Revealed! The long-term impact of Premier League suspension on Newcastle United – and the commitment Mike Ashley MUST make
The short-term impact of the coronavirus outbreak on Newcastle United is unlikely to be a game changer – but the Magpies could well be counting the cost long-term, according to football finance expert Kieran Maguire.
Speaking exclusively to the Gazette, Maguire, author of The Price of Football: The Finance and Economics of the Beautiful Game, believes the suspension of football across England is not likely to have a huge impact on the Premier League financially.
But for clubs like Newcastle, a club still fairly heavily reliant on their loyal fanbase, the problems could prove far-reaching.
Having run the numbers, Maguire explains: “This lack of games will be hitting Newcastle United. Not as much as teams in a less financially stable position, but take away 13% of anyone's revenue streams and it will hit them hard.
“The problem though is not necessarily the short-term hit, it is long-term one.
“We have absolutely no idea what this country will look like when we come out the other end of this. It is likely people will lose loved ones, jobs, revenue and much more.
“If someone does not know if they will have a job in a week or two are they going to be buying a season ticket? And then will they be buying replica shirts and other club merchandise? It could turn out to be the case that people will see shirts as a luxury item, something unthinkable just a few weeks ago.”
The income of Premier League clubs is largely made up of the sale of top flight broadcasting rights – and with no football to broadcast, those contractual agreements bring their own challenges.
And it is for that reason Maguire is certain the Premier League will finish this season, whatever the timeframe – because if they don’t, they’ll have a big bill to pay the likes of Sky, BT Sports and others.
“I think this season will end up going ahead and there will be a compromise because the biggest problem facing the Premier League and its clubs is the amount which will be due back to broadcasters if the season cannot be completed,” said Maguire, a senior teacher in accounting and finance at the University of Liverpool, where he teaches the Football Industries MBA.
“Even if the season is forced behind closed doors, they will no doubt make sure it is played to a finish.
“It would be no surprise to see games with empty stadiums but all on TV, live, seven days a week, when things can restart, as another compromise to the broadcasters who pour so much money into the game season-on-season.
“You could even have season ticket holders sent links to view games online, instead of being allowed into the game.”
While Premier League clubs will undoubtedly have headaches about broadcasting issues, the financial implications of the COVID-19 halt on English football will be bigger the further down the pyramid you look.
“In the main, the Premier League clubs have the income to be OK when this is over but further down the pyramid the same rule does not apply,” said Maguire.
“Just drop down to the Championship and look to a team just outside the play-offs in Millwall.
“They are a reasonably well-run club but still make a loss. And this could well be costing them in the region of £200,000 per missed game.
“They could go from losing a millions or two a year to much worse.
“Even teams with philanthropist owners could well hit financial trouble.
“The whole economy is likely to tank and the owner's who have cash may see their outside investments and revenue streams run dry. And as we have seen in the past, when that happens, it is often the football club which goes first.”
United owner Mike Ashley’s retail empire is set to take a considerable hit as a result of the UK coronavirus outbreak.
Frasers Group Plc, the name of Ashley’s company formerly known as Sports Direct, released a statement on Friday claiming they will be unable to now make financial forecasts for 2020 due to on-going uncertainty.
They also claim while the true impact of the COVID-19 pandemic is yet to be determined, they predict the virus ‘will cause significant disruption to its business’.
While Ashley may have worries elsewhere in his empire, Maguire thinks Newcastle could learn a lesson or two from one of their Premier League rivals – Brighton & Hove Albion – and simply do ‘the right thing’.
“Newcastle United should be OK, but they will have to cut costs, and make changes,” he said.
“We have seen other clubs such as Brighton guarantee to pay part-time staff who work on matchdays, could Newcastle United do the same? It would certainly be a good PR move for Mike Ashley.”
When asked for a response on the above matter by the Gazette, the club did not respond.