distribution of tv rights revenue in english football: equitability for all?

8/22/2019 Distribution of TV rights revenue in English football: Equitability for all?

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Distr ibution of TV r ights revenue in English football : Equitabil ity for al l?

Abstract

In this study, I investigate the potential financial effects on English football following the Premier

Leagues broadcasting rights sale for the three seasons from 2013/14 to 2015/16. The sale of

domestic broadcasting rights has alone topped over 3bn resulting in an exponential increase in

income for each club.

I am interested to discover how this income is distributed around a) the Premier League itself, b)

the Football League, comprising of the Championship and Leagues 1 and 2 and c) to grass roots

football and good causes in England in short, how equitable is the distribution of the Premier

Leagues TV revenue and revenue as a whole? I compare these figures to the data available from

the other four major European football leagues and find that, through use of a simple ratio, the

Premier League is the most equitable in terms of distributing revenue around the league itself.

However, looking closer at the figure, I find that some of the lower ranked Premier League teams

rely almost entirely on income from broadcasting and loss of this through relegation or other

means could be catastrophic for the future of the clubs.

Introduction

The early history of televised football

In September 1937, a 15 minute broadcast of a specially-arranged friendly between Arsenals

first and reserve teams was selected by the BBC as a technical exhibition, showcasing their

abilities to broadcast live sport. It wasnt until April 1938 that an entire match would be

broadcast with the Scotlands victory at Wembley in the British Home Championship televised

this was followed by the first televised FA Cup final - between Preston North End and

Huddersfield Town, some three weeks later. The outbreak of World War 2 in 1939 resulted in

the indefinite suspension of top level football including the Football League and the FA Cup and

the creation of the Wartime League as well as the suspension of all TV broadcasts. Football ontelevision resumed with the 1947 FA Cup Final.
http://www.hull.ac.uk/handbookhttp://www.hull.ac.uk/handbook



1950s-Early 1980s

It was not until the 1950s that sufficient households owned sets for television to play a

significant part in national culture. In 1950, there were 340,000 license holders, yet by the end of

the decade this figure had grown exponentially to 10.5million license holders and only the

majority of the country being covered, partly a response to the televising of the QueensCoronation in 1953.

The formation of the Independent Television Network in 1955, in response to the 1947

Broadcasting Act, heralded the first competition for the monopolistic BBC. In 1952, the

Government ruled that sports could be covered by TV if the broadcaster agreed to pay

compensation for loss of revenue to the corresponding sport. (Exall, 2007) Highlights of league

matches were broadcast intermittently through the Soccer Specialprogramme from 1955

onwards up until the BBC launched the perennial, cultural institution that is Match of the Dayin

1964. The launch of Match of the Day was followed by ITVs own regional highlights programmes

in the late 1960s. From then until the late 1970s, as buyers of broadcasting rights the BBC

appeared to have operated an informal cartel. (Dobson, 2011: 171)

The duopsony on television broadcasting limited the fees paid to football by the television

companies. All 92 Football League clubs received an equal share of the 120,000 paid during the

1968 season, just 1,300 per club. The total payment had increased to 5,800 per club, an

aggregate of roughly 530,000 by the 1979 season. (Goldberg, 1991)

In 1978, London Weekend Television independently attempted to negotiate exclusive rights to

distribute televised football to the rest of the ITV network. The Office of Fair trading put a stop to

the deal however, and in a renegotiated contract, the amount received by each club rose to23,900.

The first live league match did not air until 1983 and regular live coverage did not begin until the

following season, with ten matches per season shared between BBC and ITV at a cost of

2.6million. Footballs administrators were initially not interested in TV coverage and had been

fearful of the effect on match day attendances ever since the 1930s when the Football League

imposed a ban on broadcasting.

However, in 1985, due to a stall in contract negotiations, live coverage was temporarily

suspended. A contract was eventually settled at the start of 1986, reinstating live coverage for

the remainder of the season and for the following two seasons at an annual amount of

3.1million for fourteen matches. The 1986 contract was also the first to breach the principle of

equal distribution of revenues between all ninety-two Football League clubs (Dobson, 2001:

81). Instead, Division 1 clubs received 50 percent, Division 2 clubs 25 percent and 12.5 percent

to Division 3 and 4 clubs.

