The COVID-19 crisis has thrown up another issue that simply can’t be avoided. As the season nears a make or break period with games being played behind closed doors or a premature end to the campaign, football’s paymasters Sky Sports and newcomers BT Sports reportedly stand to lose £1B if the lockdown goes on until August.
Sky Sports are feeling the pinch with its global presence decimated and with its advertising streams dipping during the crisis. BT Sport are in an even worse position because of their status as newcomers, with fewer resources available to them in terms of a back catalogue of sport to tide them over.
As I said at the beginning of the COVID-19 outbreak, the commercial ramifications would be severely harsh and the implications would be enormous. Back in mid-March, I concluded in an article:
“The broadcasters such as Sky and BT may even try to find a legal loophole from making payments in the event of fans being banned from matches. They also face the prospect of advertising losses and having to restructure their broadcasts to offset the lack of atmosphere.”
Enders Analysis has published a report that worryingly states:
“Group activities of 25 people involving close physical contact without protection will not plausibly be the first to be allowed when some social life resumes.”
Sky Sports has already had to stop charging pubs, clubs and sports bars and pay by TV subscribers have also been placed on hold, while BT Sport have suggested that their customers contact them to reach an agreement.
The COVID-19 outbreak is an unprecedented set of circumstances and the longer it goes on, the more uncertain the future becomes with Enders claiming that “Sky would lose £700m and BT £228m in revenues”
These are staggering figures and for Sky, in particular, a business that has managed to almost single-handedly create the Premier League with its global presence and split channel packages, it’s doubly devastating.
Sky Sports these days is a stream of tiring chatter about what’s not going on! It has gone from a banquet of glorious delights to a cheese sandwich minus the cheese.
In fact, from a personal point of view, I haven’t seen Sky Sports for two or three weeks because unlike the news, which I tend to avoid as much as possible, there are no genuine updates on the Premier League or Champions League until April 30th at the earliest.
I doubt the landscape is going to miraculously change at that point either and clubs who’s financial projections are lucky enough to include the Premier League or Champions League football, may find their pay packets short as a result of the COVID-19 lockdown. As a revenue stream dries up, it makes the reality of future expenditure more unlikely and this includes the transfer window, which I suspect will be hit hard.
Sky Sports are looking to trim their overheads and like a man in a sinking boat, they are throwing out everything that increases their chances of remaining above the water.
Sky and BT could make potential savings if football stays off our screens because the upcoming rights payments would probably be cancelled altogether. The two giants are due to pay the Premier League its clubs their agreed six-month license fee for the first half of the 2020-21 season, which is worth a colossal £530m.
Moving on from there, BT Sport are due to pay their bill to UEFA for their share of the Champions League rights which comes to around £394m. It’s like Monopoly money in terms of the figures that are being mentioned and who knows what the actual club club like Chelsea, Liverpool, Manchester United, Tottenham, Newcastle United, Aston Villa, Norwich, Bournemouth alike may have to do to make sure they survive. In this game, you can’t remortgage a set of train stations to keep playing.
How long can this possibly go on without impacting on clubs themselves or finally hitting the players’ lucrative salaries?
So far, Liverpool became the fifth club and the biggest club in the Premier League to use the government’s job retention scheme, joining Newcastle United, Tottenham, Bournemouth and Norwich. Taking use of the government’s furlough scheme which covers 80 per cent of wages up to £2500 per month for all non playing staff on the payroll.
All five Premier League clubs( Tottenham, Norwich City, Newcastle United, Tottenham and now Liverpool) have agreed to top up the wages of their respective staff members on furlough. Irrespective of that all of them have been blasted by supporters and non supporters alike with Liverpool being the latest one to draw the ire of the general public over their controversial statement.
However its not long I suggest before the whole sport starts to financially contract, clubs will have no choice but to trim those budgets which are the biggest. In this case, it’s obvious that the majority of gate receipts go straight into the pockets of the players, so it’s only a matter of time.
Stay tuned, stay safe.