By Nick Varney
Who would be a Football manager? It’s a term that is often thrown about nowadays given the pressure and weigh of expectation that falls on their shoulders within the modern era. Being a Football manager is no ordinary job, no longer are they just a tactician or coach, they are a tactician, coach, man manager, figurehead for their club and often the spokesperson for all manner of things, as we have seen most recently with the short lived European Super League. It’s a role that demands focus, preparation, extensive stakeholder management and that’s without the weighty expectations of those associated with each individual Club to deliver a result week in week out.
It’s no secret that Football managers get paid handsomely. Except we, the general public don’t often hear about it until we see the severance package or ‘payoff’ as it’s often referred to more widely. Unsurprisingly, these are often significant, particularly at the top of the game and it does not sit particularly well with your average football fan, whose observing the cost of their involvement in each club as rising all the time. Often, it’s portrayed as being ‘rewarded by failure’, a sort of strange consolation prize for not achieving a set of pre-conceived goals or expectations. No such thing exists in the wider public or private sector so why is Football such a unique situation when it comes to sackings?
Well, there are two key evolutions within the footballing landscape that have led us to this point where managers have taken the balance of power and why they get paid so handsomely to ‘fail’. The first of which is the core driver behind this, money, and specifically the wild increases in riches over the last 15 years.
In order to represent how drastically these have increased over the past 10+ years, we have looked at both the Champions League and Premier League finances and the relevant differences between the 2006/ 2007 season and the 2019/ 2020 season.
According to the 2019/2020 figures, clubs reaching the Champions League group stages (Four clubs from the Premier League), clubs received a minimum payment of €15m each regardless of their performance. That number is then topped up depending on their group stage results with a win being worth €2.7m and a draw worth €900,000. Should a club reach the Last 16, they will bank an extra €9.5m followed by another €10.5m, €12m and €15m for the quarter-finals, semi-finals and Final respectively. So, in purely performance-related terms, clubs who go all the way can expect a minimum of €76m without factoring in payments based on UEFA’s coefficient (historic ranking) and broadcast market pool.
Let’s compare that with the figures in 2006/ 2007. According to UEFA, each club received a participation premium of €2m. The surplus revenue generated over and above the expected revenue saw each club receive an extra €1m. Each club also received €400,000 per group match played, totalling €2.4m per club. Group victories were worth €600,000, and each draw €300,000. The 16 teams that reached the first knockout round received a bonus of €2.2m each. Another €2.5m was earned by each of the eight quarter-finalists, and the four semi-finalists each received €3m. For winning the UEFA Champions League final, AC Milan received €7m, while the runners-up Liverpool FC received €4m.
Next, let’s take a look at the Premier League. Mere participation in the Premier League is highly rewarding from a financial perspective, with each of the division’s 20 clubs getting a portion of the financial pie. Premier league clubs can be split into roughly three categories, those competing for the title and aiming for a top 4 finish, those hoping to compete and potentially grab a European spot and finally those hoping to avoid relegation. Every season, there are around 13 Premier League clubs whose first and most important objective is to avoid relegation and the reasoning behind that is purely financial. According to the 2019/2020 figures each Premier League club pocketed a cool £77m simple for taking part. That is without factoring in their merit share and the facility fee based on the number of times their matches are broadcast live.
In the 2019/ 2020 season, Bournemouth received £96.5m and finished 20th in the division. If we, compare that with the 2006/2007 season, 20th placed Derby County received an incomparable £29.1m for finishing at the bottom of the pile. The reward for simply being involved in the Premier League has become so lucrative that Clubs will stop at nothing to achieve this. That 300% increase in windfall Is significant as it is but as that has increased, so has the disparity between England’s top two divisions creating even more of a desperate financial cliff for those that don’t survive.
The Championship’s financial package, even with Sky’s new record TV deal worth £595m is dwarfed in comparison to those of the Premier League. Championship clubs chosen to host live matches for television are awarded £100,000 per match, with Sunday fixtures worth £120,000 and Thursday games earning £140,000. Furthermore, Clubs playing away from home for those television fixtures receive a fixed fee of £10,000.
As for prize money, each Championship side receives the same fixed Basic Award and Solidarity Payment. These sums come as part of an agreement between the EFL and the Premier League. The Basic Award stands at £2.3m and the Solidarity Payment is £4.5m.
