Despite the current financial crisis in English football, it’s not down to a lack of television revenue for the Premier League. Indeed, that revenue is the envy of the world, with the £1.782 billion deal signed last year for domestic live game rights alone.
The Premier League’s deals are negotiated collectively; the threat of, say, Manchester United going it alone has long bubbled under the surface, but the overall size of the deals the League have managed to negotiate, and the long-term benefits of it for the Premier League as a whole, have kept even the biggest clubs behind the collective agreements.
The biggest clubs do receive more than the smaller clubs, with the money divided as follows:
25% is paid in merit payments determined by where a club finishes in the final league table;
50% of the domestic revenue is split equally;
100% of the non-domestic revenue is split equally among the clubs.
25% is paid in facility fees, based on how often a club is shown on TV in the U.K., with each club guaranteed a minimum of 10 facility fees.
But it’s still a far more equitable system than many other top European leagues have in place.
As Forbe’s explains:
Last season the club that got the least under that formula, Middlesborough, received 30.9 million pounds, compared to Manchester United, which got the most, at 51.1 million pounds.
That is a ratio of one to one and two thirds. Though not strictly analogous as clubs negotiate TV rights individually not collectively as in the EPL, the ratios in the top Italian and Spanish leagues are one to 16 and one to 14, respectively.
La Liga’s leadership has been looking to follow the Premier League’s example to close this gap for the benefit of the league as a whole. The problem they have is the entrenched power and massive revenue Barcelona and Real Madrid receive from selling their television rights individually. In 2006, the two companies signed deals worth a combined 2.1 billion euros with Grupo Mediapro in 2006 that expire in 2013.
Barcelona club president Joan Laporta said today in an interview with Reuters that they could consider change. Oddly, his words were described in this piece as an expression of outright opposition to such collective sales (“Barcelona are unwilling to accept a system of sharing television revenue”), but there is a reluctant acceptance that change may be coming:
“I don’t want to damage the interests of Barcelona Football Club, because we have to compete with teams in other countries,” Laporta said in an interview with Reuters Television at his office next to the Nou Camp stadium.
“In England, we are talking about 2 billion euros for Premier League rights so we have to compete against clubs that are making more money than us,” he added.
“But if there is a change in the system we will face that. I’m open to look for other systems to balance what every club represents in this business. I’m open to discuss other possibilities to make money (for) all of us.”
This change in the system could come from government action, as Bloomberg reported in December that new legislation means the biggest clubs “may have to negotiate future accords collectively with smaller Spanish soccer teams.”
It was much easier to persuade the biggest English clubs to share revenue in the Premier League, because the institution of the Premier League itself rewarded their greed: previously, the entire four division Football League had shared in the collective sale of television rights. The breakaway that formed the Premier League ensured much more revenue went to the top clubs, and the growth of those sales and of the Premier League as a global marketing phenomenon have kept them more-or-less happy since.
Given the structure of the Premier League, a corporation owned by all 20 clubs with one vote each, it would likely take another breakaway of the elite clubs to end collective television rights’ sales; and the balance that rewards the big clubs plentifully enough makes that highly unlikely.
And it’s one aspect of English football’s financial set-up that other parts of Europe do look keen to copy, as the prospective change to La Liga shows: it may be the only way they can keep up with the global selling power of the Premier League as a whole and the benefits this has for the biggest English clubs, with the potential of overseas television rights only starting to be seriously tapped.