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Money, Money, Money...

By Matt Traynor :  02/06/2011 :  Comments (19) :

For years some of us fans have berated the impact Sky has had on football, the creation of The Premier League, and the blatant favouritism shown to ?the Sky Four? before the gate-crashing of the newly-moneyed Man City to the party.

Having spent the last seven and a half years in Asia , I'm dependent on the TV deal of the Premier League to get my fix of Everton. For the last couple of seasons, where I live, every Premier League game is shown live. I've also worked with people in sports marketing, broadcasting, Football Associations, agents, event organisers etc. and have seen up close the scale of what goes on, so have been a little on the fence on how I view things.

For me the answer would be in the numbers, and with all of the recent controversies surrounding clubs going into administration, the ongoing parliamentary inquiry etc. it was only a matter of time before the TV revenue figures were out, and they make for interesting reading. Nice to see the Premier League being all transparent. The full detail is here: http://www.premierleague.com/staticFiles/fe/72/0,,12306~160510,00.pdf

It's important to note that this is not ?Sky money? - it's all TV money for domestic and overseas broadcast. The domestic broadcast is predominantly from Sky, with the balance being predominantly BBC, including radio. The new 3 year overseas TV deals kicked in this season, and is around 50% higher than the previous deal (which was 2 years), and is now more synchronised with the domestic TV deal which will assist clubs in forward planning. The overseas component now represents 38% of the overall TV revenue.

The PL claim that they are the most equitable of the major European leagues in TV revenue distribution, with 50% being split equally amongst clubs (including parachute payments to previously-relegated teams); 25% in merit payments based on final league placement; and 25% in ?facility? payments, based on the number of live broadcasts. Clubs are guaranteed a minimum payment of 10 live appearances, even if they don't appear live on 10 occasions. The difference between TV revenue of the top team (Man Utd) and the bottom (Blackpool) is a ratio of 1.54:1 (down from 1.66:1 in 2009/10). This is to be compared with other leagues cited by the PL in Spain (12.5:1), Italy (10:1), France (3.5:1) and Germany (2:1), although it should be noted that in Spain , for example, clubs negotiate their own broadcast rights.

I believe the payments are made thus (but would welcome any more up to date information):

  • Domestic equal share is paid twice yearly, end August and January
  • Merit payment is paid at the season end
  • Facility fees are paid in the cycle they are incurred
  • Overseas payment is paid monthly

If you look at the guaranteed payments (domestic equal share, minimum facility fee, the overseas component and the minimum merit payment for finishing last) all clubs are guaranteed £38,323,280.

The top earners, Man Utd, received a total of £60.43m, 63.4% of which equals the guarantee. At the bottom, Blackpool 's £39.08m accounted for the minimum payment (98.1%) plus the virtue of an extra merit payment for finishing 2 nd from bottom.

The table for live appearances, and final league position is:

Apps
Team
Final Pos
26
Man Utd
1
23
Liverpool
6
22
Chelsea
2
Arsenal
4
19
Man City
3
17
Tottenham
5
16
Newcastle
12
15
Aston Villa
9
14
West Ham
20
13
Everton
7
11
Sunderland
10
10
Fulham
8
West Brom
11
Stoke
13
Bolton
14
Blackburn
15
Wigan
16
Wolves
17
Birmingham
18
Blackpool
19

Generally, it's hard to argue against the number of live appearances relative to final position and team appeal. We could argue that Everton should have had 1-2 more live appearances, and maybe Newcastle and West Ham were over-represented. (I don't have a breakdown of Monday night / Sunday games etc.) What this does reinforce is the perceived Sky bias. And the reason they talk more about those teams is they feature them more in live broadcasts.

In terms of revenue, if you remove the merit fees for final league placing and only look at the impact of TV appearances, it's worth £582k per game. I recall when this was first introduced (it was a lot less!), it was partly to compensate clubs for any negative impact on attendance (and ancillary revenue) as a result of being on Sky, accepting also that the club would incur costs for hosting the TV crew etc. The apparent bias for certain teams cannot be worth substantial amounts in direct revenue teams.

