compensation for release of players to national teams
during Euro 2020 qualifiers amounting to ā‚¬70m
ā€¢ UEFA officially announces that the Womenā€™s Euro Championship is moved from summer
2021 to 2022
6
Provided the match itself can be played, there are no indications that the market
will fundamentally alter following the crisis. The main question is going to be
around the growth or reduction of importance of different inputs, such as ticketing
or broadcasting.
Structure of the football industry
There is also a fairly small but developing B2B service market, which at the moment
is rather limited to innovation and technology hubs launched by football clubs and
governing bodies. In that way, it is run as a shared service provision amongst club
groups with common ownership, and know-how consultancy, particularly in
specialist areas such as youth development, but that is practiced by a very limited
number of actors with a holistic approach.
Football economy and resilience
7
Modern football economy is based on several income streams, as explained in the
diagram. But in the end, it can all be brought back to two key sources:
Supporters, bringing direct revenue via tickets and merchandising, but also indirect via
subscriptions to broadcasters and via consumption of brands.
Player talent, which is at the core of the content, enabling clubs to generate transfer fees.
Spotlight on state support
Traditionally football has been happy to take as much as possible from the state
(economic breaks, favourable taxation regimes, infrastructure development) but
has staunchly protected its independent governance, at least on the surface.
In the current health crisis, government involvement has been deeply felt within
football globally, to the extent that football activity has been effectively ā€œbannedā€
due to the pandemic, and any restart is conditioned by state-level approval.
Individual national associations and leagues may be more welcoming to increased
government involvement in the football industry going forward. Nevertheless, it will
remain to be seen what the state authorities would want in return, and whether the
previous approach with ensuring independence from the sate will be maintained,
or full government involvement would become more acceptable.
8
1. Generate crisis planning scenarios and undertake risk
assessment and risk management regularly
2. Business models may need to change: widening portfolio of
activities to be less dependent on the ā€œfootball matchā€ could be one
option to consider
3. Secure cash-flow for a full season
5. Be prepared for a new stoppage due to health or another crisis
6. Be more aware of non-football influence on football
ļƒž get out of your bubble!
7. Strengthen cooperation with clubs and stakeholders outside of the
domestic environment, generating horizontal and vertical connectivity
within the industry by sharing ideas, building capacities, generating a
bigger football economy
Thoughts on potential solutions to challenges of the football
economy:
4. Disrupt more, and more often
Disrupting the current revenue model:
Finding new ways to increase revenues
9
Youth development as a source
of revenue and ā€œraison dā€™ĆŖtreā€ for
many clubs. Paid transfer activity
is expected to be reduced with
lower fees and more free players
on the market. But wages will
most likely be driven down as
well. Will player-developing
clubs be able to find a new
equilibrium where their costs will
balance against the new
reduced revenues, thereby
creating a newly sustainable
business model? Will the market
need as many players coming
into the game if there is going to
be professional clubs
disappearing or reducing their
status?
New watching and experiencing
habits. People who are no longer
able to go to the stadium may
turn to watch match broadcasts
instead, and a reduction in
stadium capacity may lead to
higher match day revenues
through a transition to more
hospitality-oriented service rather
than the basic stand seating.
One area of growing significance
may be the B2B service market,
which most likely will see some
additional development as clubs
seek to diversify their operations.
Another area that is currently
seeing an uplift is the provision
of social and community
services. Clubs have quickly
realised that they need to remain
relevant during the ongoing
crisis, and without games or
match-related visibility their only
real outlet is their local
community and media
Focus on new sponsor
industries: IT and online,
pharmaceuticals, health and
wellbeing
Focus on new owners: Middle
East, Asia, Africa? Smaller but
more stable clubs taking over
larger clubs where owners canā€™t
sustain investment?
Covid-19 recovery and lessons from
the unfolding crisis
ā€¢ Ensure
business
continuity
ā€¢ Show
solidarity
ā€¢ Preserve
ā€¢ Increase flexibility
and business
resilience
ā€¢ Pivot to online
ā€¢ Adapt product
value proposition
ā€¢ Review operating
model
ā€¢ Explore M&A
ā€¢ Capture pent-up
demand with targeted
customer
propositions
ā€¢ Refine business
resilience
ā€¢ Identify key drivers of
the end game
ā€¢ Adjust cost and
operating models to
ā€œnew normalā€
ā€¢ Plan for potential
aftershocks
ā€¢ Pursue large-scale
organic and inorganic
opportunities for
growth
Covid-19 response phases
Clamp down Emerge Catch up End Game
TODAY
Reality/ size
of catch-up
Speed of
restart
Trough timing
Catch-up timing
CATCH UP
TROUGH
Pre-Covid-19
Trough
depth
Restart
Relapse
ā€œPoint of
confidenceā€
2- 4- 6 months 6 months- 3 years
Depth and length of
any extended
recession
Post-crisis
evolution
MAJOR UNCERTAINTIES
Source: LTT Sports Germany DT
10
Football club quick Covid-19 stability checklist
4) Size and development
level of domestic
football industry
5) Supporter base
6) Management quality
8) Available assets
9) Access to fresh
working capital
7) Business model
1) Cash reserves
2) Ownership status
3) Size and development
level of domestic economy
10) Covid-related state
support package
11
ļƒžQuicker recovery period and return to normal function
ļƒžBetter contingency mechanisms
ļƒžMerger and acquisition mechanisms
ļƒžMonopolisation of talent development networks
The crisis has highlighted some major issues with the governance
and decision-making systems at international and domestic level
12
ā€¢ Little leadership was shown by the ā€œtop of the pyramid bodiesā€ in the early stages of
the crisis ā€“ both in terms of acting themselves and in terms of providing suitable
guidance to the national bodies for ways to proactively deal with the situation
ā€¢ Inherent conflict between taking on enough authority to impose transnational
regulatory regimes (e.g. transfer regulations or FFP) and at the same time not taking
on responsibility for a generalised crisis response by leaving football to deal with it at
national level as much as possible Will this create a reputational deficit in future?
