At the time of writing (which is early Sunday morning on the 28th of May) two teams are in danger of dropping out of the Premier League along with Southampton. These teams are Leicester City, Leeds United and Everton.
There are serious repercussions of dropping out of the English Premier League namely:
- £millions of lost revenue in money, (often without a similar cost reduction)
- Drop in attendance
- Players wanting to leave (and often forcing the issue publicly)
- Needing to recruit new players
- Unable to sell players on long-term expensive contracts
- The Manager leaving (unless they are sacked first)
- Reduction in sponsorship
- Loss of jobs for backroom staff.
- And the general sense of despondency
All three teams will publicly say they will focus on staying up and they are not thinking about relegation.
But one would hope that only the foolish clubs will have not thought about the implications of relegation and made some contingency or fall-back plans. For example, what would they do the day after regulation? (such as reducing staff or cutting other costs) what would they need to do before the new season? (such as finding new players, sponsors, etc)
The sooner any nasty decisions are made and implemented the better
While this article is focused on the Premier League, any organization can be hit with a serious issue unexpectedly
For example
- A major supplier fails A good example of this is ITV Digital, which collapsed in early 2001 and caused major financial issues for many Football League clubs because these clubs had factored in the extra TV money into their financial plans.
- A major client fails or leaves which could result in a gap in revenue (without a similar cost reduction) or even large unpaid bills.
- A key member of staff leaves and/or joins a competitor
- Unexpected political unrest or wars breaks out in another country. For example, the organizations who had operations in Ukraine, Russia and/or Belarus, are going through a bad time at the moment,
- A pandemic breaks out. Obviously, everyone remembers COVID-19 but other pandemics appear in localised situations.
Therefore, firms must assess what could go wrong and make serious workable plans to prepare for them; despite how unpleasant, this could be.
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