So, is the distribution of TV revenue equitable in the Premier League? Having looked through this, I'd say on balance it is. Certainly I don't think we would be better off if we followed the Spanish or Italian models of selling rights individually. I think the relative increase in value of the overseas TV rights has helped reduce the gap between the top and bottom in terms of income, and it would be interesting, maybe, to look at these figures across the board back to the inception of the Premier League and see if the gap has closed ? I believe it has.

However, the inception of the Premier League, and Sky's monopolisation of the domestic broadcast has had an impact of raising the overall ?value of the brand?. Whether they deserve plaudits or brickbats will depend on your point of view, but I believe that the Premier League ?revolution? has, directly or indirectly, led to many of the perceived problems with the state of the game today. TV revenue, although substantial, is no longer enough to sustain the huge investments required to compete. Depending on how you read the figures, whilst the difference between the top and bottom of the broadcast income league is ?equitable?, it is other income sources that now determine how a club can compete. A club with a higher media profile, real or perceived, will be able to better tap into other revenue streams. Others on this site have mentioned time and time again that we could do more to tap into the ?media value? of some of our overseas players ? Howard (especially post-Donovan), Cahill etc. Engage overseas agents if need be ? I've met enough out there who are touting around various sponsorship opportunities for Premier League clubs.

Finally, set against our overall income, broadcast revenue is huge. I've read consistently over the years on ToffeeWeb (and again more recently when asked if we'd rather have had a season like Birmingham ? a cup, and relegation) that some people believe relegation wouldn't be the end of the world for us. I'd disagree!

Reader Comments

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Chris Bannantyne
1   Posted 02/06/2011 at 18:08:33

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Thanks for the post, I need to read it again, and the link you provided to really get the gist of the monetary breakup.
Gerry Quinn
2   Posted 02/06/2011 at 18:26:19

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Matt, excellent article and insight ? many thanks for the efforts.
Joe Rourke
3   Posted 02/06/2011 at 18:12:05

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I'd have to agree with you particularly in comparison to Spain the system for spreading the money isn't bad in the PL at all.

Just two notes for you ESPN (and formerly Setanta) are another main benificiary of TV money 9 you didn't mention the parachute payments to teams who have been relegated (4-6 per year?).

I think it was really the G-14 that have destroyed top league football at a European level by effectively creating a stranglehold on the Champions League (and its bumber revenues) while relegating everybody else to the indeterminable Europa League.
Chris Matheson
4   Posted 02/06/2011 at 20:17:03

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Matt ? congratulations on a very interesting article.

I hate the fact that for many, particularly journalists, the start of the PL was almost a Year Zero, with everything that went before it simply being forgotten. I have no doubt that the sensationalisation of the game, along with mega salaries for players and ticket prices through the roof, all came along when Sky and the Premier League took over the top flight. It is a source of shame to me that Everton were part of the group that led the breakaway, the so-called "Big Five" ? and of those five we have fared much the worst since hen.

But Joe is right ? the real imbalance in finances is caused with the introduction of the Champions League in place of the European Cup, with the colossal money guarantees even for just getting through to the group stages. It has become self perpetuating, and until all the other clubs have the nerve to challenge the imbalance it creates, little will change.
Dennis Stevens
5   Posted 02/06/2011 at 21:59:40

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Interesting to see that Pompey's payout was quite similar to the rumoured cost of their latest take-over - do they get another pay-out next season?
Dick Fearon
6   Posted 02/06/2011 at 22:30:17

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Matt, like yourself, by pressing 'Viewers Choice' this ex pat can watch all Everton games on live TV. Here in Australia the same applies for all PL games.
That being the case should not all PL clubs receive equal 'Facility' payments.
Matt Traynor
7   Posted 03/06/2011 at 01:16:47

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Joe #3, the parachute payments are accounted for in the link. I didn't focus on them as there's not much to say, other than it's slightly complex in that the payments are loaded up for the first year of relegation, rightly so, as you'd expect clubs to be seeking to reduce costs (wages etc) but there would be lag for this to happen. Also, it's complicated by the fact that if a relegated club bounces back at the first time of asking, it ?trades? in outstanding parachute payments for being back in the Premier League.