ā€¢ Some of the decision-makers involved in the process are looking for rather short-term
solutions as they might not be in the football industry in the next few years, but still
have a huge influence on the football of the future
ā€¢ The main solution seems to be waiting to see how the situation develops, and the
main tool is distribution of money to members
Smaller leagues and clubs will carry on, but their weight within the total market may
reduce further, together with their level of independence and impact on global
decision-making, leading to a general situation of instability and ownership turnover.
The same situation may well be mirrored across the different lands. Larger well
managed clubs will have a better chance of successful continuity, as long as they
engage in rational management processes and operate in a generally sustainable
way based on adequate information inputs and planning.
However, it does not mean that some larger clubs would not fall victim to the crisis.
It all depends on the risk levels contained within their existing business model,
quality of their management, and resilience of their structure and organisation.
Conversely, larger clubs also take on larger business risks, therefore any fall might
be felt more in case it happens.
One thing that seems likely is that, except for the very top level, clubs will need to
re-focus their attention domestically. Signing foreign players could become more
difficult, and even travel abroad for training camps, which has become standard
practice at all levels in recent years, may no longer be affordable at the middle and
lower level of clubs, leading to a lack of international projection.
Larger and more sustainable leagues/individual clubs will have the resources and
capacity to increase their dominance through
3) At the same time, lack of leadership in crisis times is also extremely dangerous,
especially for longer-term sustainability and development
4) Small groups have been largely underrepresented
5) Large groups (with all stakeholders present) are unwieldy and difficult to
organise in a constructive way, but serve well for PR purposes by demonstrating
consensus
6) There is a lack of intelligence gathering and analytical capacity generally within
football. At the same time, some parties have developed it more than others,
and try to take advantage, whilst nominally being on the same level as others
without it
Challenges with how decisions are made in football currently
1) Normal approach to governance at domestic and international level is universally
replicated; boards are typically composed of representatives of the members of
those bodies. In case of associations it would be of the different stakeholders
within the ecosystem (usually based on outdated power balance pictures), and
in the case of leagues it will be representatives of member clubs. Under normal
circumstances it is possible to make this process work (of course, there will
always be those who are more or less satisfied with the outcome), but in times
of existential crisis it becomes clear that such bodies suffer from a legitimacy
deficit. Those elected are typically (and naturally, as survival is at stake!) guided
by self-interest of the primary organisation or the club they represent and their
specific situation at that precise moment, rather than wider interests of the game
as a whole. This will either create a conflict of interest in the decision-making
process, or a lack of representativeness
2) Any attempt at crisis leadership can be easily compromised by identifying the
individual interest in the proposed course of action or solution, because
decision-makers in football are typically also practitioners (see above)
13
7) Typically, people in decision-making position within the industry have broadly
similar backgrounds and outlooks, meaning that there is usually a uniformity of
opinions or a ā€œstandardisedā€ approach to how situations are viewed
8) Some key stakeholders of the football industry value chain are generally either
completely absent from the decision-making process, or have only token
presence
9) ā€œGuidedā€ or ā€œrailroadedā€ process and decision making, which is typical for
football, relies on a small minority having the authority, capacity and information
to make and implement decisions
10) Generally, there is a lack of business continuity planning within the industry,
independently of organisational development level
14
Proposed solutions to meet the challenges in governance
Develop and accommodate mechanisms within the regulatory framework for
fast creation of thematic expert groups or task forces, and establish dynamic
pan-European or global lists of competent experts in various fields to be able
to join such groups
Strive for a thorough separation of powers to limit inherent conflict of interest.
Ensure that competition organisation and administration are completely
separate from their commercialisation, and in turn the two are separated from
regulatory authorities
Have mechanisms ready for outsourcing decision-preparation processes on
particularly sensitive issues to competent external groups (i.e. a kind of jury
or task force, which will get full information on the problem at hand and will
be able to propose positive solutions in an objective and disinterested way,
rather than being tangled up in webs of individual self-interest)
1
2
3
Ensure a greater diversity across all levels of decision-making. This can be
done for instance through a more frequent use of independent or non-
executive board members, who can provide a competent and objective view of
the situation, rather than constantly falling into the trap of confirmation bias.
Including individuals of all backgrounds who are not stereotypical of the
football industry, will intrinsically increase diversity of opinions.
Introduce wide-ranging, universal and accessible dynamic business
information collection and analysis mechanisms across associations and
leagues domestically and internationally based on mutual interest and
collective input, to increase the quality of business intelligence, analysis and
planning available to individual actors in the game, as well as a live horizontal
industry-wide view
4
5
Scenarios:
1. Return to ā€œnormalā€ over summer 2020 and thereafter Covid
becoming a seasonal reality
āˆ’ Catch up and adapt seasonal fixture list to new reality, bearing in mind likely delay to
start of season 2020/21 domestically and internationally, as well as the need to finish
the season early to accommodate Euro 2020, Copa America and the Olympic
football tournament amongst others + take into account potential close-downs during
the course of the new season. Long-term, there will be a need to review number of
fixtures in a given season to ensure there is flexibility and scope to postpone or
dislocate matches ļƒž more focus on domestic and even regional football!
āˆ’ A need for readiness to pause or dislocate activities at short notice for a relatively
lengthy period (e.g. in case of quarantine or regional outbreak)
āˆ’ New approaches to stadia: hygiene, social distancing, zoning
āˆ’ Balance between presential and broadcast content delivery
āˆ’ Changes in talent market: transfer prices will go down as clubs are unwilling to
commit such large amounts as at the peak of transfer spending in recent years, but
salaries will also be reduced to reflect the current economic reality of the market.
