Crisis clubs: What we learned debt, losses and the impact of Covid-19 – The Athletic

Over the past week, The Athletic has delved into the financial health of five European clubs Everton, Barcelona, Inter Milan, Hertha Berlin and Lyon to explore how they ran up such substantial debt or losses and the challenges they face going forward.

So what have we learned?

These are all very different clubs of varying sizes in five different countries, some are already part of a multi-club model and one (Everton) want to be, and the majority have recently come under new ownership. They each have their internal problems but there is a common external factor: Covid-19 hit them hard.

When football was paused because of the pandemic in March 2020 and then played in empty or partially-closed stadiums for over a year, our crisis clubs were not sufficiently equipped to cope.

As our Matt Slater explained on The Athletic Football Podcast, Covid-19 was an external shock to these businesses and its all about what sort of state you were in as you went into that shock. What was your plan B? What was your plan C? Was there any plan at all?

The Athletics Crisis clubs series:

Evertons former chief executive Denise Barrett-Baxendale said losses of at least 170million are attributed to Covid-19, with further market analysis indicating that figure could be as much as 50million higher.

But in handing Everton a 10-point deduction last week for breaching the Premier Leagues financial rules, an independent commission was not impressed by the clubs attempts to use the impact of Covid-19 on the transfer market as a mitigating factor. The position that Everton finds itself in is of its own making, the commissions verdict said.

While the pandemic hurt every football club, it almost killed Barcelona.

Being forced to close the gates at their Camp Nou home deprived the club of the largest matchday revenues in Spain, as well as income from their museum and stadium tour. And all that footfall usually meant they sold lots of merchandise, too.

The company which owns Inter took out a loan at 12 per cent interest from U.S. asset management firm Oaktree Capital in 2021 to keep its investment breathing when Covid-19 threatened to take the club under. That now stands at 329million (287m). While not all of it has been drawn down, the loan must either be repaid or refinanced, or the club must be sold otherwise, Oaktree can turn the outstanding debt into equity and repossess it.

Germanys Bundesliga was the first major league to restart worldwide after that first Covid-19 lockdown, in May 2020, but Hertha had just taken on debt to buy back shares they had sold to KKR, a U.S. private equity group, so they could sell again to Lars Windhorst, a London-based financier. What was supposed to be a transformative investment amounted to very little and didnt really change the equation. And if anything, down the line, it made it harder for Hertha to recover financially.

And while it wasnt Lyons fault that French football was particularly battered by Covid-19 and things got even worse when Ligue 1s broadcaster partner Mediapro stopped paying instalments on its 780million annual TV rights deal they were left reliant on successful player trading to make money. And they didnt do particularly well at that.

All these clubs entered the pandemic in bad shape. They were already stretched and, yes, there was also a bit of bad luck for some of them, but when the crisis of Covid-19 came along, it hurt them all in different ways for different reasons.

We hope youve enjoyed the series, both the written pieces and our podcasts.

Thanks for reading, listening and commenting it means a lot.

(Top photos: Getty Images; design: Sam Richardson)

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Crisis clubs: What we learned debt, losses and the impact of Covid-19 - The Athletic