Despite European success throughout the 1970s, the late 80s was a low point for English

football. English teams had been banned from European competition in the mid-1980s due to the

Heysel disaster and, domestically, levels of hooliganism and violence were increasing.

Furthermore, stadiums and facilities were deemed to be in poor conditions, ultimatelyculminating in the Hillsborough tragedy in 1989. The release of the Taylor Report on the

Hillsborough disaster recommended that all top-tier stadiums (at the time Divisions 1 and 2) be

converted to all-seater models.



Emergence of BSkyB as a football powerhouse

Under the load of huge financial losses, struggling satellite broadcasters BSB and Sky merged in

1990, although Brown (2009) states that the merger was effectively a takeover by Murdoch's

News Corp. The implications of the breakup of the BBC-ITV duopsony were apparent early on,

even as ITV secured 18 matches per season over the next four seasons. The new contract came ata price though, as the cost to ITV surged to 44m. (Dobson, 2001: 81) Subsequently, rumblings

of discontent from the larger clubs regarding the distribution of television income it was still

being distributed around all four divisions at this point - and threats from them to withdraw

from the Football League secured a contract where roughly 75% of the ITV fee went to Division

1, with more than 40% shared between the top five clubs.

The Football Association announced in their Blueprint for the Future of Football their intentions

to form a breakaway league from the Football League, with all revenue from television

broadcasting only to be distributed between the clubs in the breakaway league. This came about

after pressure from Greg Dyke, at the time head of LWT, and the top 5 clubs. Eventually all

twenty two Division 1 clubs committed to resign en masse from the Football League to form the

autonomous Premier League.

Dyke and ITV were confident that football would remain on their channels, also potentially

ending the presence of Sky in the UK. However, in an Alan Sugar-influenced dramatic twist, Sky

blew ITVs deal out of the water. (Conn, 2001: 23) The deal, valued at 304m over five years,

was over five times larger per season (60.6m compared to 11m) than the deal negotiated for

the 1988-1991 seasons. Since then, BSkyB has succeeded along with other satellite

broadcasters that have come and gone such as ITV Digital, Setanta and ESPN in every rights

auction, with each deal being significantly larger than the last.

Televised football today

BSkyB continues to maintain a stranglehold on live Premier League coverage, attracting several

European Commission antitrust proceedings in the past decade. (European Commission, 2006)

The result of which is that no one broadcaster can purchase all packages that are available for

purchase. The emergence of BT as a competitor at the 2013/14-2016 rights auction signaled an

escalation in the price paid for the seven available packages, culminating in a deal worth

3.018bn. (BBC, 2012; Guardian, 2012) Overseas television rights are expected to surge past

2bn.

Invest igation

The ultimate aim of my investigation is to determine how equitable the distribution of income

from television revenue is in English football and investigate the potential financial impacts .

I will compare the data of the Premier League to that of the other four major European football

leagues, the top level leagues from Spain, Germany, Italy and France. These leagues will be

referred to by the nation rather than their official title due to varying sponsorship deals andname changed. These five leagues, collectively referred to as the Big 5 have been selected

through use of the official UEFA Country Coefficient Rankings.



The UEFA Country Coefficient rankings are based on the results of each associations clubs who

are competing in European competition so is therefore a measure of the teams competing from

each country as opposed to the strength of the national team.

An example of disparity between strength of national team and strength of top level league this

would be The Netherlands. The Dutch are frequently ranked amongst the elite of internationalfootball, but a relatively weak top league in comparison to other nations means that they rarely

appear in the upper reaches of the coefficient. The rankings determine the number of places in

allocated to each association in the following seasons Champions League and Europa League

competitions.

