FA Cup: Risk and Reward
2 Feb 15
As we approach the final few stages of the FA Cup, it is fascinating to remember that at the beginning of the tournament, 736 teams were eligible to participate from the Premier League, the Football League and steps 1-6 of the English football league system in the UK. With the first FA Cup competition held in 1871-72, the FA Cup has grown to become a tournament of huge proportions with both risk and reward for the clubs involved.
Only 20 teams of the 736 teams come from the highly-funded Premier league. For the balance of the smaller clubs, the FA Cup is an opportunity to slay the giants in front of home fans, showcase talent that might be sold for much-needed funds, and promote their clubs on the global stage. Should they advance, there is additional television coverage which provides financial dollars and a much needed leg-up. Of course, advancing deep into the tournament provides local loyal supporters of small clubs and new bandwagon recruits stories to tell for years to come.
For League Two side, Cambridge United FC, advancing to round 4 of this year’s FA Cup means a great deal for the organization. A payday of over £1 million from the 4th round draw with Manchester United will be used to help improve the grounds at Abbey Stadium, specifically to improve hospitality and to upgrade the toilets. This is from the same cash-strapped club who would have charged its players £40 if they exchanged their home jerseys post-match with a Man United player during the same match. They received £112,500 from FA prize money, a further £144,000 for the first game televised and might receive more if the replay at Manchester United is also aired. Their share of the gate from the two matches also contributes to this sum. Dave Doggett, the Chairman of the club has put the supporters first by upgrading facilities but then plans to develop a “hub of sports, education and housing facilities” with the support of the local council. Doggett noted, “it’s certainly a far cry from the situation we found ourselves in a few years ago where we were reporting losses of around £400,000 .”
However, with all of the rewards comes risk. For these minor clubs, inclement weather during unpredictable winters means a risk of event cancellation when hosting FA matches. Smaller clubs in more remote towns have challenges in icy conditions, as their grounds aren’t heated, and nearby roads that can’t always be cleared can prevent safe access. Citing dangerous conditions for the community at large, or “player safety,” “pitch integrity,” or “quality of play,” matches can be postponed and ultimately moved out of a live TV broadcast window. If the match isn’t aired, there is no financial compensation. If the match is rescheduled, it is often at the alternate ground which could take big game revenue from for example: Cambridge United and give it to Manchester United. In January 2014, Crawley Town’s 2nd round match with Bristol was called off, and Charlton’s FA Cup match with Oxford United was postponed. In December 2014, Barnsley FC was forced to postpone its league match versus Oldham due to extreme weather and ice surrounding the ground as well as dangerous player conditions. It happens.
Risk looms to all clubs participating in the FA Cup with the potential for player injury. There is relatively equal risk for all matches, but while some Premier League teams are exempt until later rounds and might rest their best players and still compete deep into the tournament, thinner squads and Football League players are adding all of the high-level matches to their schedule as they progress into the later rounds. Injuries are costly to a team when required to pay out salaries while players are healing… and teams suffer in league play while they are a key player down. Just this weekend, Southampton forward Shane Long left his 4th round FA Cup match with suspected broken ribs which could sideline him for a month. For a lower-tier team vying for promotion, this would be equally or even more impactful.
Contingency coverage is a financial solution for these clubs to ensure that the rewards of FA Cup play exceed the risks. A simple weather cancellation policy, purchased more than 10 days prior to the match, can pay out lost television and gate revenues if the game is postponed. Player wage coverage can at least cover the player’s salary while the player regains form.
With regards to rewards, there are ways to make the rewards of success even better. Customized performance bonus coverage can support the club’s contribution to the player’s bonus pool with unexpected wins so that the FA prize money can be secured for other means. Additionally, promotional contingency programs can be built upon the potential results of the matches. These policies can help reward season ticket holders, all match attendees or even activate sponsorships to prolong the effect of the celebration.
Collins Sports Group can help clubs prepare for the risks and rewards of FA Cup play, and any address a club financial challenges. Our consulting team can evaluate your organization’s financial and operational risk and design solutions to help elevate your game. Contact Jen Johns at firstname.lastname@example.org for more information.
Tags: #sportsbiz #FACup #riskmanagement