Therefore, own development of talent will become more of a priority, as it always
does in times of economic and structural difficulty for football clubs
āˆ’ ā€œCovid-freeā€ industry:
o Testing and screening (technology, quality assurance)
o New kinds of infrastructure
ā–Ŗ ā€œClean zonesā€ in stadia
ā–Ŗ Even less contact between players and society
ā–Ŗ Special infrastructure prepared to host matches for broadcast at
short notice (e.g. hotel resorts with football facilities ready to host
matches in case of dislocation from ā€œhomeā€) to minimise
broadcast disruption
o Lifestyle of key performers (e.g. players, referees)
āˆ’ Vaccine development
o Full return to ā€œnormalā€ only possible when working vaccine is developed
and successfully introduced
o Variation will still be possible between different countries in terms of
vaccination rates or implementation of different zoning on a worldwide
basis, therefore creating additional challenges for cross-border matches
15
3. Covid-19 disappears completely by summer, never to return
again
āˆ’ Dream scenario for football and the world
āˆ’ Economic and social impact of the last few months will still be felt very painfully for
years to come and noticeable through:
o Economic downturn
o Change in spending priorities
o Change in working practices
o Change in social habits
o Post-traumatic stress
āˆ’ Football clubs that had a distressed economic situation will still be likely to collapse
in the short term even with the existing level of impact. Although some might
disappear completely, most likely new owners will appear to take them over,
particularly in countries where there is significant state ownership, as the state has
to deal with the aftermath of the Covid-19 crisis on a wider scale and football could
lose its priority status
āˆ’ The impact on grassroots football will be unpredictable. From kids no longer playing
football because they have lost the habit or the interest, to volunteer coaches or
team organisers no longer there or no longer able to provide as much time as
before, due to individual challenging circumstances
āˆ’ Club owners and managers will be conditioned by the crisis experience in their
planning, but complete risk aversion is a very expensive choice
2. Return to ā€œnormalā€ over the summer is cut short by a second
wave, which prevents completing season 2019/20 and start of
season 2020/21 with uncertain outlook
āˆ’ Economic pressure on clubs of all sizes and business structures will become
extreme
āˆ’ Fixture pile up will eventually become unmanageable, potentially reaching a stage
where it will no longer be viable to accommodate rescheduling once the crisis
reaches its conclusion, leading to major choices having to be made (e.g. having to
choose between Euro 2020 or World Cup 2022)
āˆ’ Whilst staff contracts will be normally accommodated within state furlough systems
(until when!?), player contracts, registrations and status will need to be examined
further
āˆ’ Sport broadcasting industry will see some significant long-term negative impact
āˆ’ Need to ā€œmothballā€ unused infrastructure
āˆ’ Overall impact on the wider economy will be unprecedented and unpredictable
āˆ’ Psychological state of individuals will be generally negative due to unrealised hopes
of a relatively quick exit, and this will affect potential recovery
16
LTT Sports Insight: Three possible strategic
pathways for the football industry post-Covid
ā€œCircular Economyā€
The internationalisation of football will make it emerge as a more global product based on
the closed league model similar to Formula 1. As more events will be concentrated on
premium quality, cost and talent inflow rationalisation will become even more crucial, so
the large clubs participating in the international circuit will create their own economy chain,
based on a pyramid club network. The franchises will play in the most valued leagues and
a set of clubs and supply organisations will be directly linked to them in smaller-sized
markets to provide locally trained talent, test technologies or tactics, and a supply of fans
of the ā€œcoreā€ club.
17
ā€œSecured Leaguesā€
Following the example of the league in Mexico that decided to switch from a promotion
and relegation model to a closed league for the next five years, the economic insecurity
leads the industry to look even more carefully at the US model of sport business.
In such a model clubs are ā€œbusiness partners off the field, competitors on the fieldā€, and
when you own a team, you own a share of the league. Therefore you care about the whole
league. In order to increase the value of the market, you also have to mutualise the risks,
give up cannibalisation and limit your market to a certain radius.
In Europe, traditionally there is a link between professional and amateur football, and it
sounds less feasible. But the Covid-19 crisis could serve to open some eyes of club
owners to the benefits of a ā€œsecuredā€ league, leading to a reassessment of the benefits of
the US sports model, particularly focusing on the business side of the industry, as
relegation jeopardises the economic stability of clubs.
ā€œeDevelopment and Digitalisationā€
The lockdown period allows stakeholders to accelerate the digitalisation process, leading
to stronger digital presence, sponsorship visibility and introduction of more remote activity
in the game (acoustic ā€œsupporterā€ system, referee voice). Infrastructure of stadia will
change and be readapted (see Club Affairs ā€œReturn To Playā€ measures or Fenwick
Iribarren architectural design studio opinion) allowing a different presence and flow of
supporters in the stadium with a disappearance of separate ā€œordinary seatsā€ and VIP
zones, as the whole stadium becomes focused on hospitality and guaranteed Covid-free
individualized premium experiences. In-stadium and at-home versions of watching football
morph into each other in the middle with the growth of VR and personalization, and
immediate on-demand consumption of associated products becomes part of the overall
approach.
18
LTT Sports constructs bespoke solutions based on football expertise from the
inside and corporate industry standards from the outside at strategy, operational
and field levels, as well as a visionary conceptual understanding of the universally
shared needs of the football industry in a fast-evolving landscape.
Follow us for further insights:
linkedin.com/company/lttsports/
twitter.com/LTTsports
Ā© Copyright throughout this work is vested with LTT Sports and all rights are reserved.