You are right about the disparity introduced by the Champions League. The fact is, even as losers, Man Utd earned far more from their CL campaign than they did for the whole of the PL campaign. I believe the commercial people at UEFA would have hated the idea of Shalke beating Man Utd ? partly because Germany is a smaller revenue market than the UK, and partly because Shalke are not the ?biggest? team in Germany. Teams from Norway, Turkey etc. are a real inconvenience. Russia is now less so as companies there are now spending more money subsidising, I mean sponsoring, football. For the same reason, the commercial people at Sky would hate it if Everton, or any club with a perceived smaller fanbase, gatecrashed their top 4 love in. Hence the media coverage of the PL feeds the desire to see the ?glamour? teams at the top of the league, who then go on to feed the UEFA desire of the biggest brands competing in the CL.

The real power is with the sponsors. Look at the recent FIFA fiasco. As soon as McDonalds, Coca Cola, VISA etc. point out that all of the furore was ?concerning? for them, FIFA shit themselves, and ask Henry Kissenger to sort them out! I'm not going to go into the political background to all of this, but I think The Sun's comparison of Blatter and Gadaffi was not entirely satirical ? a despotic regime fighting to cling to power at all costs. Henry Kissenger. You couldn't make it up. Except FIFA will get away with it, because only the FA had the balls to stand up to them. For all their faults, compared to some of the associations around the world, the FA are as pure as the driven snow.

Dick #7 ? the Facility Fees are purely part of the domestic contract, hence the variation between number of appearances. All clubs receive the same portion of the overseas contract. The overseas TV deals are incredibly complex! Basically it's what a country is willing to pay, hence why China, with it's huge population but state-controlled media probably pays less than the small city-state of Singapore, which has 2 private cable TV companies bidding against each other. Ultimately the user pays of course, but in China, the Premier League coverage is free ? via the Internet, with advertising revenue being the profit for the IPTV company. It is interesting to note that the ?short form? contracts used by the commercial negotiating team in their selling of overseas rights is the model followed by FIFA for the World Cup, IOC for Olympics etc.
Brendan O'Doherty
8   Posted 03/06/2011 at 01:43:48

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Ah well, talking of money, cheer yourself up by reading this! £120k a week FFS!

http://www.guardian.co.uk/football/2011/jun/02/liverpool-transfers

Marcus Choo
9   Posted 03/06/2011 at 03:10:00

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I guess one question now is how well we are doing in raising our "brand value" from our current circumstance...
Joe Rourke
10   Posted 03/06/2011 at 11:13:31

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Marcus - "regarding raisng brand value" -perhaps its time for Everton to rename itself 'Liverpool United' and change the home kit to a permanently Barcelona-esque strip like that blue/salmon pink away shirt of 16 years ago?

Global domination is within our reach!
James Flynn
11   Posted 04/06/2011 at 06:09:59

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We need to win.

Who would have thought 20 years ago the city of Manchester would be so famous around the world? Think about it. Manchester famous everywhere? Over a team from the city of Liverpool? What the fuck!

Our low profile is from the frustrating lack of funds preventing the final jump up to the top; just out of reach these last few years.
Rob Keys
12   Posted 04/06/2011 at 13:47:47

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Great article Matt. James, nobody questions your passion, but think your facts about manchester is about as deep as the history of the premier league. People outside the UK heard about Man Utd thru the busby babes, munich disaster, bobby charlton, the 5Th beatle from the 50s onwards. Especially the commonwealth states. The very same states probably only heard of liverpool thru the beatles in the 60s, and then liverpool's dominance in the 70s.
Dave Wilson
13   Posted 04/06/2011 at 19:39:03

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Rob #12 ? you're having a chuckle, are you not?

Are you really trying to compare Manchester favourably to our great city?

While we were building one of the busiest ports on the on the planet, introducing the UK to exotic delights from all four corners of the earth, Mancs were building dark satanic fucken mills.

When four of our lads shook the earth, they could only look on gormlessly ? it took them 20 years to come up with a cheap imitation. While scousers boast one of the world's most recognisable and iconic water fronts, Mancs pride themselves on the cheap tacky flats they've built overlooking the canal.

