- English Football League Two club Exeter City left vulnerable without matchday income
- Club’s front-of-shirt sponsor, Flybe, collapsed at beginning of Covid-19 crisis
- New deal with Carpet Right due to club’s reputation for loyalty and longevity
Exeter City Football Club knows its way around a crisis.
In September 2003, Exeter City Supporters Trust paid £20,000 to acquire the club and its debts, saving the team a week before it was due to be liquidated. The trust still owns the club and current chairman Julian Tagg was a key part of the acquisition 17 years ago.
Having been on the front lines of Exeter’s fight for survival in the 90s and 2000s, Tagg and the trust he represents are preparing for the latest test. The outbreak of Covid-19 and the indefinite postponement of the 2019-20 season could be devastating to clubs in the second, third and fourth tiers of English football, as matchday revenue is vital to keeping them afloat.
Exeter’s plight could be harder still. The club’s front-of-shirt sponsor and closest business partner, British airline Flybe, collapsed on March 5 after its own long battle against administration and liquidation.
Flybe had been more than just a sponsor. The relationship between club and airline lasted for 17 years – the longest-running commercial relationship in English professional football. Tagg regards the company as a primary reason for the club’s continued survival.
“There were occasions, when Flybe were in a really good position, that they brought payments forward. On any number of occasions, when we needed it, it was: ‘no problem, get the invoice in to us, we’ll pay it now’. We needed it, so they did that for us right until the death. The relationship at the end was just as good as it was at the beginning.”
Flybe, an Exeter-based company, invested in the club at a time when it teetered on the edge of existence. To repay that faith, Tagg and the trust activated the partnership in any way they could, rolling in naming rights to the main stand at St. James Park and even designing a third kit in Flybe colours.
When the airline began to fail in 2017, Exeter made the decision to stick with Flybe, just as it had done with them.
“[The amount Flybe paid] was a very, very small amount at the end, which is not a consideration when you take into account what we received over that period of time,” Tagg said. “You could see that there were problems and quietly we would work to be prepared, but there was never a point where we wouldn’t stick by them.”
He continued: “And you know what? That’s the nature of the club. The nature of our club is not to penny pinch, or to suck the next one dry, and the next one. That’s not what we set out to do in 2003 and it’s stood us in good stead. A lot of good people stood beside us then, and still do now.”
A little help from your friends
Exeter’s unwavering commitment to Flybe could have landed them in serious financial trouble after the company’s demise. While earning nothing from matchday revenue and having no front-of-shirt sponsor, the club would have had to consider making redundancies across the board.
With the football season suspended indefinitely, finding a new front-of-shirt sponsor would have proved impossible for most other clubs. But the way in which Exeter worked with the airline didn’t go unnoticed. The club’s loyalty and contribution to the partnership proved incredibly attractive for other companies, especially those local to the club.
“The end of Flybe was a very, very sad day for us,” Tagg said. “But fortune favours the brave… and the trust model is a brave one, there’s no doubt about that.”
Two weeks after Flybe went bankrupt, Exeter announced it had struck a three-year deal with UK retailer Carpet Right, which will expire at the end of the 2022-23 season. The company’s chief executive, Wilf Walsh, is an Exeter City season ticket holder and has seen first-hand the club’s loyalty to its partners.
“I can’t tell you how lucky we feel at this point,” Tagg said. “Of course, the harder I work the luckier I get! He is a supporter and a season ticket holder. But whether he was or he wasn’t, we’ll be doing everything we can to maximise the opportunities.”
“The way I used to work with Flybe: if you can give me something, great. It’s not a favour or something that has to be given back later. It worked both ways: if they wanted something that I could give, they could have it with goodwill. We will do exactly the same with Carpet Right, as we do with all our sponsors.”
Carpet Right is recovering from its own financial difficulties. The company was rescued in November 2019 and though it is in the process of paying off emergency loans, it is now able to trade normally. Tagg and Walsh’s understanding of financial difficulties means that Exeter and Carpet Right have an immediate kinship.
Tagg and the trust’s personal commitment to commercial relationships has benefitted Exeter since they took over in 2003, and Tagg believes the club’s latest sponsorship deal shows that continues to be true.
“I’m certainly not saying we’re better than anybody else or trying to single us out as something special. But I just think that’s the right approach to people and business. The [Supporters] Trust has that same ethos, and it works in my opinion. That’s why so many people like working with it and for it.”
EFL relief package
With Carpet Right in their corner, prior experience of managing a long-term financial crisis and a club philosophy geared toward sustainability rather than growth, Exeter City know they might be better equipped to handle the current crisis than some other English Football League clubs.
“It wasn’t that long ago when, had we not had money coming in on a Saturday, we wouldn’t have been able to pay wages the following Friday,” Tagg said. “There are still people at the club that remember that situation and how dire, desperate and uncomfortable that was, in so many different ways. That’s probably meant we’ve probably been slightly more cautious than many clubs. We’re not well placed, but reasonably well-placed, perhaps, in comparison to many others.”
For clubs in direr need than Exeter, the EFL has made a total of £50m – £28m in forwarded broadcast rights payments and £22m in interest-free loans – available to clubs in the second-tier Championship, third-tier League One and fourth-tier League Two.
Championship clubs have each received £800,000 and can apply for interest-free loans up to £584,000, while League One clubs received £250,000 and are entitled to a loan of £183,000.
As a member of League Two, Exeter have received £164,000 from the EFL and can take out an interest-free loan of up to £120,000, should it be necessary.
Tagg is happy with the EFL’s swift action: “I’ve been critical of them on many occasions, but from what I’ve seen behind the scenes, the amount of work the EFL has done to look at different scenarios and plan for what might happen over various periods of time has been exceptional. I think they have been very sensible in terms of how they’ve stretched the risk as far as they feel able and capable at this point.”
But while the EFL’s relief package will help clubs survive in the short term, pay cuts and layoffs could become the norm if the UK’s Covid-19 crisis lasts into the summer. League One club Tranmere Rovers have already asked their players to take a 10-per-cent pay cut, with chairman Mark Palios expressing a hope that wages will be lowered permanently after the crisis.
Tagg believes the Professional Footballers Association, the UK players’ union, should be more active in setting guidelines for clubs and alleviating financial loss for players. While he doesn’t foresee Exeter resorting to pay cuts and redundancies just yet, Tagg knows that clubs across the English Football League, as well as their staff, are incredibly vulnerable.
“You don’t know how long the storm will be. We can at least cope with it in the short to medium term, but the reality is that some will not be able to cope. Whether that’s after two weeks, two months, or a year. At every point along the way, there will be any number of clubs that start to struggle. There will be nobody that escapes from this without it being extremely difficult and detrimental.”
As a League Two club that nearly went bankrupt, Exeter have worked wonders to put themselves on relatively good footing. Part of that is down to luck, but plenty of it was by design. The long-term partnership with Flybe showed that Exeter are the perfect friend to call upon in a crisis.
“Flybe got value because we worked bloody hard to ensure they did, and we’ll do exactly the same for Carpet Right because they’ve showed some faith in us at a difficult time for the industry,” Tagg said. “I think this is going to be an exceptional relationship.”