Nose-diving salaries the new normal for athletes worldwide
What can you do with $6 billion? America’s United Airlines would say it fetched them 50 new Airbus long range jets in 2019. The top five European football leagues may, however, say it’s still $13 million less than what they splurged in the summer transfer window last year.
The summer of 2019 also saw Virat Kohli pocket Rs.17 crore from the two month-long Indian Premier League (IPL). He led the pack of 10 cricketers who earned over Rs.10 crore each from the world’s richest cricket tournament.
Another summer is upon us but missing is the buzz over astronomical, some would say inflated, players’ pay cheques caused by decades of burgeoning corporate capital.
The reason: Covid-19. The pandemic has caused a global economic crisis which will affect investment in sport. It has also indefinitely jettisoned major sport events leading to a world of reduced pay and furloughs.
The English and Wales Cricket Board’s centrally contracted players have volunteered a 20 per cent pay reduction for six months while the Cricket Australia plans to furlough almost 80% staff, putting them on 20% pay till June 30.
Formula One drivers, including Mercedes’ world champion Lewis Hamilton and Ferrari’s Sebastian Vettel, have accepted cut in pay. Yet McLaren’s chief executive Zak Brown has said four teams could fold due to loss of income.
Teams and F1 have put staff on furlough taking advantage of the UK government scheme which will pay staff 80% wages up to a maximum of £2500 a month. And the senior management of F1 has agreed to a 20% pay cut.
For now, it looks like the shock will spare Indian cricketers. The Board of Control for Cricket in India (BCCI), the world’s richest with a net worth of Rs. 3000 crore in 2019, cleared dues of all listed cricketers in March.
But what if the IPL, worth over Rs. 4000 crore per the BCCI’s annual report of 2016-17, doesn’t happen this year? Kohli, for one, earns Rs. 7 crore (plus match fees and incentives) from the BCCI for leading India. He gets more than twice (Rs. 17 crore) for playing in IPL.
The situation is worse for players of the less affluent cricket boards such as West Indies, Sri Lanka and New Zealand. Their major income is from T20 franchise leagues around the world, international matches and ICC events (there are question marks on the 2020 T20 World Cup too).
Footballers hit too
Footballers are in no better position. Barcelona, Juventus, Arsenal and Bayer Leverkusen have announced player pay cuts ranging from 12.5 per cent to 70 per cent. According to Transfermarkt, a website specialising in transfer values, $2 billion has already been wiped off the value of Premier League squads.
“No games mean no fan spending at stadiums and no TV coverage impacts sponsorship revenue. This is something that will shape the future of the game, at least for the next year or two…. That ‘Force Majeure’ section on contracts, so widely ignored, has now come into play big time,” Baljit Rihal, British football agent who also has clients in India, told HT. “This will no doubt affect clubs’ spend on players. The next transfer windows across the world will see significant drops compared to previous years. I do believe both transfer prices and players’ salaries will show a steady decrease.”
Football finance expert Kieran Maguire said that transfer fee deflation will translate into clubs lower in the pyramid distress selling players to stay afloat.
“The vultures and predators will pick off good players for very modest fees,” he said, in an interview to news agency AFP.
Maguire also warned of a domino effect if one club fails to meet its transfer debt. “The concern is that financial problems in one league could spread throughout the industry just like the pandemic,” he said.
No tee party this
The European Tour, golf’s second-biggest after the USA’s PGA Tour, has cancelled or deferred 16 events since March.
The Ryder Cup is a major revenue stream for the Tour but there is a question mark over the 2020 edition. Tour chief executive Keith Pelley has asked players to be ready to play for “lesser prize money, decreased tournament infrastructure and a condensed schedule”. Three Indians, SSP Chawrasia, Gaganjeet Bhullar and Shubhankar Sharma, have full playing rights on the Tour.
Fifteen Indians are part of the Asian Tour where since March three events, including the $1.75 million Hero Indian Open, have been postponed and a tournament in Japan cancelled. Even if it resumes mid-September, players could be staring at no earnings for over six months.
The PGA Tour, which has cancelled nine events, offers a rare bright spot. It plans to resume on June 11 with the $7.5million Charles Schwab Challenge in Fort Worth, Texas, but till then players inside the top 150 of the FedEx Cup (order of merit) standings can claim a bonus, with a cap of $100,000, which will be adjusted with their earnings at season-end.
Those outside the top-50 too can claim a bonus which will be adjusted with their earnings from pro-ams.
Anirban Lahiri, the only Indian on the PGA Tour, though isn’t sure how easy it would be to start.
“There is talk of playing without fans, and while this can help in a team sport, not in a golf tournament of 150 players. Then, variables like taking a flight with 150 strangers to the tournament venue, standing at the baggage collection point with 700-plus people, taking a taxi to the hotel and finally the sanitation levels at that place,” he told HT.
A Forbes report in 2019 said out of Kohli’s yearly income of $25 million, $21 million came from endorsing brands such as Audi, Google, Puma, Tissot and Uber.
Rarely are endorsement agreements tagged to a company’s bottom-line, says Nandan Kamath. “However, some have performance bonuses and these will obviously diminish as without the events taking place these cannot be earned,” says Kamath, sports lawyer.
On and off the playing fields, incomes nose-diving will be the new normal for athletes.