Covid-19 lockdown could cost Palace £37m in lost revenues

The covid-19 lockdown of top-tier football may end up costing Crystal Palace more than £37million.

Feeling the squeeze: has someone just shown Palace boss the club’s financial figures for the pandemic lockdown?

That’s the latest estimate by a leading football finance analyst, on the day after the chairman of the FA, Greg Clarke warned a council meeting that the game in England was in danger of “losing clubs and leagues as finances collapse”.

Palace are one of two Premier League clubs (the other is Newcastle, run by that paragon of business virtue, Mike Ashley) who have opted to use emergency business measures during the coronavirus and deferred filing their latest annual accounts by three months. All perfectly legal, and morally a good deal more acceptable to many that what some other clubs have chosen to do, such as laying off backroom staff, or using the government’s furlough scheme, while keeping their players on full wages of five-figure sums every week.

So far, Premier League Newcastle, Norwich and Bournemouth have decided to take the government subsidy of their (non-playing) staffs’ wages, though Liverpool’s owners thought better of the idea after the public outcry. Tottenham, who reported a £89.4million profit in their last full year’s accounts, were less concerned about public opinion and have gone ahead to furlough staff.

Palace made a loss of £35.5million for the last season for which financial figures are available (2017-2018). With a much-reduced turnover this season because of covid-19, they look set to be hit by bigger losses still.

Talks between the clubs, the players and the Premier League last week broke down when agreement could not be reached over how some of the clubs can continue to meet their soaring overheads while their incomes have been squeezed down to almost nothing.

Palace’s £35.5m losses for 2017-2018 (the latest financial figures available) won’t be improved by the coronavirus lockdown of football

Clarke was uncompromising in his warning yesterday. “Football faces economic challenges beyond the wildest imagination of those who run it,” he said.

“The pandemic will be followed by its economic consequences and all business sectors will suffer.

“We face the danger of losing clubs and leagues as finances collapse. Many communities could lose the clubs at their heart, with little chance of resurrection. In the face of this unprecedented adversity, all the stakeholders within the game from players, fans, clubs, owners and administrators need to step up and share the pain to keep the game alive.”

Clarke has a remit which covers all football, including those outside the promised land of the Premier League where some had experienced hard times even before anyone had heard of Wuhan or covid-19: Bury were expelled from the Football League last autumn, without playing a match, due to the club’s inability to pay its bills, and Bolton Wanderers, one of the founding clubs of the Football League, had been struggling all season in the third-tier with a hefty points deduction after they, too, had money problems.

Worried: FA chairman Geoff Clarke

But those alarm signals are now sounding around some Premier League clubs, according to research by the sport website The Athletic.

Despite the billions they receive in TV payments from the likes of Sky and BT Sport, Palace and their Premier League rivals have been wracking up significant losses, largely through huge player wages bills and the money paid to their agents.

Covid-19 has “brought to light just how stretched the industry is and how many clubs live from hand to mouth”, Dr Dan Plumley, a sports finance specialist at Sheffield Hallam University, told The Athletic.

The last financial figures available for Palace show that the club had a player wages to income ratio of 78 per cent, against an average across the Premier League calculated by The Athletic for last season of 64 per cent.

That means that for every £1 that comes in to Selhurst Park, 78p is spent on players.

Compare Palace’s ratio to their Premier League rivals in London: Chelsea 64 per cent; Arsenal 63 per cent; Tottenham 39 per cent.

According to the latest available figures, Palace had an annual turnover of £150.3million – or about one-quarter of that enjoyed by the Premier League’s biggest money-spinners, Manchester United.

As The Athletic explains, “The only way the clubs further down the economic ladder can even hope to compete with the big-earners on the pitch is to spend a higher percentage of their income on salaries and ask their owners to keep topping up the shortfalls.

“These clubs also tend to be more reliant on the league’s main source of income: broadcast rights.”

And there’s been no live football on our tellies for four weeks now.

For Palace, 81 per cent of their turnover comes from television revenue.

Nick Harris’s calculations show a potential £37m blackhole facing Palace

And now the Premier League is preparing to pay refunds to some of the overseas broadcasters who paid top dollar for TV rights – some reckon as much as £762million if the remaining games are not played, which goes a long way to explain why so few leading figures in football are prepared to even consider giving up on finishing the season.

While talks continue over re-jigged transfer windows and contract extensions for players, the bottom line is that football, just like any other business, will not get through the coronavirus emergency financially unscathed.

Nick Harris, the widely respected sports data journalist, today published a set of figures which estimates that the coronavirus lockdown could end up creating a £1billion blackhole for Premier League clubs.

For Palace, Harris’s figures suggest lost incomes of £31.9million from television, £1.9million in match revenue, and £3.3million in lost commercial income, combining for a total of £37.1million.

That, of course, is a lot less than some of the other Premier League clubs, but it is certainly enough to seriously reduce any meagre transfer budget manager Roy Hodgson might have thought he had, and it could further delay the club’s £100million new stand. Two years since it was granted planning permission, it is beginning to look like another stalled major scheme in Croydon.

But as the FA’s Clarke said yesterday, “Time is pressing as football burns through its cash reserves with no sign yet of a resumption of the game. Pointing fingers serves no purpose. It is time for the stakeholders to agree common cause to save our game. Contribute. Football is a team game and now is the time for teamwork.”

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1 Response to Covid-19 lockdown could cost Palace £37m in lost revenues

  1. Anthony Mills says:

    Isn’t this one of the most obvious examples of how pay has become so totally skewed, and madly unbalanced, with the people we have suddenly realised we actually depend on for our daily lives, the cleaners and delivery drivers, supermarket staff and care workers, never mind “our glorious NHS heroes” being paid a pittance, so little that many qualify for state income support ordinarily, while these skilful but essentially superfluous entertainers are paid OBSCENE amounts every week.
    Take it away from them, all of them.
    Create a pay structure within normal bounds and redistribute the savings to save the game. It’s long past time there was a financial adjustment and this is the ideal opportunity.
    And for those who say, ‘can’t do that, they have contracts’ how many employers with equally binding contracts of employment with their staff have imposed restructured pay and conditions when their businesses were failing? It can be done…

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