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Covid-19 and football finances

Assessing the consequences of the Covid-19 pandemic for football finances is far from easy.   Apart from anything else, we don't know what the future course of the pandemic will be, e.g., whether mutations will significantly reduce the efficacy of the available vaccines.

In any case there has already been pressure on broadcasting contracts which have been coming in around 10 per cent below previous values which would mean a £450m fall in revenues for the Premier League.  In the UK, Sky has new leadership, BT has decided that its optimal strategy is to settle for second place and Amazon is an opportunistic purchaser: https://www.theguardian.com/media/2021/jan/11/tension-everywhere-premier-league-back-foot-uk-tv-rights-auction-nears

There is a temptation in this situation which some analysts have fallen to resort to hyperbole and overly pessimistic accounts of the end of football finance as we know it (this does not apply to the cited article which is a very balanced and careful assessment).

One issue that has arisen is the £300m of loans made by the Bank of England to Arsenal and Tottenham Hotspur.   There have been complaints that this could have a distorting effect on the Premier League.

The clubs used the Bank's Covid corporate financing facility, a form of low-cost borrowing open only to companies with an investment grade credit rating.   Smaller rivals are ineligible under the terms of the scheme.  It has been claimed that interest rates on the Bank scheme are lower than those on other Government-backed Covid loan schemes.

A backlash against some clubs including Liverpool and Spurs using the furlough scheme for non-playing staff has made other clubs reluctant to use that option.

One club told the Financial Times off the record, 'It feels strange that state aid is being refused to most clubs because it's not palatable from a PR perspective, but Arsenal and Spurs have borrowed quarter of a billion pounds between them.'

Another chief executive told the Pink 'Un: 'It's slightly galling some clubs are hugely criticised for using the furlough scheme [while] we don't get access to the Bank of England scheme.'

The Bank of England is, of course, not part of the government as such, but is part of the state.   There is a complex and sometimes tense relationship between the Bank and the Treasury, but the Bank has enough independence to do things that the Government could not do,  Its democratic accountability is indirect, to say the least.

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