That’s without factoring in the increasingly lucrative parachute payments, designed to aid relegated Premier League clubs. These have meant that being promoted from the Championship into the Premier League, also guarantees a minimum of two years’ worth of parachute payments which equates to around £70m, hence the “£170m match” tag for the play-off final.
It’s designed to break the fall of those who get relegated, however those payments can quickly dwindle with a high-priced squad and top tier facilities. The reality is though, if you drop out of the Premier League into the Championship, you’re jumping off a cliff financially and facing an uphill battle to get back. On the flip side, promotion to the Premier League allows considerable financial impetus into the a club resulting in better structural changes throughout and subsequently a massive competitive advantage if they were to then drop back down to the Championship.
With the aid of these examples, It’s easy to now see the pressure those in their respective board rooms place on their playing staff and the respective management staff to lead achieve their goals be that promotion or maintaining a league position. In truth, the large majority of those clubs featured in the top two divisions are focused on one thing and one thing only, achieving the next level, be that promotion to the Premier League, maintaining a position within the Premier League or pursuing a place in one of Europe’s two elite competitions.
That relentless drive to achieve has resulted in a ‘win at all costs’ marketplace. This attitude has brought about the second key factor that has led us to the point that managers have stolen the balance of power. The role of a Football manager is one of little to no job security. It’s a week-to-week performance review with the fate of a manager, particularly a failing one being decided in a gladiatorial like fashion each weekend both in their stadiums and across social media.
Throughout the season, Football fans tune into social media to deliver an immediate and often negative verdict on that afternoon’s fixture. On top of that, pundits and journalists, often paid to deliver hard hitting and often controversial opinions serve up their immediate reflections to an audience of millions across their numerous platforms which are then broadcast on social media to add further fuel to swelling fire.
It’s therefore little surprise that owners who despite their initial intentions to let their intended manager build a squad and a culture become entrapped in a battle between appeasing the media and fans and building a sustainably run and successful football club.
The financial incentives for winning paired with the constant pressure and expectation mean that decision makers tend to have very little patience when success is not achieved at the first time of asking. The result of this immediate thirst for success is that the job security of management staff is at record lows. A Sky Sports study conducted in May 2020 showed that amongst the top 92 clubs in England the average tenure for a departing manager in the 2019/ 2020 season was an all-time low of just 423 days.
Due to these increasingly shortened tenures and lack of security, the few managers that do meet expectation and achieve success become extremely highly sought after and just like in any competitive job market, employers must always seek to offer the most attractive terms in order to attract and ensure the services of the best candidates.
As the rewards for winning have increased exponentially over the years. The costs of maintaining a competitive playing staff and management have staff have also significantly increased. Managers running the rule over many of England’s top clubs are commanding significant salaries to bring them success in pursuit of the riches that lie in wait for those that achieve it and that has trickled all the way down the footballing pyramid.
Over this same period of time, the negotiating power has increasingly fallen in the manager’s favour. As they have become more sought after, their positions have strengthened and in order to combat the increasingly low job security, they have manufactured a position that has enabled them to effectively guarantee their salary for the duration of the agreed contract.
It is, perhaps, one of the most unconventional employment situations across the spectrum. Even at clubs like Manchester United, managers like Mourinho hold the balance of power in the negotiation of their employment and subsequent termination. “The bigger the name, the better the negotiating power on the notice period,” one agent stated.
Paying off managers is extraordinarily expensive. Manchester United’s half-yearly accounts revealed it had cost £19.6m to pay off Mourinho and his assistants, who had previously received a total of more than £8m from Chelsea. Furthermore, it is being reported that his most recent dismissal as manager of Tottenham, could have cost the club upwards of £25m. However, in every single one of these cases, these clubs identified and employed him as the man they wanted to power them up the ladder. It’s little surprise that to employ one of the most revered managers in the world, they had to sign up to his terms be that in success or failure.
Simply put, these dismissals and the severance packages that come alongside them are the cost of doing business in the Premier League these days.
So, to answer the question, why do football managers receive such significant severance packages?
The drive to achieve success, particularly on a financial level has over the years reduced managerial job security to such a point that they had to protect their salaries. Added to that, the scarcity of top football managers has created a situation whereby demand heavily outweighs supply. As such, clubs are willing to pay a higher price to gamble on a manager who could potentially provide those clubs with significant success, which invariably comes at a price either way it turns out.