Reproduction is authorised provided the source is acknowledged. For any use or
reproduction of graphics, permission must be sought directly from the copyright holders.
All information is provided in good faith and whilst every effort has been made to ensure
the accuracy of the information supplied herein, LTT Sports cannot be held responsible for
any errors or omissions. LTT Sports shall not be held liable for any damages or losses
arising from the use of any material contained in this work, or from any resulting action or
decision.
Konstantin Kornakov
Strategy Council Member
konstantin@lttsports.com
Edinburgh, UK
Konrad Gozdzior
Strategy Council Member
konrad@lttsports.com
Geneva, Switzerland
Siri Wallenius
Managing Partner
siri@clubaffairs.ch
Geneva, Switzerland
Olivier Jarosz
Managing Partner
olivier@clubaffairs.ch
Geneva, Switzerland
Contributors to this Issue:
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additional information
please write to us:
admin@lttsports.com

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Covid Crisis Impacts on Football Governance

  • 1. COVID CRISIS 2020 IN FOOTBALL Issue 3 Governance, Decision Making & Football Economy 7 May 2020
  • 2. Index 1 First Response ā€¢ Introduction ā€¢ FIFA Covid-19 Timeline ā€¢ UEFA Covid-19 Timeline 2 Covid-19 recovery and lessons from the unfolding crisis ā€¢ Football economy and resilience ā€¢ Thoughts on potential solutions to the challenges in the football economy ā€¢ Spotlight on state support ā€¢ Disrupting the current revenue model: Finding new ways to increase revenues 4 Structure of the football industry ā€¢ Covid-19 Response Phases ā€¢ Football club quick Covid-19 stability checklist ā€¢ Challenges with how decisions are made in football currently ā€¢ Proposed solutions to meet the challenges in governance 02 07 10.................. ................ ............................................... Scenarios 3 ...................................................... 15 ā€¢ Covid-19 return scenarios ā€¢ Three possible strategic pathways for the football industry post-Covid
  • 3. First Response Football has traditionally been organised as a self-governing and self-regulating system. Everything is based on the acceptance by all participants of a general set of arbitrary rules (e.g. laws of the game), recognition of the sole authority of the vertically-organised governing bodies and a focus on consensus or acceptance- based decisions by all participants in the ecosystem. This development path has meant that football bodies have accumulated in-house activities. Over time, with the industry growing in complexity and increasing its commercial footprint, governing bodies have amassed many different functions beyond the initial regulatory and competition organisation ones. On one hand this means that the football industry generally has been able to attract many passionate professionals driven by authentic interest in the game, while in some parts people with less holistic expertise or narrowed to one specific area have taken control, limiting perspectives for the sector as a whole. Access to ordinary justice mechanisms for resolving internal football issues is very much discouraged within the industry. This is being prevented both by convention and regulatory means, but until recently most conflict resolution and arbitration was done by football associations and leagues for their own members. Some steps have been taken by the emergence of an independent Court of Arbitration for Sport, untied from its links with the International Olympic Committee, and the creation of domestic sport dispute resolution bodies, but this is by no means prevalent across the world. Football governance systems in many cases continue to be arcane and reflect realities of the first half of the 20th century at best. 2 Very often, governance structures of football at national and international level are lagging well behind optimal corporate or even association governance practice. Major football organisations have incorporated such disparate and even conflicting areas of responsibility as competition organisation and administration, regulation, arbitration, membership support, commercial rights management, education or licensing. One can easily imagine someone writing the rules to a competition, organising it, controlling access to it, solving conflicts, judging compliance, selling commercial properties, improving quality of management and organisation within membership, and even carrying out education and certification of compulsory personnel. Introduction
  • 4. Self-regulation and self-governance are considered critical pillars of the football industry, enshrined in Articles 14, 15 and especially 19 of the FIFA Statutes, for example, whereas the linear hierarchical organisational structure is explicitly mentioned in Article 11. This has not prevented football in general across the world of benefitting from third- party financial support, including state sponsorship and large-scale investment. Although associations in some countries have been more connected with their respective national governments than others, it has always been done in such a way that on the surface independence has been preserved. Otherwise, international governing bodies have typically been very quick to issue warnings or even suspend national associations deemed in breach of this fundamental principle. External intervention in the football industry has been fairly rare over the years, but when it has happened, it has usually produced momentous shocks to the system. For instance like the Bosman ruling in the 1990s, or the move towards selling media rights in packages rather than as a bloc to a single bidder, which was not a strategic business choice but rather stemmed from an intervention by the European Commission. Overall external intervention from authorities, sometimes without accurate sports expertise and football knowledge, may have led to producing the opposite effect than desired. Nevertheless, the Covid-19 (SARS-CoV-2) crisis in 2020 has seen widespread influence of national governments on the running of their respective football systems, going as far as preventing football from functioning at all due to its non- critical nature as part of the entertainment and leisure industry with a high degree of inter-personal contact. The fall-out from this widespread influence is only now beginning to receive fuller appreciation, whilst the effects of this extraordinary turn of events will most likely not be completely understood until many years have passed. The ideas developed below are also related to womenā€™s football, but the Issue 4 will specifically focus on womenā€™s football in greater detail, concentrating on specific impacts of Covid-19 on the womenā€™s game, and potential development scenarios. 3
