Forums / The footytube Blog
Order: Newest / Oldest
How Will The Premier League Windfall Affect Your Club?
Footytubeblog (Blog) 2 years ago
Say what you like about Richard Scudamore but the man knows how to negotiate a TV rights package. When Scudamore was appointed as CEO of the Premier League in 1999 the current deal with BSkyB was worth £670m for the period 1997-2001. That worked out at just under £2.8m per game broadcast. The deal announced yesterday, brokered by Scudamore, is worth more than four times that amount.

The seven different television packages, split up by the time of the games (e.g. Monday night, Sunday afternoon), have been sold to BSkyB and newcomers BT. BT already have a television service but are creating a new football channel to facilitate their purchase of two of the Premier League packages.

So, just how much are they paying? And, what does that mean for Premier League clubs? Well, the amount of money received by the Premier League totalled £3.018b – almost double the last deal. However, it should also be noted that more games than ever before are also being broadcast, which has inflated the overall price.

Nonetheless, BSkyB and BT are paying a hefty price per game in this new arrangement. Over the 154 game deal, each match will now cost £6.6m. To put that into perspective: that is roughly the combined gate receipts of Old Trafford and The Emirates for a league game. The top ten clubs in the league will, from 2013-14 onwards, have an increased their annual income by around £30m all thanks to Scudamore’s negotiations and the Premier League’s undeniable appeal.

The vast improvements in income will not be limited to the top clubs either. The 20th placed team in 2013-14 will, The Daily Telegraph reports, earn over £15m more than Wolves did this year and, whilst it hasn’t been expressly stated, it is presumed that the relegation parachute payments will also increase. The biggest increase, however, will obviously go to the future champions. Whilst Man City received around £40m from this year’s triumphs they would, in two years time, be entitled to almost double that for achieving the same feat.

This, clearly, opens up a whole world of opportunities for clubs throughout the league. Not only is this an opportunity for the lower clubs to drag themselves away from the brink of financial crises but there is also the possibility that many of the top clubs could justify their current spending levels.

Club debt and FFP

For the 2010/11 season, the average debt of the bottom ten clubs was just over £33m. Clearly the additional income provided by the new TV rights deal will not completely wipe that out, but it will go some way to doing so. In fact the extra money they will receive would allow at least three of the clubs, providing no new large new debts are taken on, to become debt free within a year. Other clubs would be able to halve their debts or maybe even better, all in the space of 12 months.

We also have to remember that these figures do not even include the international television rights to the Premier League, which have yet to be sold; and, it is thought that they could raise a further £1.5b between 2013 and 2016.

Purists in England may complain that the commercialisation of football is ruining the game, yet those very same fans should be aware that the exponential commercial value of our league could be the saving grace of many frivolous clubs.

You’d have to say that this is a timely boost for both Man City and Chelsea. With the Financial Fair Play regulations intending to be enforced from 2014 onwards, this increase in revenue kicks in just in time. When Peter Kenyon claimed at Chelsea in 2009 that they were virtually debt free the footballing world scoffed at the idea, and rightly so.

However, the West London club are not as far as many people think from complying with the new financial regulations. Yes, the purchases of Eden Hazard and Fernando Torres were far from helpful on that front yet in their latest financial results they published figures of under £100m for their overall debt. If you then consider the £30m+ they could be receiving annually from 2013 onwards, not to mention the increased international television rights, then suddenly Chelsea look as though this could be their ticket to complying with the FFP rules.

Admittedly, Man city will need slightly more help if they are to achieve the same goal but it is nevertheless a step in the right direction.

Concerns

It’s easy to look at current club finances and speculate about what clubs could do with an extra £20-30m in the bank. The reality of football, however, is quite different. Yes clubs could reduce their debt, they could use the extra money to aid their compliance with financial regulations, and they could use the money to reduce or freeze ticket prices; but will they?

The alternative is that tabloids start citing figures such as ‘£300k p/w’ instead of ‘£200k p/w’, the transfer market becomes even more inflated and we end up being no better off despite our increases in revenue.

The other issue is: has this Premier League deal worsened the problem of the uneven distribution of wealth amongst the different tiers of football in England? You’d be hard pressed to argue that it hasn’t. Ideally, the television rights for the Championship would be increased proportionately (c.70%) but that seems unlikely considering that the competition amongst broadcasters is much smaller outside of England’s top tier of football.

The Championship has made decent strides in recent years in terms of both the quality of the league and its reputation around the world. This deal, whilst not necessarily detracting from those gains, is a blow to Championship clubs hoping to rise through the ranks of English football. The latest financial results for the Championship showed that the average turnover for a Championship club was £18.5m. That’s £98.75m less than the Premier League counterparts for the same year. The disparity is already evident; it will be even more so after 2013.

Responsibility

Ultimately, it seems anti-progressive to complain about this windfall for Premier League teams. The responsibility to spend the money on infrastructure, youth development and other sustainable projects lies with the clubs. Some will act conscientiously, some won’t. One thing we can all be proud, and glad of in England is that through uniting our television rights across the league we have provided a platform from which our smaller clubs are in a position to develop business plans not based on debt and short-termism.

Blog by Hamish Mackay



This blog does not necessarily reflect the views and opinions of footytube or its partners.



   
Kick4Life - changing lives through football