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The English Premier League: where is it all going wrong?



English Premier League financial review – a look at a few of the issues in the League as a whole

By Phil Gregory

First up, a couple of general notes. As most of the teams in the Premier League are privately owned, they are much slower at publishing their accounts than you might expect.  But these articles are based on actual published accounts and not rumour and comment in newspapers.  So my most recent and complete data set is for the 07-08 season. Not the most up-to-date information, but the trends and concerns that I will point out during this article are not the sort of thing to have changed in a couple of years.

The profitable sides

Looking at the entire Premier League, Arsenal, Birmingham, Blackburn and Manchester United were the only sides to make an operating profit in the 07-08 season, a clear minority. As such, it is not surprising that the net operating loss for the League was nearly £20million for the season.

Such figures look worse when you remember that operation profit is calculated as Earnings Before Interest, Tax, Depreciation and Amortisation. Accounting for those, most club’s financial positions worsen: case in point the hefty £42million of operating profit made by Manchester United disappears completely once interest payments are considered. See the article written recently on Manchester United for more on this.

What does this mean? Well, as I said in a previous article, operating profit is your core business. If a club is not turning an operating profit,  the club is in trouble as their income is simply not covering their costs. Why might this be?

Well, naturally a big part of the reason is wages. By my calculations, wages as a percentage of turnover were on average 65% for the 16 teams in my data set. Naturally, you’ll know there are 20 teams in the Premier League, but as I started compiling my data with, I only looked at teams currently in the Premier League. Once you go back a few years there isn’t the data for a few sides who dropped out of the league.  But these are the sort of sides who have the highest wages as a percentage of turnover, so I’d imagine the actual figure would be nearer 70%.

The wages

I’ll have to lapse into economics-talk briefly here to explain the rationale behind footballers’ wages. In economics, wages are assumed to be priced according to a complicated-sounding thing called the “marginal product of labour”, which is basically a measure of how productive a worker is. Applying this to football, a footballer’s wage is based on what he “produces” i.e. what he adds to the team on the pitch (and likely the commercial side think, for example, of Beckham & Madrid).

Naturally, all teams desire the best players (those who “produce” the most) so there is an intense competition for players, but there is only a limited pool of professional footballers. Classic supply and demand plays a role, and usually the footballer goes to whomsoever pays him the most. This means that generally speaking the sides with the biggest wage budgets also have the best squads, which we can assume translates into the most points. The table below compares wage budgets in the 07-08 to points gained and final position.

As you can see, wages roughly correlate to actual performance, but there is scope to waste substantial sums of money in the style of Newcastle United.

There may be an element of having to pay players more to turn down flashy London for the North East, but you could look at Sunderland and argue that such an effect is negligible. I also note that in the table, no team outperforms the position their wage bill ranks them at by more than five positions. As Dylan Mills put it recently, money talks.

The pressure on lower-table sides is further complicated by the fact that most teams cannot financially afford to be relegated (more on that shortly) and so regardless of their resources they think they need to spend an amount that will get them enough to points to survive. Of course, three sides have to go down, so the end result is all sides spend beyond their means to keep up with their peers, but those who go down do so in a more perilous financial state than would otherwise be the case.

So considering the fact that smaller sides can’t sustainable rival the larger, established Premier League sides, they have to offer more wages than is considered safe in order to compete for talent…

(Article continues below)

So what we end up is a lot of sides spending more than they can safely do in order to stay in the league. 60% is taken to be a safe limit beyond which wages should not go (remember the Premier League average was above this!)

Given how some clubs manage to perform poorly or above-expectations given their wage budgets, we can analyse further what they get for their money. A good measure of this is a club’s wage bill divided by the number of points gained. I plotted this measure against a club’s total league points below:

(In case the text is not clear, the clubs in order are Birmingham Fulham, Bolton, Sunderland, Wigan, Newcastle, Spurs, WHU, Man City, Blackburn, Aston Villa, Everton, Liverpool, Arsenal, Chelsea, Man U)

Where the left axis is wage spending per point gained.

As I’d expect, there is a weak upward trend, which lends weight to the idea that players’ wages get exponentially more expensive despite them only adding a small amount of extra quality as they get better and better. The trend would be much clearer if Newcastle (them again!) hadn’t performed so poorly while Chelsea’s wage bill should see them winning the League. It’s also interesting to note some of the teams that are below the trend – such as Everton and Blackburn – two teams you would traditionally link with doing a lot with a little.

TV Revenue dominates

Another issue that should be of concern to the Premier League is how for the lower-table clubs, TV contributes a vast percentage of revenue. Clearly this is a big concern, as TV revenue falls dramatically if a side is relegated, a very real threat for many of these teams.

(Article continues below)

This compares to 35% for Arsenal in the same period.

I couldn’t include Bolton in my mini-table above as there were no TV money figures in their accounts, but they will be roughly comparable to Blackburn. Straight away you can see the importance of TV money to some of these clubs, Blackburn, Fulham and Wigan would all face massive falls in turnover in the event of relegation. Birmingham and Newcastle aren’t quite so reliant due to larger matchday revenues arising from having good-sized crowds but Newcastle have  a substantially higher wage bill than most to contend with.

