Premier League revenues highlight where the real gulf lies

The latest figures on TV cash and Premier League prize money made interesting reading if you’re a Manchester United fan. The Red Devils earned a record breaking £60.4m which was an increase of £7m on the previous year from overseas TV deals.

The figures really show the importance of being in the Premier League, but also of being successful. These sorts of figures are likely to take on added importance when the financial fair play rules get into full swing. It’s clear that clubs that finished near the top the previous season will gain an immediate advantage over teams that finish lower down.

However, even a single season in the Premier League can be hugely lucrative to a club’s finances and will give them a significant advantage over Championship clubs the following season and presents an opportunity to clear debts. This point is especially true when you also take into account the parachute payments paid over the following four seasons after relegation; Blackpool being the lowest earners in the Premier League but still receiving £39.1m. With these sorts of numbers it’s easy to see why clubs are so keen to get into the Premier League and why they will really push the boat out financially to try and get there. The next best earners were Chelsea with £57.7m, Arsenal £56.2m and Manchester City £55.5m.

Now there is obviously some difference between the earnings at the top and the bottom, but the difference is actually quite small in comparison with other leagues in Europe. England’s top club earned 1.54 times as much as the bottom in TV money. The gap is actually closing because this number was 1.66 the previous year. To put things into perspective it can be interesting to look at La Liga in Spain where TV money is negotiated on a club by club basis and there is quite a significant difference between the top and the bottom. Real Madrid and Barcelona earn 12.5 times more than the smallest clubs in La Liga.

Many people have commented on the competitive nature of the Premier League this season, but does the income distribution play any part in this? Well Premier League chief executive Richard Scudamore believes this to be the case. Scudamore said “We believe that our income distribution mechanism, the most equitable of Europe’s major football leagues, rewards sporting success while also guaranteeing a significant amount to each club in order that they can plan from one season to the next.” Scudamore went on to say “Many have commented on the competitive nature of this season’s Barclays Premier League. “The clubs deserve huge credit for putting on fantastic competition. We believe the way we distribute broadcast income plays a part in allowing each club to compete at the highest level.”

The Premier League distributes TV rights money based on where they finish in the league, an equal share of TV money and the number of times each team appeared on TV throughout the season. Therefore, this season each club received £13.8m as the equal share of domestic TV rights and £17.9m as the equal share of overseas TV rights; each place in the Premier League table is worth £756,000 the amount West Ham received and Manchester United received £15.1m.

Facility fees are also played to each club every time they get selected for live TV coverage. These are £582,000 with a minimum income £5.82m even if the club has less than 10 televised games.  The Premier League also paid out £15m each to Hull, Burnley, Portsmouth and Middlesbrough and the same amount will be paid out to West Ham, Birmingham and Blackpool next season.

All of this paints a very rosy picture of the Premier League and the finance distribution and there is no doubt that there is a lot of money in the Premier League. However, despite the fair picture this data likes to pretend to suggest the reality is quite different; especially because this data does not include TV revenue and prize money gained from being in the Champions League. The recent report in the Guardian looking at football finance in the Premier League really illustrates the difference within the Premier League in TV money and prize money alone.

Being in the Champions League is crucial for the financial health of a Premier League football team and Arsenal that were involved in that competition had TV and broadcasting revenue of £85m. Compared with Manchester City’s figure of around £55m mentioned earlier in the report.

However, to get a real feel for the difference within the league I think it’s best to look at the difference in TV and broadcasting between the top club and the team that finished bottom and this really does produce startling reading. Manchester United received £104m all told compared with the figure of around £39m West Ham received.

So I say there is a massive gap within the Premier League and this is really only part of the story because we are only looking at TV revenue and not even considering factors such as stadium capacity and merchandising that brings in yet more money for a club like Manchester United. A quick look at these two areas quickly shows the widening gap if we do a comparison between Manchester United and Newcastle United. Manchester United made £100m in match day income in comparison with the £21m Newcastle made; that is a difference of £79m. Manchester United made £81m in commercial income compared with the £15m Newcastle made; a difference of £66m.

The new financial fair play rules may ensure that clubs will have to spend more sensibly and only the money they actual have but based on the evidence I have just provided they will be a significant difference between what Manchester United can spend and what Newcastle United can. A quick look at Premier League finances tells us that every Premier League club carries some level of debt with Wolves being the only club that currently has no debt.

Given the difference between the top and the bottom of the league the TV deals are not as fair as suggested, because the clubs that are making the most commercially and through match-day income are also making the most in TV money. And let’s be fair a club near the top of the table is likely to be featured more than a team that is simply in mid-table.

What the data definitely shows is the importance of being in the Premier League because that is where all the money is. But also the limitations that are put within the league itself and with clubs at the top receiving so much more money than the clubs lower down it’s hard to see how clubs can change their circumstances much. It’s a sad reality but there is an ever increasing financial gap in the Premier League.

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