“The Premier League has written to Government to express its concern at the decisions taken to restrict, and potentially delay, the planned programme for the return of fans to football stadiums. For each month of the season without fans, more than 100 million pounds are lost to football across the leagues, with consequent damage to the local and national economy.”
The statement from the Premier League tells the story of how the lack of fans is hurting. It is not just the clubs and players but the brands that associate with the sport which are also hemorrhaging.
Each month of the sport without fans could mean a loss of £100 million to football across all the matches in the UK, the Premier League also said. The season is set to officially begin today, September 12, and there seems little respite in sight. The last match for the season is scheduled for May 23, 2021. Never before in its three-decade history has the league faced such financial uncertainty.
When the financials are officially revealed, the Premier League is expected to announce a fall in revenues for the first time in its history.
The numbers for 2020-21 for the league is sure to be revised downwards. The last season had seen revenues fall. This coming season could, perhaps, be its worst.
The last season, extended because of the coronavirus, had ended in July with Liverpool emerging as the winners for the first time in 30 years. Several matches had to be postponed, television broadcast disrupted and fans were not allowed inside the stadium after the spread of the coronavirus.
Mega TV deal goes bad
Unfortunately, as the Premier League must be realising, when it rains, it pours.
Its partnership with brands has taken a hit. Now a lucrative broadcast contract for the Chinese market has been terminated. The broadcast deal with PP Sports had been signed to last till the 2021-22 season but was called off by the two sides. When the £500 million deal was signed in 2016, it was touted as the biggest deal by both sides.
Media reports suggest that PP Sports had withheld payment of £160 million for the 2019-20 season that was due in March. PP Sports is owned by Suning Holdings and has the exclusive rights for to broadcast La Liga, Serie A, the German Bundesliga and Ligue 1 for the Chinese market. It had also bought a majority stake in Inter Milan four years ago.
PP Sports now plans to sue the Premier League for terminating the deal.
It was critical for Premier League that its biggest ever broadcast deal run its full cycle because part of the money that it gets from selling television rights is passed on to the teams which are part of the league.
Football is one of the top five popular sport in China, according to a report by Nielsen in 2018. Several other sports leagues from Europe and the US are closely followed in China.
Small clubs face heat
The smaller clubs could face a tough situation as revenues could dry up for them. According to Deloitte, which closely tracks the financial performance of football clubs, the smaller clubs have been hurting. During 2018-19, the last season when there was no pandemic impact, 20 teams had an aggregate loss of £165 million.
With the UK government limiting sports events to a maximum of 1000 people, small teams may not be able to enjoy the paid support of fans, so critical for them to thrive.
Arsenal is the only club to have announced a cut in wages for the players. If clubs have to tide over the challenges now, more of them will have to strike a deal with the players.
The home truth is going to hit hard, sooner or later. When things limp back to normal, football may never be the same again.
- Ashutosh Sinha is the founder of WordWiseWeb Media. Read his weekly column on the business of sport here. Connect with him @ashutoshsinha00 on Twitter