I hope you are all keeping safe and well during these troubling times and that you are, like I, hopeful as we look forwards to a time when we are all permitted to return to something resembling a new “normal” for our athletics and running family. Work continues at all levels of the sport to prepare for a progressive and innovative return to club and group activity and competition, and we remain optimistic that we will be afforded this opportunity in the coming period whilst continuing to adhere to government guidance at all times. We recognise that in the immediate term we may all need to adapt our activities to comply with government guidance but with perseverance and patience we will get back to action, stronger together.
The purpose of this specific communications is to update you on the latest information and action being taken regarding EA’s financial and organisational planning.
You will be aware from our communications in recent weeks and months, that in light of COVID-19 related financial impacts, it has been necessary for us to review how we operate, to do all we can to income generate to re-invest back into the sport, reduce our operating costs and to see the organisation safely through this unprecedented period.
As part of this planning we have worked to ensure continuity of support and service to our members through initiatives such as our Athletics & Running @home platform on www.englandathletics.org. This content has been enjoyed by over 100,000 people from across the England Athletics family. I would like to thank everyone who has helped us during this period including the 1,400 clubs and member bodies that have affiliated and 77,000 athletes and runners who have registered since April.
We hope that this content has been useful for members during this period of lockdown in addition to the regular guidance we have issued related to “return to training and competition” planning. We have now evolved the @home platform to reflect the safely distanced messaging and will continue to produce services to benefit participants of all levels in the coming period. Our virtual challenges and competitions such as the Weekly30 are important parts of this phase of return.
The sector and the wider landscape have been greatly affected during this period and has changed significantly since COVID-19 struck and the ability to deliver normal services that realise income for many organisations has been hampered greatly.
Whilst our funding from Sport England is now secure until the end of 2022, this only represents c.30% of our annual income. Therefore, our sport is not immune to the current financial disruption and we remain uncertain as to the long-term prognosis and impacts of COVID-19 on income streams such as affiliation, athlete registration, road race licence income, education and event income and income from our commercial partners.
Therefore, we have actively worked since lockdown in March 2020 to cut our costs, reduce expenditure and to explore income generation opportunities to fill a significant financial hole in our annual operational budget. We forecast the budget shortfall in 2020/21 will be in the region of £750k and have reviewed this regularly as part of ongoing scenario planning work.
As some of you will know, mitigation action has included the furloughing of c.50% of the company workforce, introducing pay cuts for members of the Senior Leadership Team, reducing Board and Council costs and restricting further activity expenditure.
We have closed our Birmingham head office until further notice and continue to review this decision with our partner UKA and will only return to these offices as and when we can be sure that it is safe to do so. We have been able to manage this unprecedented situation relatively efficiently due to enhancements made in our digital systems but recognise that in the long term we will need to assess if such an office will be required to meet operational and financial requirements in the future.
We have also explored the feasibility of accessing a government loan to help us with cashflow, but the risks associated with this and the ability to take on further debt is a serious risk and one we are not prepared to take at this present time.
Despite these mitigations it has now become clear, as is the case with many other organisations across the sector, that we will need to implement a wider restructure of our staffing operation to reduce our cost base and in doing so reduce the number of individuals employed by England Athletics. I am sure that you would appreciate that this has not been an easy decision to reach but it is a necessary one to initiate if we are to maintain the services we provide to our clubs, athletes, runners, coaches, officials, volunteers and partner organisations across the sport and to protect the future of the company. The main reason for the scale of this proposed reorganisation is financial.
As a not for profit organisation with the aim of re-investing back into the sport, we are not in a position to keep significant reserves but are only required to keep enough to be able to close the business down efficiently and correctly should we ever be required to do so. It is clear to the EA Board and I that unless we initiate a company reorganisation and reduce our fixed cost base, then the company will enter a precarious position very quickly as our cash flow position is adversely affected.
The plans that we are looking to initiate will realise a reduction in our employee headcount by roughly a third from a current total of 64 employees (20-22 roles). A statutory consultation process will be required to take place, and this began on July 1st.
I am sure you will recognise that during the next month or two, a number of individuals will be naturally concerned by what these plans may mean for them and their colleagues. We will do whatever we can to support these individuals and to continue our support to the wider sport, to minimise disruption and to maintain continuity of service. Despite this restructure, our strategic priorities of supporting clubs, competitions, people, places and talented athletes remain and we will continue to strive to help our athletes and runners of all abilities and backgrounds to fulfil their potential and to enjoy a lifelong experience in our sport. We anticipate that our reorganisation will be completed by early September and we will keep you informed as we go through this period of change.
We will need to continue to review our cost base carefully in the coming period as we look to a future post COVID-19. We will do all we can to work efficiently and to make the best use of the resource that we have to service and support our sport and will embrace digital technology as a core aspect of how we work- something that has served us well over the past 3 months.
Thanks for your ongoing support and for everything that you are doing to sustain our great sport at this time.
Chris Jones, CEO England Athletics