While we we churn out top class footballers generation after generation, they would have to get Mike Summerbee out of retirement to make up a five-a-side team.

When we came up with the greatest and most spectacular race course in the world, they countered it with Belle Vue dog track.

While we we basking in our City of Culture status, they were thinking about sprucing up the Arndale Center.

Manchester's answer to our stunningly beautiful buildings like the MDAHB and the Anglican Cathedral are concrete block monstrosities... What a pug ugly, deeply depressing city!

The Manc footy teams may be enjoying the the most successful period in their history, but we are STILL they most successful city this country has known.

And yes, admittedly, they do have the biggest stadium in the country, but they need that to house the 75,000 who want to come and worship a scouser.

Let's face it, the guy who wrote the song "Manchester is full of shit" will not be getting any Grammy awards as a lyricist, but somebody should pin a fucken medal on him for his his ability to hit the nail on the head.

James Boden
14   Posted 06/06/2011 at 12:54:12

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Dave Wilson nevermind a medal for that bloke you deserve a medal for putting it to bed that anyone who thinks the history of Manchester can compare to that of The City of Liverpool. To put it into context the only real significance the city of Manchester has had is Manchester United themselves.
Colin Fitzpatrick
15   Posted 06/06/2011 at 21:02:04

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Who don't technically play in Manchester, they play in Trafford..the city's all theirs???
Fergus McCarthy
16   Posted 06/06/2011 at 23:36:45

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People from Manchester think Manchester is the 2nd City in UK.
People from Liverpool KNOW which is the 2nd City in the UK!
It's London.
Roman Sidey
17   Posted 06/06/2011 at 23:38:15

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The PDF linked on this shows that the main difference between the top clubs and Everton is European football (Champs League, not that burden that is the Europa League), as well as poor board management.

The board needs to drastically change it's approach and manage the money we do have better, and we need to have a season where the 'ifs' of 2009-2011 are converted to 'dids', placing us in the top four, where we can finally kick on with a bit of extra revenue.

Originally from Australia, I've seen how popular Everton are, but also how little effort the club makes in marketing itself down under. Living in North America, I didn't expect many people to even know what an Everton was, but have been surprised at how many people know and support the club here. Much of this is directly down to Tim and Landon's time at the club.

The amount of corporate involvement in sport in America and Canada dwarfs that in the UK, and one thinks that there's countless companies here that could better the sponsorship deal that Chang provide - which is fairly similar to the amounts that the MLS sides get anyway.
Peter Lee
18   Posted 08/06/2011 at 17:06:49

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Excellent outline of the current picture.
A couple of points:
A pity that most of the money has gone into the back-pockets of players in the EPL. That is the destination of much of the CL money too and together they create a totally unsustainable market in transfer fees.
The disparity in funding that occurs in countries where clubs negotiate their own deals illustrates why the original pair of cowboys bought into LFC at such a ridiculous price. They must have believed that, ultimately, that?s what would happen here.
(I can?t figure out why the latest pair think that there is money to be made. Like all clubs LFC is not immune from stay away fans when they don?t win and a few years outside the top 4 wouldn?t be good enough to prevent that. You?ve got to look around a long time across the whole of Europe to find any football club that makes a sensible return on investment when you take into account the costs of purchase of the club and its on-going maintenance such as transfer fees and wages. That?s why I can?t understand why people are surprised when there are no serious offers for Everton or that the board won?t put their own money in. At best it?s the investment equivalent of buying premium bonds without the raffle.)
WRT the relative knowledge of the two cities, my experience has been for years that few people across Europe and the US know or care much where any cities are in England other than London. They know that MU are from Manchester, LFC are from Liverpool (even the yanks can figure that one out) and so are the Beatles.
Matt Traynor
19   Posted 10/06/2011 at 17:05:19

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Peter (#18), I think you raise a couple of interesting points, but you're in danger of opening a rather large can of worms!

This is maybe something we can debate in the close season (rather than the boring transfer rumours etc)

If I can get the info, I'd like to compare the TV revenue figures with clubs' overall turnover figures.

I believe that where owners can make money out of clubs is on leveraging the media value.

Therefore Everton would probably represent good value to a prospective buyer...

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