  • 5. Timelines 30 January 2020 āˆ’ FIFA contacts stakeholders about the impact of the dislocation of Womenā€™s Olympic qualifier matches from Wuhan to Nanjing and then to Australia, including an extension to the international period due to the 14-day quarantine of the Chinese team 21 February 2020 āˆ’ The Chinese national menā€™s team's World Cup 2022 qualifiers against the Maldives and Guam is moved to Thailand due to Covid-19 outbreak in China 11 March 2020 āˆ’ FIFA reschedules its Congress from June to September, and its Council meeting from March to June/July 2020 13 March 2020 āˆ’ FIFA President Gianni Infantino visits the World Health Organisation to discuss with its President how football can help the fight against Covid-19 17 March 2020 āˆ’ FIFA President Gianni Infantino issues a statement confirming support to postpone major international football competitions including Euro 2020, Copa America 2020 and Club World Cup 2021, as well as announcing a monetary contribution to WHO, a potential football support fund and the start of a consultation process concerning player status and contract regulations FIFA 3 April 2020 āˆ’ FIFA-Confederations Covid-19 working group proposes to suspend the June 2020 international match window, organise consultations on rescheduling of qualifiers for WC2022, postpone various women's tournaments and to create a sub-working group looking at the women's international calendar 21 April 2020 āˆ’ FIFA confirms fulfilment of $1bn investment plan in womenā€™s football for 2019-2022 7 April 2020 āˆ’ FIFA issues legal guidelines on the consequences of Covid- 19, particularly focusing on player contracts and transfer windows, encouraging players and clubs to work together but highlighting that solutions will need to be found primarily on the national level 10 April 2020 āˆ’ FIFA President Gianni Infantino issues a video to member associations, identifying three priorities for FIFA to support football during and after Covid-19: health comes first, FIFAā€™s help to football and consultation regarding future evolution of the sport 24 April 2020 āˆ’ FIFA announces it will proceed immediately to issue ā€œoperational fundingā€ due for years 2019 and 2020 to its member associations, amounting to around $150m 4
  • 6. 19 February 2020 āˆ’ Three days prior to the first lockdown measures werebeing introduced in Northern Italy by the Authorities, Atalanta plays Valencia in Milan in front of more than 40ā€™000 spectators. This becomes a major source of infection, but nobody is fully aware of this at the time, despite news of the infection already circulating in the media and society 24 February 2020 āˆ’ Inter announces that their UEFA Europa League match against Ludogorets in Milan on 27 February will be played behind closed doors, ā€œin accordance with the requirements of the health authorities in the Region of Lombardy and the Municipality of Milan and with the agreement of UEFAā€ 3 March 2020 āˆ’ UEFAā€™s 44th Ordinary Congress is held in Amsterdam. UEFA President Aleksander Ceferin asks to be ā€œoptimistic and not think of dark scenariosā€ over the virus threat; UEFA General Secretary Theodore Theodoridis announces the creation of a consultation group with European Leagues but calls for a ā€œcase by caseā€ approach UEFA 5 5 March 2020 āˆ’ It is announced that the return leg of Valencia vs Atalanta in Valencia is to be played behind closed doors following the demand of Spainā€™s Ministry of Health 8 March 2020 āˆ’ UEFA bans handshakes between players and officials in all its competitions until further notice 9-10 March 2020 āˆ’ Various matches in Europa League and Champions League are announced to be played behind closed doors 11 March 2020 ā€“ UEFA announces that Sevilla vs AS Roma and Inter vs Getafe will not take place following the imposition of travel restrictions between Spain and Italy by the Spanish Government The Liverpool vs AtlĆ©tico de Madrid Champions League match goes ahead with spectators at Anfield in Liverpool 12 March 2020 ā€“ The second leg of Manchester City vs Real Madrid in Champions League on 17 March is postponed, as Real Madridā€™s first team squad is quarantined following the positive test for Coronavirus of a senior basketball player at the club UEFA announces a meeting of European football stakeholders on 17 March to discuss the developing Coronavirus situation UEFA announces the postponement of all its elite U17 and U19 tournaments scheduled between March and April 2020
  • 7. 12 March 2020 āˆ’ Ä°stanbul Başakşehir vs FC Copenhagen and Glasgow Rangers vs Bayer Leverkusen in the Europa League are played with spectators, all other matches of the day are played behind closed doors 15 March 2020 āˆ’ UEFA announces that all its club competition matches scheduled for the following week are postponed until further notice 17 March 2020 āˆ’ UEFA announces a joint resolution on Covid-19 response together with ECA, EL and FIFPro, including provisions to postpone Euro-2020 to 2021, a commitment to complete domestic and European seasons by 30 June 2020 should the situation allow it, and the creation of two working groups: one on calendar dislocation and another on economic, financial and regulatory impacts 23 March 2020 āˆ’ UEFA announces the postponement of the finals of Champions League, Womenā€™s Champions League and Europa League to an unspecified date 1 April 2020 ā€“ UEFA formally announces the suspension of matches in all its competitions, and agrees that the ā€œcurrent exceptional circumstances necessitate some specific interventions to facilitate the work of national associations and clubsā€ 16 April 2020 ā€“ UEFA calls to an ā€œinformation meetingā€ with General Secretaries of its national associations on 21 April and a UEFA Executive Committee meeting on 23 April, where the plans for the remainder of the season are to be discussed 20 April 2020 ā€“ UEFA President Aleksander Ceferin reiterates in an interview with Corriere della Sera that it is ā€œtoo early to say that we cannot finish the [current] seasonā€ 2 April 2020 ā€“ UEFA issues a joint letter to all their national associations also signed by ECA and EL, confirming that it is working on a plan to resume competitions by July or August, and saying that abandoning or finalising domestic competitions as they are would be ā€œprematureā€ for the time being 23 April 2020 ā€¢ UEFA announces a new medical subgroup to look at health issues surrounding return to play and link work already done by clubs and leagues. National associations are strongly urged to try and complete their leagues and cup competitions and a Guideline on Eligibility Principles for 2020/21 UEFA club competitions is issued It is announced that Euro 2020 will keep its original name ā€¢ UEFA announces early payment of compensation for release of players to national teams during Euro 2020 qualifiers amounting to ā‚¬70m ā€¢ UEFA officially announces that the Womenā€™s Euro Championship is moved from summer 2021 to 2022 6
  • 8. Provided the match itself can be played, there are no indications that the market will fundamentally alter following the crisis. The main question is going to be around the growth or reduction of importance of different inputs, such as ticketing or broadcasting. Structure of the football industry There is also a fairly small but developing B2B service market, which at the moment is rather limited to innovation and technology hubs launched by football clubs and governing bodies. In that way, it is run as a shared service provision amongst club groups with common ownership, and know-how consultancy, particularly in specialist areas such as youth development, but that is practiced by a very limited number of actors with a holistic approach. Football economy and resilience 7 Modern football economy is based on several income streams, as explained in the diagram. But in the end, it can all be brought back to two key sources: Supporters, bringing direct revenue via tickets and merchandising, but also indirect via subscriptions to broadcasters and via consumption of brands. Player talent, which is at the core of the content, enabling clubs to generate transfer fees.
