Business
In this episode we will be discussing what Impact and recovery COVID-19 has had on sports professionals.In unprecedented times, it feels like an understatement given the impact COVID-19 has had on world affairs and of course team sports. We’ll drill down on how different people have been affected in vastly different degrees. This period has been a time of reviewing for advisors, to generate discussions on what this means for players and how it affects lifestyle going forward. It has also changed the players attitude towards their finance, taking more of a keen interest more than ever.Impact in Rugby Union As of the 30 June 2020, more than 50 premiership players found themselves out of contract, a large proportion of those were negotiating deals back in March. During lockdown – all those negotiations were put on hold and some players had provisional contracts rescinded. A fortunate few have found new clubs, although most are on short-term deals or reduced wages for the remainder of the season.95% of rugby players will need a second career, at least half will experience financial difficulties within five years of retirement. All occurring before the premiership’s clubs imposed 25% salary cuts.1There are a lot of considerations all parties must advise on players futures, such as cashflow, forecasting, outgoings, lifestyle in the coming years.We’ve had a range of dialogues with sports people on: potentially cutting back on savings for a monthplanned big capital purchases or outlay to be deferred or cancelledThe Rugby Professionals Association have development programs that are more crucial than ever to – prepare and educate players for life after rugby.In 2010, 30% of the RPA’s members were engaged in off-field development. In 2020, this had reached a record 91%.1The RPA has been very well positioned and has adapted in helping the players transition across to life after their professional sporting career. It has been a preconceived idea that rugby players will go into a business development or business role after sport. However, this is not always the case. The transition for life after sport is a struggle, as it’s entirely different way of living. For many years it has provided an enormous structure, daily activities, a ready-made social life. Then suddenly you have a complete disconnect. We encourage players to try and focus on getting some additional skills sets and working on outside interests.Impact on FootballersWhen COVID-19 become an extremely serious matter as lockdown was occurring. Birmingham City FC asked players earning more than £6,000 per week to defer half of their wages for the next four months.2 Hearts in Scotland then asked all staff to take 50 % pay cut.3Mackrell Solicitors had several enquiries from early April to May, who didn’t understand wage deferrals or know if they could be forced into a position with their club. And if by saying ‘no’ how this could impact them in the future.Under Scottish Law, there is a clause in players contracts that states if the Scottish FA suspends a season, then the club does have the right to postpone or change salaries. Contrasting this with English Law – contracts do not contain a force majeure clause, which is therefore difficult for an English club to propose a wage reduction or deferral. Any variation or reduction to the players salary will require the consent of the player.As football players and clubs are participants under the regulations of the Football Association (FA), it is possible for a player to take their club for unpaid wages to the FA. Under FIFA rules, they class a change in contract terms grounds for early termination. So, a player in affect, could walk away from a club, which opens the door for players to strategize their career going forward.Many conversations have also been had with players over receiving their weekly wages which has come at a surprise as the wage had dropped considerably. There appears to be a lack of understanding on the two pay component parts of their contract. First being the guaranteed weekly wage, secondly the performance wage which was non-existent as they weren’t playing games, winning matches, scoring goals to receive those bonuses. Another issue that has caused headaches and worrying times for players and clubs is that in the vast majority of cases; contacts for footballers usually terminates on the 30th June every year. There was this uncertain period while the season was continuing as to where players stood if they have a situation if their contract was running out 30 June 2020. It was made known to help clubs and players during this uncertain period, terms of the contract could be extended till the season concluded. In the future, contracts should reflect this period of questions and uncertainly raised.Although conversations were repetitive to have with players, it was welcomed as many for the first time, had an uptake and interest in their personal finance position. In the past, it is often the case parents or other family members, or everything is left to the agent to deal with. During lockdown, personal finances and contracts sparked a level of interest with players, with players reaching out to advisors to get a better understanding. A positive result from these conversations was a stronger client advisor relationship.Now is the time for players and agents to assess the financial impact of COVID-19.The requirement and value of the professional advisor during this period cannot really be understated. Sometimes it might be difficult to know who to speak to. If you’re unsure of where to go, please contact either Peter Fairchild or Mo Pasricha who would be more than happy to assist.**Sources**1 Research conducted by the Professional Player’s Federation. Reference in The Telegraph article: https://digitaleditions.telegraph.co.uk/data/304/reader/reader.html?#!preferred/0/package/304/pub/304/page/173/article/664962 https://www.bbc.co.uk/sport/football/520227413 https://www.bbc.co.uk/sport/football/51953399***LINKS***Sports & Media podcast show page https://bit.ly/2TsBUAxSmith & Williamson Sports, Media & Entertainment Services https://bit.ly/3e57L23Mackrell Solicitors https://www.mackrell.com/ This episode was recorded on 05/08/2020This S&W The Pulse podcast is of a general nature and is not a substitute for professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of what is said. The views expressed are not necessarily those of the presenter or of Smith & Williamson or any of its affiliates. No reproduction of this podcast may be made in whole or in part for professional or recreational purposes. No action should be taken based on this podcast and we accept no liability if we change your views on any of the subjects mentioned.Smith & Williamson LLPRegulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International