Grexit Stage Fulham: How Eurozone Economics are Impacting The Whites this Summer
“Grexit” is the portmanteau coined in recent times to succinctly describe the potential exit of Greece from the Eurozone. The scenario has come to a head in recent weeks with Greek President Alexis Tsipras leading both his Government and Country to the brink and back several times.
The macroeconomic uncertainty of Greece’s fate has played havoc with the European financial markets and in an ironic twist of fate is now potentially hampering Fulham’s very own Grexit, as Kostas Mitroglou is attempted to be sold.
Indeed, wider economic and financial issues are playing an important role in Fulham’s offseason. Aside from player movement, there was the announcement earlier this week that the delay to our big home kit unveiling is down to the lack of a confirmed sponsorship agreement to go on the front. Attracting a marquee sponsor will have been one of the toughest financial challenges facing Fulham’s senior leadership structure this off-season.
With Marathonbet presumably exercising their right to vacate the front of Fulham’s shirts at the earliest contractual opportunity following relegation, Fulham will have been left with something of a gaping hole in the profit and loss account. Marathonbet’s deal was the largest in the club’s history. Replacing that deal to any decent level will have proven extremely difficult given the reduced exposure the Championship gives you, especially given our largely dire performances last season hardly mean Sky are in a rush to schedule us at primetime.
Hull City’s recent announcement that they were losing global sports betting brand 12Bet as their lead sponsor and replacing them with local tourist attraction Flamingoland is perhaps the starkest recent example of the drop off in the calibre of sponsor once a team drops out of the Premier League.
In financial terms, it is estimated that a mid-table Premier League club can earn shirt sponsorship well into seven figures per season. Fulham’s deal with Marathonbet was reportedly said to be worth between £2m – £3m per season. The average Championship sponsorship package is believed to be mid six figures. The drop off is significant.
My fellow Fulham Supporters Trust director Mike Gregg has previously done an in-depth look at Fulham’s finances over on a rival website, which is well worth finding if you wish to look at the numbers in greater detail.
Going back to title of this article, the Grexit; what the wider macroeconomic situation in Europe has meant for Fulham this summer is broadly that we have been sellers in a market with very few buyers.
At close of business on today (15th July), the Euro was trading at near its 52 week high against the Pound at €1.42 per £1. For European clubs, this translates into very expensive prices when buying players from outside of the single currency Eurozone.
In comparison, this time last summer the Euro was worth €1.25 v GBP. This rise of 17 cents in a 12 month period represents a nearly 14% jump in import/export costs for businesses, or in this case football clubs. This means that those clubs whose daily trade is in Euros are now significantly weaker when they deal with clubs trading in Pound Stirling. Buying a player in Pounds has never been more expensive.
This brings us back to Kostas Mitroglou, whose cumbersome transfer is now beginning to look like well thought out retribution for the Elgin Marbles. Fulham are reportedly hawking the striker around Europe with demands of a £1m loan fee and a £7.5m buyout clause. Compared to one year ago, £1m is now €170,000 more expensive, with £7.5m now €1,275,000 more expensive.
As a result, there are two potential outcomes, either European clubs will have to pay the increased prices, or Fulham will have to lower their price demands. Neither scenario is ideal and perhaps explains why Fulham’s own Grexit is becoming as protracted as its ideological big brother’s.
With several of Fulham’s international playing staff in the queue for an exit of their own, the enduring financial turmoil in Europe, and resulting impact on currency rates, is likely to be a significant hindrance to the club securing them transfers out of England. Bryan Ruiz’s departure from south west London is a prime example. A year overdue, Sporting Lisbon’s eventual acceptance to go against the prevailing economic outlook and pay any sort of transfer fee for the Costa Rican is a result Fulham’s management should be applauded for securing. Should Alastair Mackintosh and co secure a similar deal for Kostas Mitroglou and Fernando Amorebieta’s exits, their achievement should not be without appreciation.
Unfortunately for Fulham, the movement in European currencies has also come at the wrong time for incoming transfers. This summer has seen a shift in the transfer paradigm at Fulham. For the first transfer window in recent memory, we are concentrating our recruitment on transfers from within England. So far, not a single arrival has come from Europe, so we are yet to take advantage of the favourable exchange rate movement that, conversely to the scenario above, makes players cheaper to buy from Europe than they have been before.
This summer is providing a series of financial challenges to Fulham off the field. As I’ve shown above, many of these are well out of the club’s control. With the kit unveiling and the conclusion of the transfer window, the next month and a half will be a fascinating time, and for now it’s worth reading the business pages as well as the sport.
COYW