Furlough Sees RED

Liverpool Football Club reversed their decision to furlough their non-playing staff after getting negative responses from the public, namely from those associated with the club in one way or another. CEO Peter Moore claimed that the club made the wrong decision and apologized. Now, bear in mind, Liverpool is not the only club to furlough their staff. Tottenham Hotspur, Bournemouth, Newcastle United, and Norwich City are the other Premier League clubs to have placed their staff on furlough.

So, what’s the big deal here?

First of all, what is furlough? Furlough is a temporary leave of absence granted by an employer due to certain unforeseen circumstances, such as worsening economic conditions, due to a pandemic which affects the bottom line of the organization. Now, because of COVID-19, Chancellor Rishi Sunak unveiled a job retention scheme which essentially means that the government will pay 80% of staff wages (up to a maximum £2,500 per month), which include staff on furlough. In a nutshell, Liverpool basically told their employees to take a leave of absence whilst having the government pay a part (or most) of their wages. The issue here is the fact that Liverpool sought government funding when the club reportedly made a £42 million profit last season, which made them look greedy. And greed is bad. Also, some argue that other organizations, such as SME’s, need government funding more than Liverpool and that Liverpool is simply reducing the pie. Again, greed. And greed is bad.

It is important to understand that Liverpool Football Club is, first and foremost, a business entity. Like all for-profit organizations, it’s the financial statements that make the most logical argument. The £42 million profit may seem like a substantial amount of money, but, as mentioned by Peter Moore, Liverpool is still operating as per usual (expense wise) while not generating revenue. This means that money is going out but none coming in and, in the long run, Liverpool will be operating at a loss (depending on the severity of the COVID-19 pandemic of course). Now, Liverpool did not get their £42 million profit by sheer luck. It takes great business acumen to turn around a club that was on the brink of administration. To my point, clearly Liverpool was attempting their best to utilise all alternative resources other than the £42 million to save for when all other options have been exhausted. It’s important to digest the severity of the current situation and playing your card early on may result in disaster in the long run. At this point, nobody knows how long this pandemic will last. Therefore, it’s good to have money in the bank.

BUT, not many people view Liverpool as a business entity. To many, especially the former players and fans (and of course politicians who are swayed by the opinions of the crowd), Liverpool is a football club, a community organization that is not supposed to be thinking about dollars and cents, but rather focus on the people of Liverpool. It doesn’t help that Liverpool’s PR team have been echoing the notion of family and inclusion and that Liverpool Football Club is a bond akin to family. This whole debacle is nothing more than a PR disaster for Liverpool. Business wise, it was not the worst decision. Image wise, it was absolutely the worst decision.

Owning a football club is not like owning any other business. You are essentially owning a part of a community. With Liverpool, you are owning the heart of an entire city. As we all know, the heart is not rational, rather is it emotional. The owners should always remember that although the math makes sense to the brain, it’s always and will always be the heart that drives the relentless and unequivocal support of the Liverpool fans. At the end of the day, football is nothing without the fans. Always listen to the beating heart of Liverpool Football Club.