As of April 4th 2013, the country coefficients are as follows:

Country 08/09 09/10 10/11 11/12 12/13 Total

1 Spain 13.312 17.928 18.214 20.857 17.000 87.311

2 England 15.000 17.928 18.357 15.250 14.571 81.106

3 Germany 12.687 18.083 15.666 15.250 15.642 77.328

4 Italy 11.375 15.428 11.571 11.357 14.250 63.981

5 France 11.000 15.000 10.750 10.500 11.583 58.833

6 Portugal 6.785 10.000 18.800 11.833 10.583 58.001

7 Ukraine 16.625 5.800 10.083 7.750 9.500 49.758

8 Russia 9.750 6.166 10.916 9.750 9.416 45.998

Source: UEFA (1)

The three countries at the top of the list: Spain, England and Germany, have been in the top 5

ranked nations for each of the five seasons listed. There have been some limited fluctuations in

ranking between the other five nations listed, however. Due to successful seasons for Portugal in

2010/11 where three of the four Europa League semi-finalists, and ultimately both finalists

were Portuguese; and Ukraine in 2008/09 where Shakhtar Donetsk won the competition, both

nations placed in the top 5 during these respective seasons. However, as the coefficient takes

into consideration the season at present (at time of writing) and the previous four seasons, we

see France positioned in fifth place based upon its current coefficient. Previous literature has

also referred to France as a Big 5 nation. (Dobson, 2011: 14; Szymanski, 2010: 21; Pawlowski,2010: 188) So for the purpose of this investigation, France will be selected. The selection of

Frances top league will allow for continuation with previous literature.

To calculate equitability, or how fairly revenue is distributed around the Premier League, I will

produce a simple ratio using the clubs that received the highest and lowest amounts directly

from TV revenue and then the same for each of the other four leagues. For example, if the highest

earners generate 2m, and the lowest earners generate 1m directly from television revenue,

the ratio will be 2:1. Complete equitability will be a ratio of 1:1 or both of the aforementioned

teams (and therefore every other team in the league) will earn 1m.

Information regarding how money from television rights is distributed is generally available

from press releases of the relevant associations and appropriate authorities of each league.

Otherwise, information could be obtained from multiple, reputable sources such as articles to



ensure accuracy. I will collect data regarding how much each club generated from broadcasting

income from, where available, the annual reports and financial accounts of clubs, as well as other

reputable sources such as the Deloitte Football Money League. The figures produced, where

available or if calculable, will be less revenue from continental competition. This is to ensure

comparability between the clubs within their respective leagues, specifically between those thathave and those that havent competed in Europe in the 2011/12 season.

Furthermore, I am interested to find out whether any of the Premier Leagues income is

distributed to the Football League and to the lower echelons of English football. I am already

aware of relegated teams receiving parachute payments to cushion the blow of dramatic

revenue losses as a result of relegation, however, to how much of a further extent does the

Premier League support English football as a whole? There have been many reports since the

Premier Leagues inception about the widening gap between the Premier League and the

Championship, both financially and competitively. (James, 2006; Miller, 2011; Buraimo, 2006:

34)

Findings

The sale of domestic rights for the 2013-2016 inclusive seasons to BSkyB and new entrant BT

has alone topped over 3bn and been well-documented, whilst the burgeoning international

appeal of the Premier League will mean the sale of rights to overseas broadcasters is likely to

surge past the 2bn in value, (Harris, 2012) resulting in a further exponential income for each

club.

The distribution of money to Premier League clubs

The FA Premier League Founder Members Agreement states that:

(e) revenue from domestic television contracts would be shared as follows:

50% would be equally divided amongst the member clubs;

25% would be shared on the basis of the league position of each member club at the end of

the season;

25% would be allocated as facility fees to be divided equally between the home and visiting

team, the intention that each club would appear in at least one televised match each season;

(f) revenues from sponsorship and overseas television contracts would be shared equally

amongst the clubs.

Revenue 2011/12

A breakdown of the individual payments made to every team from the 2011/12 Premier League

season is available in the End of Season Review 2011/12. Merit payments are an extra 755,062

for every position upwards, i.e. Wolves earned 755,062 for finishing 20th, and Manchester City

earned 15,101,240 for finishing 1st. Each team is guaranteed at least 10 facility payments.