  • 9. Spotlight on state support Traditionally football has been happy to take as much as possible from the state (economic breaks, favourable taxation regimes, infrastructure development) but has staunchly protected its independent governance, at least on the surface. In the current health crisis, government involvement has been deeply felt within football globally, to the extent that football activity has been effectively ā€œbannedā€ due to the pandemic, and any restart is conditioned by state-level approval. Individual national associations and leagues may be more welcoming to increased government involvement in the football industry going forward. Nevertheless, it will remain to be seen what the state authorities would want in return, and whether the previous approach with ensuring independence from the sate will be maintained, or full government involvement would become more acceptable. 8 1. Generate crisis planning scenarios and undertake risk assessment and risk management regularly 2. Business models may need to change: widening portfolio of activities to be less dependent on the ā€œfootball matchā€ could be one option to consider 3. Secure cash-flow for a full season 5. Be prepared for a new stoppage due to health or another crisis 6. Be more aware of non-football influence on football ļƒž get out of your bubble! 7. Strengthen cooperation with clubs and stakeholders outside of the domestic environment, generating horizontal and vertical connectivity within the industry by sharing ideas, building capacities, generating a bigger football economy Thoughts on potential solutions to challenges of the football economy: 4. Disrupt more, and more often
  • 10. Disrupting the current revenue model: Finding new ways to increase revenues 9 Youth development as a source of revenue and ā€œraison dā€™ĆŖtreā€ for many clubs. Paid transfer activity is expected to be reduced with lower fees and more free players on the market. But wages will most likely be driven down as well. Will player-developing clubs be able to find a new equilibrium where their costs will balance against the new reduced revenues, thereby creating a newly sustainable business model? Will the market need as many players coming into the game if there is going to be professional clubs disappearing or reducing their status? New watching and experiencing habits. People who are no longer able to go to the stadium may turn to watch match broadcasts instead, and a reduction in stadium capacity may lead to higher match day revenues through a transition to more hospitality-oriented service rather than the basic stand seating. One area of growing significance may be the B2B service market, which most likely will see some additional development as clubs seek to diversify their operations. Another area that is currently seeing an uplift is the provision of social and community services. Clubs have quickly realised that they need to remain relevant during the ongoing crisis, and without games or match-related visibility their only real outlet is their local community and media Focus on new sponsor industries: IT and online, pharmaceuticals, health and wellbeing Focus on new owners: Middle East, Asia, Africa? Smaller but more stable clubs taking over larger clubs where owners canā€™t sustain investment?
  • 11. Covid-19 recovery and lessons from the unfolding crisis ā€¢ Ensure business continuity ā€¢ Show solidarity ā€¢ Preserve ā€¢ Increase flexibility and business resilience ā€¢ Pivot to online ā€¢ Adapt product value proposition ā€¢ Review operating model ā€¢ Explore M&A ā€¢ Capture pent-up demand with targeted customer propositions ā€¢ Refine business resilience ā€¢ Identify key drivers of the end game ā€¢ Adjust cost and operating models to ā€œnew normalā€ ā€¢ Plan for potential aftershocks ā€¢ Pursue large-scale organic and inorganic opportunities for growth Covid-19 response phases Clamp down Emerge Catch up End Game TODAY Reality/ size of catch-up Speed of restart Trough timing Catch-up timing CATCH UP TROUGH Pre-Covid-19 Trough depth Restart Relapse ā€œPoint of confidenceā€ 2- 4- 6 months 6 months- 3 years Depth and length of any extended recession Post-crisis evolution MAJOR UNCERTAINTIES Source: LTT Sports Germany DT 10
  • 12. Football club quick Covid-19 stability checklist 4) Size and development level of domestic football industry 5) Supporter base 6) Management quality 8) Available assets 9) Access to fresh working capital 7) Business model 1) Cash reserves 2) Ownership status 3) Size and development level of domestic economy 10) Covid-related state support package 11
  • 13. ļƒžQuicker recovery period and return to normal function ļƒžBetter contingency mechanisms ļƒžMerger and acquisition mechanisms ļƒžMonopolisation of talent development networks The crisis has highlighted some major issues with the governance and decision-making systems at international and domestic level 12 ā€¢ Little leadership was shown by the ā€œtop of the pyramid bodiesā€ in the early stages of the crisis ā€“ both in terms of acting themselves and in terms of providing suitable guidance to the national bodies for ways to proactively deal with the situation ā€¢ Inherent conflict between taking on enough authority to impose transnational regulatory regimes (e.g. transfer regulations or FFP) and at the same time not taking on responsibility for a generalised crisis response by leaving football to deal with it at national level as much as possible Will this create a reputational deficit in future? ā€¢ Some of the decision-makers involved in the process are looking for rather short-term solutions as they might not be in the football industry in the next few years, but still have a huge influence on the football of the future ā€¢ The main solution seems to be waiting to see how the situation develops, and the main tool is distribution of money to members Smaller leagues and clubs will carry on, but their weight within the total market may reduce further, together with their level of independence and impact on global decision-making, leading to a general situation of instability and ownership turnover. The same situation may well be mirrored across the different lands. Larger well managed clubs will have a better chance of successful continuity, as long as they engage in rational management processes and operate in a generally sustainable way based on adequate information inputs and planning. However, it does not mean that some larger clubs would not fall victim to the crisis. It all depends on the risk levels contained within their existing business model, quality of their management, and resilience of their structure and organisation. Conversely, larger clubs also take on larger business risks, therefore any fall might be felt more in case it happens. One thing that seems likely is that, except for the very top level, clubs will need to re-focus their attention domestically. Signing foreign players could become more difficult, and even travel abroad for training camps, which has become standard practice at all levels in recent years, may no longer be affordable at the middle and lower level of clubs, leading to a lack of international projection. Larger and more sustainable leagues/individual clubs will have the resources and capacity to increase their dominance through
