Bad press is one thing - clearly and repeatedly stating views that alienate 60% of your fan-base is something entirely different.
His world, his legacy, is crumbling. A massive decline in album sales just 18 months after the previous album's release, record shops refusing to stock his CDs, advertising space owners taking down his posters, long established Smiths tribute nights having to close, fan forums effectively shutting down (this one isn't but others are). If you really feel this situation is just a bit of bad press, you're as deluded as Steve himself.
Steve must unambiguously retract his support for right-wing politics, racism and the For Bigots party, or that's it. Simple choice for you there, Steve.