Gold Keepers: Why the Premier League Clubs Will Get Only Richer

  • 5/16/2018
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For many decades in football’s development the end-of-season standings, triumphs and disappointments were pored over as sports results, not generally reckoned for their impact on clubs’ bank balances. Those days have dwindled as football’s revenues have swollen, as investors have bought clubs to make money for themselves, and as the financial gap between clubs and leagues has dramatically widened: cash has become a much more prominent consequence of winning and losing. For Premier League clubs a top-four finish is a landmark achievement to secure Champions League qualification – and the financial windfall it delivers. It is quite staggering to see that Leicester City made €82m (£70m) from Uefa TV payments last season for their run as reigning Premier League title holders to the Champions League quarter-finals. Due to Uefa’s agreed formula for allocating the riches, rewarding clubs for their progress and where they finished domestically the previous season, Leicester made almost double the €43m (£38m) Tottenham Hotspur made, still a very tidy bonus. Uefa starts new 2018-21 TV deals next season and has promised yet more money for the privileged top clubs, although the precise amounts are not yet divulged. The great financial divides distort and undermine competitiveness but there is no serious effort in football to distribute money more equally. Uefa president Aleksander Ceferin is leading an examination of ways to alleviate the damage to “competitive balance.” The real pressure is the other way, from rich clubs wanting more, as with the so-called “big six” Premier League clubs currently seeking a greater share of the league’s international TV rights, which have always been shared equally between all 20 clubs. In English football the enormous inequality is weirdly celebrated, the Championship play-off final hyped annually as football’s richest match, as if that is something the nation should be proud of. As play-offs are one-off matches, which can be decided like last years between Huddersfield and Reading on as narrow a margin as a shootout, the winner’s vast financial reward is clearly not in proportion to the achievement. The money simply encapsulates the divide between the Premier League and the Football League’s three divisions, from which First Division clubs broke away in 1992 so they could keep the lion’s share of new satellite TV money. The Premier League’s success, now garnering more from international TV rights, has meant the breakaway’s gap, despite the Football League’s attractions, best efforts and rebranding into the EFL, has stretched much wider. The Premier League clubs, and those relegated from it with lucrative parachute payments, are feasting on their record from £.8.4bn TV deal from 2016-19. Although UK income from Sky and BT Sport will fall from £5.13bn to £4.46bn during the 2019-22 deals because of BT Sport not bidding aggressively for the main packages, the Premier League executive chairman, Richard Scudamore, is confident that international growth will take it over the current £8.4bn total. The contrast with the EFL is alarming and puts Championship clubs under financial pressure as they strain to pay the players who might take them up. The EFL’s current TV deal amounts to £90m a year – 3% of the Premier League’s, shared among all 72 clubs. From 2019 a new five-year deal will pay £120m annually – improved, but still a fraction of Premier League riches. Parachute payments land the inequality into the Championship itself. The bottom three Premier League clubs last season, Hull City, Middlesbrough and Sunderland, made £97m, £99m and £93m respectively in 2016-17 from Premier League TV rights; parachute payments for relegated clubs are now £42m in the first season in the Championship, £34m in the second and £16.6m in the third, a huge financial advantage on other clubs. A club relegated after one season in the Premier League is paid two years of parachutes, not the third £16.6m, so the minimum windfall of promotion is £170m-£180m. Recognition of this divide did finally lead to the Premier League releasing a fraction of its money to the EFL directly in “solidarity” payments. They are not insignificant: £4.5m to each Championship club, £675,000 to those in League One, £450,000 for League Two clubs, but nowhere near enough to bridge the gap. A study into the effect of parachute payments by academics Rob Wilson, Girish Ramchandani and Daniel Plumley of Sheffield Hallam University documents the huge financial advantage they give clubs relegated from the Premier League and that they reduce competitiveness in the Championship. “The competitive balance of the [Championship] in general has declined in recent years,” they conclude. To address this, they suggest parachute payments should be shared throughout the EFL rather than paid only to relegated clubs, or a handicap system – or the abolition of parachute payments altogether. “[Their] premise in the early years was to soften the financial blow of relegation,” the report says, “but in light of increasing broadcasting fees all it appears to have done is to give relegated teams a significant advantage over their competitors.” The authors, though, recognise the Premier League’s power, leading to “powerful ‘super-clubs’ that monopolise the market to some extent”, means suggestions for greater equality are largely futile. The pressure is the other way: from big clubs, for inequality to be increased, in their favour. The Guardian Sport

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