  • 14. 3) At the same time, lack of leadership in crisis times is also extremely dangerous, especially for longer-term sustainability and development 4) Small groups have been largely underrepresented 5) Large groups (with all stakeholders present) are unwieldy and difficult to organise in a constructive way, but serve well for PR purposes by demonstrating consensus 6) There is a lack of intelligence gathering and analytical capacity generally within football. At the same time, some parties have developed it more than others, and try to take advantage, whilst nominally being on the same level as others without it Challenges with how decisions are made in football currently 1) Normal approach to governance at domestic and international level is universally replicated; boards are typically composed of representatives of the members of those bodies. In case of associations it would be of the different stakeholders within the ecosystem (usually based on outdated power balance pictures), and in the case of leagues it will be representatives of member clubs. Under normal circumstances it is possible to make this process work (of course, there will always be those who are more or less satisfied with the outcome), but in times of existential crisis it becomes clear that such bodies suffer from a legitimacy deficit. Those elected are typically (and naturally, as survival is at stake!) guided by self-interest of the primary organisation or the club they represent and their specific situation at that precise moment, rather than wider interests of the game as a whole. This will either create a conflict of interest in the decision-making process, or a lack of representativeness 2) Any attempt at crisis leadership can be easily compromised by identifying the individual interest in the proposed course of action or solution, because decision-makers in football are typically also practitioners (see above) 13 7) Typically, people in decision-making position within the industry have broadly similar backgrounds and outlooks, meaning that there is usually a uniformity of opinions or a ā€œstandardisedā€ approach to how situations are viewed 8) Some key stakeholders of the football industry value chain are generally either completely absent from the decision-making process, or have only token presence 9) ā€œGuidedā€ or ā€œrailroadedā€ process and decision making, which is typical for football, relies on a small minority having the authority, capacity and information to make and implement decisions 10) Generally, there is a lack of business continuity planning within the industry, independently of organisational development level
  • 15. 14 Proposed solutions to meet the challenges in governance Develop and accommodate mechanisms within the regulatory framework for fast creation of thematic expert groups or task forces, and establish dynamic pan-European or global lists of competent experts in various fields to be able to join such groups Strive for a thorough separation of powers to limit inherent conflict of interest. Ensure that competition organisation and administration are completely separate from their commercialisation, and in turn the two are separated from regulatory authorities Have mechanisms ready for outsourcing decision-preparation processes on particularly sensitive issues to competent external groups (i.e. a kind of jury or task force, which will get full information on the problem at hand and will be able to propose positive solutions in an objective and disinterested way, rather than being tangled up in webs of individual self-interest) 1 2 3 Ensure a greater diversity across all levels of decision-making. This can be done for instance through a more frequent use of independent or non- executive board members, who can provide a competent and objective view of the situation, rather than constantly falling into the trap of confirmation bias. Including individuals of all backgrounds who are not stereotypical of the football industry, will intrinsically increase diversity of opinions. Introduce wide-ranging, universal and accessible dynamic business information collection and analysis mechanisms across associations and leagues domestically and internationally based on mutual interest and collective input, to increase the quality of business intelligence, analysis and planning available to individual actors in the game, as well as a live horizontal industry-wide view 4 5
  • 16. Scenarios: 1. Return to ā€œnormalā€ over summer 2020 and thereafter Covid becoming a seasonal reality āˆ’ Catch up and adapt seasonal fixture list to new reality, bearing in mind likely delay to start of season 2020/21 domestically and internationally, as well as the need to finish the season early to accommodate Euro 2020, Copa America and the Olympic football tournament amongst others + take into account potential close-downs during the course of the new season. Long-term, there will be a need to review number of fixtures in a given season to ensure there is flexibility and scope to postpone or dislocate matches ļƒž more focus on domestic and even regional football! āˆ’ A need for readiness to pause or dislocate activities at short notice for a relatively lengthy period (e.g. in case of quarantine or regional outbreak) āˆ’ New approaches to stadia: hygiene, social distancing, zoning āˆ’ Balance between presential and broadcast content delivery āˆ’ Changes in talent market: transfer prices will go down as clubs are unwilling to commit such large amounts as at the peak of transfer spending in recent years, but salaries will also be reduced to reflect the current economic reality of the market. Therefore, own development of talent will become more of a priority, as it always does in times of economic and structural difficulty for football clubs āˆ’ ā€œCovid-freeā€ industry: o Testing and screening (technology, quality assurance) o New kinds of infrastructure ā–Ŗ ā€œClean zonesā€ in stadia ā–Ŗ Even less contact between players and society ā–Ŗ Special infrastructure prepared to host matches for broadcast at short notice (e.g. hotel resorts with football facilities ready to host matches in case of dislocation from ā€œhomeā€) to minimise broadcast disruption o Lifestyle of key performers (e.g. players, referees) āˆ’ Vaccine development o Full return to ā€œnormalā€ only possible when working vaccine is developed and successfully introduced o Variation will still be possible between different countries in terms of vaccination rates or implementation of different zoning on a worldwide basis, therefore creating additional challenges for cross-border matches 15