For the 2011/2012 season, teams placed in final league position order:

Live Equal share Facility Merit Overseas Total

Manchester City 25 13,788,093 12,948,312 15,101,240 18,764,644 60,602,289



Manchester United 26 13,788,093 13,426,422 14,346,178 18,764,644 60,325,337

Arsenal 19 13,788,093 10,079,652 13,591,116 18,764,644 56,223,505

Tottenham Hotspur 23 13,788,093 11,992,092 12,836,054 18,764,644 57,380,883

Newcastle United 18 13,788,093 9,601,542 12,080,992 18,764,644 54,235,271

Chelsea 20 13,788,093 10,557,762 11,325,930 18,764,644 54,436,429

Everton 10 13,788,093 5,776,662 10,570,868 18,764,644 48,900,267

Liverpool 23 13,788,093 11,992,092 9,815,806 18,764,644 54,360,635

Fulham 10 13,788,093 5,776,662 9,060,744 18,764,644 47,390,143

West Brom 10 13,788,093 5,776,662 8,305,682 18,764,644 46,635,081

Swansea City 10 13,788,093 5,776,662 7,550,620 18,764,644 45,880,019

Norwich City 11 13,788,093 6,254,772 6,795,558 18,764,644 45,603,067

Sunderland 10 13,788,093 5,776,662 6,040,496 18,764,644 44,369,895

Stoke City 10 13,788,093 5,776,662 5,285,434 18,764,644 43,614,833

Wigan Athletic 10 13,788,093 5,776,662 4,530,372 18,764,644 42,859,771

Aston Villa 10 13,788,093 5,776,662 3,775,310 18,764,644 42,104,709

QPR 14 13,788,093 7,689,102 3,020,248 18,764,644 43,262,087

Bolton Wanderers 10 13,788,093 5,776,662 2,265,186 18,764,644 40,317,633

Blackburn Rovers 11 13,788,093 6,254,772 1,510,124 18,764,644 40,594,585

Wolves 10 13,788,093 5,776,662 755,062 18,764,644 39,084,161

Totals 290 275,761,860 158,563,140 158,563,020 375,292,880 968,180,900

Championship teams receiving parachute payments:

Birmingham City, Blackpool and West Ham: 15,475,000; Burnley, Hull City and Portsmouth: 12,219,732;

Middlesbrough: 4,081,548; Total: 87,165,759

Source: PremierLeague (2)

From this table, we can see that the team who earned the highest and lowest revenues are

coincidentally those that appear at the top and bottom of the league: Manchester City and

Wolverhampton Wanderers, respectively. Total Our Equitableness ratio is therefore 1.55:1.

Potential Revenue 2013/14-2016

As previously mentioned, the latest domestic television rights deal agreed by the Premier Leagueis worth 3.018bn. This figure is applicable to the 154 games purchased by Sky and BT. Further

to this, the growing global attraction of the Premier League means that there is likely to be a

further substantial increase in excess of 2bn. Until all overseas deals are finalised and reported,

we cannot be certain of the total figures so growth estimations are the most appropriate manner

of investigating the potential impact.


8/16

HUBS Coursework Submission 8

In the table above I propose four different scenarios with regards to growth of revenue from overseas broadcasting: Flat or zero growth,

30% growth, 50% growth and 70% growth the latter being the level that domestic revenue has increased by. From the table above, we see

that even a 50%, let alone 70%, growth in revenue from overseas broadcasting would mean that the bottom side, Wolves, would receive

more revenue from broadcasting than the champions of the 2011/12 season (62.7m - 60.6m) It must be further noted that growth of zero,

30 or 50 per cent of revenue from overseas broadcasting will result in a small increase in our equitability ratio to 1.68, 1.62 and 1.58

respectively.

Club Equal Facility Merit Overseas Total Total if Total if Total if

70% 70% 70% 0% (If O/S is Flat) (O/S up 30%) (O/S up 50%) (O/S up 70%)

Manchester City 23,439,758 22,012,130 25,672,108 18,764,644 89,888,641 95,518,034 99,270,963 103,023,891

Manchester United 23,439,758 22,824,917 24,388,503 18,764,644 89,417,822 95,047,215 98,800,144 102,553,073

Arsenal 23,439,758 17,135,408 23,104,897 18,764,644 82,444,708 88,074,101 91,827,030 95,579,959

Tottenham 23,439,758 20,386,556 21,821,292 18,764,644 84,412,250 90,041,644 93,794,572 97,547,501

