Easy Come, Easy Go : Cash Bonanza in the Premier League

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Last year, the English Premier League signed a deal with television companies worth 5.14 billion Pounds. This represents a 70% increase on the previous deal. The way this money is distributed will have dramatic effects across global football. Within the league itself, it could end up signalling the biggest change since the Premier League broke away from the Football Association.

Clubs in England were already making plenty of money on the traditional sources of income such as merchandising, TV rights, gate receipts and sponsorship. Add to this the new generation of income earning –such as selling stadium naming rights, partner sponsorships, and in some cases private ownerships from overseas billionaires- and the clubs were doing pretty well thank you very much.

With this bumper deal, the whole landscape changes. And the upwards spiral of profit will just get higher.

The deal itself means that Sky will show 10 more games than it currently does, and the public shows no sign of football fatigue. Each televised match is worth £11 million.

Sky paid the bulk of the money, to the tune of £4.2bn, as the flagship of televised football in English. BT paid another £960mn, while the BBC paid a quarter of that number for content for their Match of the Day programme.

But the money train doesn’t stop there. Foreign channels are getting involved as well, with NBC spending a further £1bn for rights across the Atlantic.

The amounts offered are pretty impressive, but become even more so when we consider what was paid before. In 1992-97, a tiny £191m was the total TV deal. Today, individual clubs make more than that.

By European standards, the manner in which the money is divided is rather democratic. After the Premier League’s governing body takes its cut and distributes some to their grassroots and charity programmes, and a little sniff is awarded to the lower leagues. But the vast bulk of the cash is directed to the 20 Premier League clubs.

Fifty per cent is divided equally between these clubs, then another 25% is split up according to their placement in the table: known as merit money. Under the new system, the champions could end up making £150m on the back of a win, whereas the wooden spoon would still see £100m placed in your bank account: along with a generous “parachute payment”.

This one-off block of money is designed to help relegated teams deal with life in the lower tier, where there is nothing like the TV money that these clubs will have based their recruitment policy around. Premier League wages have sent some clubs into bankruptcy once they hit the Championship.

The final 25% is distributed according to how many televised matches each club has been involved in.

Overall, this breakdown means that even the poorest of the Premier League clubs will be richer than 90% of the clubs across Europe. Already, there are 14 English clubs rated in the top 30 richest. In a couple of years, it is predicted that all 20 teams will be.

It is the equity in the distribution model that allows for this. In the big leagues across Europe, clubs make their own deals with the TV companies. Real Madrid and Barcelona in Spain hoover up TV money at a ratio of 14:1 on the smaller teams. Juventus in Italy gets ten times what the other teams earn, and it is similar in Germany and France.

The most obvious consequence is the lack of competition in these countries. Juventus has won the bulk of the Italian titles over the past half decade, while Barcelona and Madrid are the only teams worth betting on in Spain. Paris St Germain and Bayern Munich are virtually unbackable favourites in France and Germany respectively.

Meanwhile the opposite is true in English. Until this latest deal, England was at least a four-horse race: an oligarchy rather than a monarchy. But this year has seen a trend which may well become a habit in the coming years.

Anticipating the coming downpour of cash and riding high on a better financial situation to begin with, the mid-tier English teams have started to buy the best talent in Europe. The days of the British yoyo player and journeyman who moves between teams like Stoke City and Sunderland are disappearing.

Instead, as soon as a player of talent comes onto the radar of these clubs, they snap him up. Dutch and French players are particularly highly represented in the squads of the mid-table teams.

And this nouveau riche gang of clubs are making the money count. The 2015-16 season has been the most competitive in decades. Leicester City, a team that saved themselves from relegation by a hair last season, have lead the competition for months at a time. West Ham United, a club that has spent much of its history either fighting relegation or fighting for promotion, is close to a European spot. Tottenham Hotspur, famously classy yet flaky, look the most complete team in the league.

This buoying of mid-table teams could end up confirming the Premier League as the most exciting in the world. But what about the fans? Ticket prices keep rising, which has alienated many of the more traditional ones. Liverpool recently backed down from further hikes after a very vociferous backlash. Surely the money will have a positive result of the increasingly sterile match days by allowing for reduced tickets.

According to many, not so. “It’s what is known as the ‘prune juice effect’,” Lord Alan Sugar told BBC Sport. “It goes in one end and goes out the other.” Most predict that the money will go on wages.

Most clubs currently spend between 40%-60% of their money on wages. With elite footballers becoming more and more prized, wages can only keep increasing. There is no chance of football considering a wage cap, and with the recent splurging in China, expect to see the first 500,000 weekly wage come soon.

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