Football finance expert stresses the importance of lowering Sheffield Wednesday's wage bill
A Sheffield-based football finance expert has stressed how important it is that Sheffield Wednesday lower their wage bill regardless of whether or not they are thrown into a relegation battle before the end of the season.
The Owls could be slapped with a points deduction before the end of this campaign after their defence of a charge of misconduct by the EFL was brought forward to start yesterday. They currently sit eight points clear of third-bottom Hull City.
Asked about the contract offers of key pair Steven Fletcher and Morgan Fox earlier this month, Owls boss Garry Monk said that he hoped they would have “An understanding of how the situation has changed with this pandemic and when it hit and how that has changed a lot of the landscape across football.”
Dr Dan Plumley, a sport finance expert and Senior Lecturer in Sport Business Management at Sheffield Hallam University, said that it is only sensible for a business to plan for a worst-case scenario and given the uncertainty around when supporters might be able to return to Hillsborough, commended the sense of caution at the club.
Wednesday’s accounts for last season are due at the end of next month having had its April 30 deadline extended due to the coronavirus crisis.
The EFL charge came as Wednesday sold their Hillsborough stadium for £60m in order to avoid a breach of FFP rules.
Dr Plumley said: “If you look at the figures in the latest set of accounts [2017/18], even if you take out the League One argument, what is clear from those accounts is that Sheffield Wednesday have a very high wage bill. It was £42m, which was across all staff, but it’s a £42m wage bill against a £23m revenue for that season.
“Wednesday aren’t the only club that operate in a similar model at the minute but even if you don’t factor in relegation and you look at what’s happened over the last 12 months with promotion looking unlikely, the wage bill was something that the club needed to look at.
“That’s a hangover from years ago when the club was pushing hard at promotion and just missed.
“It’s sensible to lower that wage bill and you would always expect clubs to plan for a worst-case scenario. You look at those figures there’s no doubt that something needed to be done in the short-term.”
Should the unthinkable happen and Wednesday were to be relegated, Dr Plumley painted a particularly uncomfortable financial picture – with Wednesday liable to lose more than 30% of their annual revenue as per their last available accounts.
With fans unlikely to be allowed into stadiums for many months to come, clubs will become increasingly reliant on TV revenue, which drops from around £6.5m to less than £1m with relegation to League One.
“A conservative estimate would say that relegation is a direct hit of £6-7m,” he said. “You’ve also then got the added issue of a drop in matchday revenue even when fans are allowed back in.
“At the very least here we’re talking £7m and probably a lot more considering the current circumstances going forward.”