Newcastle United 23,439,758 16,322,621 20,537,686 18,764,644 79,064,710 84,694,103 88,447,032 92,199,961

Chelsea 23,439,758 17,948,195 19,254,081 18,764,644 79,406,679 85,036,072 88,789,001 92,541,929

Everton 23,439,758 9,820,325 17,970,476 18,764,644 69,995,203 75,624,596 79,377,525 83,130,454Liverpool 23,439,758 20,386,556 16,686,870 18,764,644 79,277,829 84,907,222 88,660,151 92,413,080

Fulham 23,439,758 9,820,325 15,403,265 18,764,644 67,427,992 73,057,386 76,810,314 80,563,243

West Brom 23,439,758 9,820,325 14,119,659 18,764,644 66,144,387 71,773,780 75,526,709 79,279,638

Swansea City 23,439,758 9,820,325 12,836,054 18,764,644 64,860,782 70,490,175 74,243,104 77,996,032

Norwich City 23,439,758 10,633,112 11,552,449 18,764,644 64,389,963 70,019,356 73,772,285 77,525,214

Sunderland 23,439,758 9,820,325 10,269,013 18,764,644 62,293,741 67,923,134 71,676,063 75,428,992

Stoke City 23,439,758 9,820,325 8,985,238 18,764,644 61,009,965 66,639,359 70,392,287 74,145,216

Wigan Athletic 23,439,758 9,820,325 7,701,632 18,764,644 59,726,360 65,355,753 69,108,682 72,861,611

Aston Villa 23,439,758 9,820,325 6,418,027 18,764,644 58,442,755 64,072,148 67,825,077 71,578,005

QPR 23,439,758 13,071,473 5,134,422 18,764,644 60,410,297 66,039,690 69,792,619 73,545,548

Bolton Wanderers 23,439,758 9,820,325 3,850,816 18,764,644 55,875,544 61,504,937 65,257,866 69,010,795

Blackburn Rovers 23,439,758 10,633,112 2,582,511 18,764,644 55,420,025 61,049,419 64,802,347 68,555,276

Wolves 23,439,758 9,820,325 1,283,605 18,764,644 53,308,333 58,937,726 62,690,655 66,443,584



In comparison to Europes four other major leagues

Germany

Licensed leagues, Bundesliga 1 & 2 run by DFL. 79:21 split.

Germanys top division, the Bundesliga, operates a different organizational structure to the other

four major European leagues. Two eighteen-team divisions are governed by three associations in

a licensing system. Clubs are required to submit economic data seasonally for scrutiny by the

authorities, demonstrating liquidity, in order to be licensed to play. (Muller, 2011)

The Bundesligas television broadcasting revenues are considerably more modest, in fact the

weakest, of the five major European leagues, with currentbroadcasting revenues of 326m per

season (Fernsehgelder.de, 2012), almost a third of the Premier Leagues annual media revenue.

This is partly due to the collapse of the Kirch empire, and also possibly due to a highlycompetitive free-to-air market with 12 channels. Yet in terms of revenues excluding transfers,

the Bundesliga ranks second only behind the Premier League (Bundesliga, 2013), which of

course contains two more teams. Additionally, according to the Bundesliga (2013), 14 of the 18

teams achieved a positive result [were profitable].

Club Domestic TV payment (in

Euros)

(in GBP)

Bayern Munich 24,156,000 20,500,000 (@0.85) aprox

FC Augsburg 12,078,000 10,250,000 (@0.85) aprox

Source: Fernsehgelder.de (2012)

The distribution of domestic television money is formalised at a ratio of 2:1. As is the difference

in organizational structure, 21% is distributed to Bundesliga 2, with the remaining percentage

being given to the top division. (Bundesliga, 2009) However, the German system of distribution

is different to the rest of the Big 5. A weighted points system is applied based upon each sides

performance in the present and previous three seasons.

The collapse of the Kirch media empire in 2002 set German football back (Frick, 2006: 63)

including the insolvency of 32 lower league clubs in divisions equivalent to the Football League

and Conference in the four years from 2008 to 2012 and the near misses of Borussia Dortmundand 1860 Munich, both effectively saved by loans from Bayern Munich. (Samuel, 2012) Similar

effects on the Football League can be seen due to the collapse of the ITVDigital/OnDigital

package in 2002.



