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Against the ropes: redundancies in the sport sector

We have seen the unfortunate but inevitable start of significant job losses being publicly announced in the sector. The first major organisation at the end of June to announce this was the Football Association (FA), which announced 124 redundancies, or around 15 per cent of their workforce. In early July, the Rugby Football Union (RFU) also announced 139 potential job losses, around 24 per cent of their workforce.

This is the unhappy reality of a sector which is heavily reliant on revenue from large events and the ‘matchday experience.’ With significant uncertainty over when the FA may be able to host games and other events at Wembley, and the RFU facing an autumn with no internationals, both organisations have openly commented that they could face losses into the tens, if not the hundreds, of millions of pounds. Income from tickets, hospitality, broadcasting and commercial streams are likely to be decimated over the next year.

The timing is, in part, likely to be linked with the expected finish of the Government’s, Coronavirus Job Retention Scheme (Furlough) which will begin tapering off next month and stop completely by the end of October. The FA and RFU have likely already reviewed and reduced significant non-staff costs and, due to the additional time afforded by the Furlough scheme, are now having to make difficult decisions over their staff costs.

These two organisations will not be the sole entities to make tough decisions and all organisations, across every part of the sector, are at least having to consider the same. The FA and RFU are most likely to have modelled differing scenarios to understand their financial positions and how much action needs to be taken. However, with still significant knowledge gaps about the return of major income streams, this is still open to some crystal ball gazing. These models will almost certainly be used to evidence decision making, even if they don’t provide the answers.

If your organisation is struggling with the same concerns (as so many of you are), always seek appropriate professional advice to ensure the process is completed fairly and legally. If your organisation is considering making more than 20 positions redundant at the same time, then you will be subject to the collective redundancy rules, requiring a formal consultation process, for a minimum of 30 days for 20 to 99 redundancies, and at least 45 days for over 100 redundancies. The consultation process must cover consultation with staff representatives to minimise redundancies, the specific reasons for redundancies and whether retraining is possible.

This is never a very palatable topic but with the strain our sector ongoing, it is one sports organisations should consider sooner rather than later.

Author: Tom Wilson, Partner at haysmacintyre