Soaring energy prices have been well-publicised in the context of a cost-of-living crisis for households and stagnating production for manufacturers, but as we approach winter, there are increasing concerns about the impact of rising energy costs on sport clubs and organisations.
The current energy price caps increased by 80% from April 2022 to October 2022 and they are expected to increase even further between October and the New Year. There are serious concerns that this could trigger a wave of insolvencies across a range of industries, including in sport.
While larger sporting organisations and clubs may be able to offset the increased utility bills against marginal increases in season ticket and gate prices, merchandise or other consumer products, and are able to rely on steady and consistent ticket sales, smaller professional clubs and many semi-professional, community-based/grassroots, or amateur clubs will struggle to do so.
During the heights of the Covid-19 pandemic most professional and amateur sport was played behind closed doors due to social distancing rules and although many were hoping that the easing of restrictions would allow for financial stability and recovery, the cost of living crisis has increased energy overheads and resulted in slower ticket sales as fans struggle to justify the expense of attending sport events.
Fair Game’s recent survey of football clubs (including 12 EFL clubs) found that many would look to move fixture times to earlier in the day to reduce the energy costs over the winter (mostly from stadium floodlights). Recently, Mansfield Town announced that their game against Walsall on 15 October would be played at 1pm instead of 3pm due to energy costs, and many other EFL clubs appear to be considering rescheduling to midday kick-offs in the coming months.
One Rugby Union Premiership club CEO recently has said that they anticipated their gas bill alone to be up to £100,000 for this season.
New governmental measures
When Liz Truss was appointed Prime Minister, it was announced that a £2,500 annual cap would be placed on domestic energy bills, and in the government’s more recent ‘mini-budget’ details of an emergency package for businesses were released.
The new Energy Bill Relief Scheme would apply a per-unit discount on energy costs for eligible businesses in order to reduce cost of energy bills (with maximum discounts rising if the wholesale prices rise). This is said to be the equivalent of the Energy Price Guarantee for households, and the government has suggested that this could reduce energy prices for businesses by more than half.
This support will also be available for voluntary sector organisations and public sector organisations, so amateur clubs and community-based organisations can also benefit.
It is worth noting that, at the time of writing, the Energy Bill Relief Scheme is only set to continue for six months, until April 2023. A review of the first three-months of the scheme is planned to consider whether certain industries should be granted extended support.
Professional and non-professional sport clubs and organisations alike will welcome this new scheme over the upcoming winter months, particularly given the wave of insolvencies in other industries, but the lack of clarity on the exit strategy in April 2023 may be of some concern.
Some clubs may look to alternative funding, including debt or equity finance, potentially make use of the Future Fund convertible loans, or seek grants available to grassroots sports, in order to maintain or gain an element of financial stability in these challenging times.
In order to discuss the impact of the energy and cost of living crisis on your business and funding options available, please contact the Sport Team.