  • 17. 3. Covid-19 disappears completely by summer, never to return again āˆ’ Dream scenario for football and the world āˆ’ Economic and social impact of the last few months will still be felt very painfully for years to come and noticeable through: o Economic downturn o Change in spending priorities o Change in working practices o Change in social habits o Post-traumatic stress āˆ’ Football clubs that had a distressed economic situation will still be likely to collapse in the short term even with the existing level of impact. Although some might disappear completely, most likely new owners will appear to take them over, particularly in countries where there is significant state ownership, as the state has to deal with the aftermath of the Covid-19 crisis on a wider scale and football could lose its priority status āˆ’ The impact on grassroots football will be unpredictable. From kids no longer playing football because they have lost the habit or the interest, to volunteer coaches or team organisers no longer there or no longer able to provide as much time as before, due to individual challenging circumstances āˆ’ Club owners and managers will be conditioned by the crisis experience in their planning, but complete risk aversion is a very expensive choice 2. Return to ā€œnormalā€ over the summer is cut short by a second wave, which prevents completing season 2019/20 and start of season 2020/21 with uncertain outlook āˆ’ Economic pressure on clubs of all sizes and business structures will become extreme āˆ’ Fixture pile up will eventually become unmanageable, potentially reaching a stage where it will no longer be viable to accommodate rescheduling once the crisis reaches its conclusion, leading to major choices having to be made (e.g. having to choose between Euro 2020 or World Cup 2022) āˆ’ Whilst staff contracts will be normally accommodated within state furlough systems (until when!?), player contracts, registrations and status will need to be examined further āˆ’ Sport broadcasting industry will see some significant long-term negative impact āˆ’ Need to ā€œmothballā€ unused infrastructure āˆ’ Overall impact on the wider economy will be unprecedented and unpredictable āˆ’ Psychological state of individuals will be generally negative due to unrealised hopes of a relatively quick exit, and this will affect potential recovery 16
  • 18. LTT Sports Insight: Three possible strategic pathways for the football industry post-Covid ā€œCircular Economyā€ The internationalisation of football will make it emerge as a more global product based on the closed league model similar to Formula 1. As more events will be concentrated on premium quality, cost and talent inflow rationalisation will become even more crucial, so the large clubs participating in the international circuit will create their own economy chain, based on a pyramid club network. The franchises will play in the most valued leagues and a set of clubs and supply organisations will be directly linked to them in smaller-sized markets to provide locally trained talent, test technologies or tactics, and a supply of fans of the ā€œcoreā€ club. 17 ā€œSecured Leaguesā€ Following the example of the league in Mexico that decided to switch from a promotion and relegation model to a closed league for the next five years, the economic insecurity leads the industry to look even more carefully at the US model of sport business. In such a model clubs are ā€œbusiness partners off the field, competitors on the fieldā€, and when you own a team, you own a share of the league. Therefore you care about the whole league. In order to increase the value of the market, you also have to mutualise the risks, give up cannibalisation and limit your market to a certain radius. In Europe, traditionally there is a link between professional and amateur football, and it sounds less feasible. But the Covid-19 crisis could serve to open some eyes of club owners to the benefits of a ā€œsecuredā€ league, leading to a reassessment of the benefits of the US sports model, particularly focusing on the business side of the industry, as relegation jeopardises the economic stability of clubs.
  • 19. ā€œeDevelopment and Digitalisationā€ The lockdown period allows stakeholders to accelerate the digitalisation process, leading to stronger digital presence, sponsorship visibility and introduction of more remote activity in the game (acoustic ā€œsupporterā€ system, referee voice). Infrastructure of stadia will change and be readapted (see Club Affairs ā€œReturn To Playā€ measures or Fenwick Iribarren architectural design studio opinion) allowing a different presence and flow of supporters in the stadium with a disappearance of separate ā€œordinary seatsā€ and VIP zones, as the whole stadium becomes focused on hospitality and guaranteed Covid-free individualized premium experiences. In-stadium and at-home versions of watching football morph into each other in the middle with the growth of VR and personalization, and immediate on-demand consumption of associated products becomes part of the overall approach. 18
  • 20. LTT Sports constructs bespoke solutions based on football expertise from the inside and corporate industry standards from the outside at strategy, operational and field levels, as well as a visionary conceptual understanding of the universally shared needs of the football industry in a fast-evolving landscape. Follow us for further insights: linkedin.com/company/lttsports/ twitter.com/LTTsports Ā© Copyright throughout this work is vested with LTT Sports and all rights are reserved. Reproduction is authorised provided the source is acknowledged. For any use or reproduction of graphics, permission must be sought directly from the copyright holders. All information is provided in good faith and whilst every effort has been made to ensure the accuracy of the information supplied herein, LTT Sports cannot be held responsible for any errors or omissions. LTT Sports shall not be held liable for any damages or losses arising from the use of any material contained in this work, or from any resulting action or decision. Konstantin Kornakov Strategy Council Member konstantin@lttsports.com Edinburgh, UK Konrad Gozdzior Strategy Council Member konrad@lttsports.com Geneva, Switzerland Siri Wallenius Managing Partner siri@clubaffairs.ch Geneva, Switzerland Olivier Jarosz Managing Partner olivier@clubaffairs.ch Geneva, Switzerland Contributors to this Issue:
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