Source: Deloitte (2013)

Since then TV broadcasting deals have remained around the same level up until the most recent

rights sale which has generated 6 In response to this, German clubs were forced to alter their

business strategies. The illustration above highlights the differing business models between the

German and other Big 5 nations clubs. Over half of each of Bayern Munich, Borussia Dortmundand Schalkes revenues can be attributed to the commercial areas of business. These proportions

would be higher as the illustration above also includes European competition television

contribution. Bayern Munichs run to the Champions League final in 2011/12 contributed over

60m of its 81m total from broadcasting. The news is the same for each of the other clubs

including Hamburg who despite having a miserable Bundesliga season, still managed to make it

into Deloittes Football Money League for 2013, generating 18.6m from broadcasting. The

Bundesligas revenue mix is clearly more balanced than any other major nation, as well as there

being a lower level of dependency on television income. (Bundesliga, 2013: 7) As with all major

leagues, the majority of revenue is concentrated at the biggest clubs, particularly Bayern Munichwho have been profitable for 20 consecutive years at time of writing.

So whilst German football has lagged behind in terms of television income, it has generally

managed to adapt. The cause, or perhaps effect of this, has been a fan-focused league with, on

average, the cheapest ticket prices (Guardian, 2013) and highest average attendances in Europe.

France

From an aggregate league revenue of 518m (SwissRamble (1)), the income is distributed as

follows:

- 49.3% of aggregate amount shared equally (approx. 12.7m) fixed equaly

- 24.6% of the aggregate amount depending on the season ranking - proportional

- 4.9% of the aggregate amount ranking based on the last five seasons proportional

- 21.2% of the aggregate amount for the number of times club has been broadcast over past 5

seasons.

Source: EPFL (2010)

Club Domestic TV payment () ()

Lyon 43,900,000 37,300,000 (@0.85) aprox

Dijon FCO 13,800,000 11,720,000 (@0.85) aprox

Source: SwissRamble (1)

A ratio of 3.18:1 separates Lyon, who finishing second in 2011/12 have not won a title since

2008, yet won seven straight titles from the turn of the century; and newly promoted Dijon, who

were immediately relegated back to Ligue 2.



The curious cases of Spain and Italy

Spain

Unlike the other nations from the Big 5, Spain does not sell its television broadcasting rights

collectively. In other words, the league does not have central authority over the sale anddistribution of media revenue streams. The onus is on each club to negotiate its individual

broadcasting revenue to one of the two main TV platforms, Mediapro and PrisaTV.

The undisputed top two clubs in Spain, Real Madrid and Barcelona, both signed huge individual

rights deals with Mediapro, each 7 years in length and worth an estimated 1.1bn.

(SportBusiness, 2006) Official figures are hard to come by, but estimations range from 150m

(BBC, 2010) to 160m (SportsProMedia, 2011) per year for each club, equating to roughly half of

the total television income from the league. (Independent, 2011)

Club Domestic TV payment ()(Estimated)

Domestic TV payment ()

Real Madrid 160,800,000 136,000,000

Real Sociedad 13,000,000 11,050,000

Sources: UEFA (2), Swiss Ramble (2), Deloitte (2013)

A ratio of 12.3:1 is by far the largest ratio between two clubs in the Big 5. The disparity between

Barcelona, Real Madrid and the rest of the league has caused tensions amongst clubs and

owners, with threats to strike from the smaller clubs affecting the start of the 2012/13 La Liga

season. Real Madrids contract is due for renewal but there is likely to be sufficient pressure from

other parties for an overhaul of the revenue system in order to narrow the gap to Barcelona and

Real Madrid. The vast amounts of total debt currently in La Liga (estimated to be 3.5bn) could

be catastrophic for some clubs in the near future, with Spanish football economist Jose Maria Gay

de Liebana stating that La Liga could kill itself within 5 years.

Italy

The breakdown of television revenue in Italy is very rarely published, unlike the Premier League

where it is freely available. Italy had, like Spain, previously sold television rights individually, on

a club-by-club basis. However, for the 2010/11 and 2011/12 seasons, the domestic rights were

sold to Sky Italia for a total of1.149bn, (Reuters, 2010) approximately 575m euros per

season. They are distributed as follows:

- 40% in equal parts among all Serie A TIM clubs;

- 25% according to the number of fans in each club and 5% according to the population of every

team city

- 30% based on sporting results following these criteria:

- i) 5% according to results of current season

- ii) 15% according to results of the previous 5 seasons

- iii) 10% according to the historical results since season 46/47

Source: EPFL (2010)



Club Domestic TV payment () ()

AC Milan 86,400,000 73,420,000 (@0.85) apprx

Cesena 21,000,000 17,845,000 (@0.85) apprx

A ratio of 4.11:1.

The distribution of money to the Football League and grass roots

The Premier League distributed 189.4m outside of the league in 2011/12, accounting for

roughly 15% of its turnover. (Premier League (2)) However, half (90.9m) of this was in the

form of parachute payments, and only 49m in solidarity payments. Parachute payments are

payments offered to teams relegated from the Premier League to the Championship. The

payments are designed to help teams soften the blow of losing out on the Premier Leagues

commercial and television windfall. Payments of 48m are made over 4 years, equating to anaverage of12m per year, although in reality they are staggered. Solidarity payments are

payments made to the remainder of the Football League directly from the Premier League,

Championship clubs receive 2.3m. The Parachute Payment system has come under criticism

from some circles, as in theory it imbalances the Championship to those teams who have already

been promoted and then relegated. However, we have seen many former Premier League teams

slip further and further away from the Premiership with sides such as Coventry, Portsmouth and

Bradford who have failed to adapt.

Conclusions

Nation

England (,000) Germany (,000) France (,000) Italy (,000) Spain (,000)

Highest 60,600 (Man C) 20,500 (Bayern) 37,300 (Lyon) 73,420 (AC M) 136,000 (Real M)

Lowest 39,080 (Wolves) 10,250 (Agsbrg) 11,720 (Dijon) 17,845 (Cesena) 11,050 (Real S)

Ratio 1.55:1 2:1 3.18:1 4.11:1 12.3:1

From the table above, we can see that in a simple ratio format, the Premier League seems to be

the most fair and equitable league of the Big 5, with a ratio of 1.55:1. Whilst this may be

equitable in terms of television distribution currently, the vast increase in revenue from the most

recent sale of television broadcasting rights means that clubs are likely to become more and

more reliant on television money. This is a problem also highlighted in France, Italy and Spain.

Overdependence on television income is a high-risk business strategy, as seen previously with

Kirch Media and OnDigital collapsing and leaving the respective leagues that they had signed

deals with in trouble. German football seems to have learned its lessons and is committed to a

commercial-based business model with over fifty per cent of revenue from the three clubs

aforementioned coming from this area, and with a strict licensing system, threatened clubs can

generally be dealt with earlier on. After all, there will always be fans to go to matches, even if

attendances do fall dramatically due to relegation or other events. The cutting off of one single

revenue stream for some clubs would be catastrophic.



Spanish football at the lower end seems in dire straits, and unless there are dramatic changes to

the distribution of revenue perhaps through a return to collective bargaining as has occurred

in Italy it is likely that smaller clubs will be struggle. What we do see is, from the estimation of

future Premier League TV income, is an increase in disparity. Effectively therefore, I can say that

the rich clubs are likely to get richer, and the smaller clubs likely to be less competitive.In my initial plan, I intended to canvas opinion from fans of domestic English football with

regards to whether they thought that the distribution of income to in English football was fair.

Eventually I thought against this as the results would have been perhaps self-explanatory, i.e.

those of fans from the Football League (Championship, League 1 and 2) would prefer more

money to be given to the Football League, and those of fans from the Premier League believe that

they should not. I believe that this would not have contributed greatly to my report so elected

not to continue with it. Additionally, I do believe that the accuracy of some data may not be

correct. Having to collect data from multiple sources if theyre not available may mean there are

some tolerances in the data, particularly with regards to the Italian and Spanish leagues, wheredata is not as freely available as that from England and Germany.



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16/16

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distribution of tv rights revenue in english football: equitability for all?

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