Conclusions

Heavy pressure on lower-table sides to spend more than they can afford due to their reliance on Premier League TV revenues. How do you go about dealing with this situation? The financial gulf between the Premier League and the Championship needs to be reduced and with TV money creating the gulf, it stands to reason that TV revenues should be shared  much more between the leagues. The Premier League does a very, very good job of ensuring a relatively equal distribution of revenues within its own twenty clubs, so it baffles me how they don’t think to do more between leagues.

Cutting the gap between the divisions would allow them to do away parachute payments (which to me simply reward overspending, a “don’t worry about the wage bill fellas, we’ve got those handouts to come yet” approach to financial management). More equal TV revenues would mean the hit upon relegation would be lessened so that parachute payments weren’t necessary, while a financially-stronger Championship would mean less clubs having to spend excessively to get a shot at promotion.

However, any attempt to remedy the Premier League-Championship revenue gap would just create another one between Championship and League One. Any passing of revenues must occur in every single level of the Football League in a proportional manner or more problems will just be recreated elsewhere.

Let me know your thoughts: I intend to redraft this in a few weeks with the key points and send it off to Richard Scudamore so any good insights will be taken on-board, properly credited of course! If you need a job doing properly…

————————————–

Untold Arsenal: Index to Everything

The Economics of Football: Index to all articles

40 comments to The English Premier League: where is it all going wrong?

  • I thought I knew the economics of football – but this article really took matters further for me – for example I had not realised the reliance on TV money further down the table. And as anyone who has run a business will tell you – never rely on one thing. Don’t rely on one client, one member of staff, one product, one source of income.

    Apologies for the two gaps in the piece, and the reduced quality of the graphs – which are all to be blamed on my ICT incompetence, not on Phil’s piece.

    If you have not looked at the three earlier articles in this series (Arsenal, Chelsea, Man U) I would strongly recommend them. And there’s more to come – isn’t there Phil?

  • avatar Gooneraside

    Thanks, Phil.

    I always knew that I never really knew much about economics – except I never spent more than I earned (mortgage excepted).

    But what I do immediately note is that Chelski spent 40M more that Man IOU in 07-08 and still finished below them. Did C have to up that difference to overtake M last season?

    And, regardless of how much I know about economics, it’s comforting to know that Mr. Wenger obviously knows much more.

  • avatar Donnyfan1

    Hi Phil, the ‘wage spending per point gained’ line graph should be a histogram, I believe. There is no sense in trying to interpolate between Man City and West Ham for instance- although a Man Ham club might be interesting!! Good work and thanks.

  • avatar Rhys Jaggar

    The reality is that, at some point, you must draw a line as to what constitutes a line in the sand for a truly sustainable professional business. In football you can choose to draw the line almost anywhere, but for the seriously professional, I would say you need sustainable gates of 15,000+. Because less than that and you’ll struggle to aspire to be an EPL club without a billionaire sugar daddy.

    I think you can pretty much draw up a list of around 60 clubs that fit that and you say, probably as a dictator: that’s where we draw the line for rules on finance. You’ll get pretty much a three tier league. Below that, the issues are much smaller as the sizes of businesses will in general be £5m T/O or less.

    That doesn’t mean you can’t get into the league, conference style, if a club can demonstrate appropriate standards and potential. There are regions of the country where historically the football club wasn’t good. But broadly, you’ll include all areas of the country using that criterion.

    How you spread money around should depend on what is done with it. So you could say: we, the EPL, want to see lots of English youth growing up in the smaller clubs, just like French players do at, say, Auxerre, Cannes, Lorient etc etc.The money we supply isn’t for wages, it’s for youth centres of excellence and coaches who go into schools. And we’re paying for top, top coaches in that age group to work there. So that children from all around the country, from the age of 6 can be exposed to appropriate good coaching at the age they need it. We expect to know about the talent that you find, but we’d like that talent to get experience playing at first team standard before we think about signing them.

    You could say: basic wages of players are determined solely by gate money and media money. By which I mean: your base salary next season depends on sale of season tickets plus a percentage of the pot of media money the club will get. Your bonuses will come from non-season-ticket sales, merchandising sales and performance-related income from prize money and the media, as well as from sponsors.

    This isn’t as scary as it sounds. If clubs limit their liabilities in this way, they could say to players: if your pay last season dropped below a certain amount, you are allowed to depart, since the club failed to a certain extent. And if your next season’s guaranteed basic drops due to e.g. relegation, then you must be allowed to make a decision.

    The effect of this would be that relegation would automatically trigger wage reductions but also flexibility to allow good players to depart. But with current disparities between the EPL and the Championship, it would trigger clear-outs and make it more difficult for clubs to bounce back. And there are clearly issues for those with mortgages………

    The difficulty of course is that the Championship is unlikely to be a media winner in the way the EPL is, so it’s not easy to go back to smaller differentials without in effect jettisoning the EPL as a concept.

    The figures highlight the difference between global businesses such as Man Utd and, increasingly, Arsenal; and regional businesses such as Wigan, Bolton or Blackpool/Burnley, which are based in largish towns in lowish wage areas but did well through making the best of what they had, hiring good managers and building a strong rapport with their local fans.

    The question will arise, sooner or later, as to whether the global businesses want their bread and butter to be with local businesses or with other global ones. As you see monarchies across Europe in most leagues now…………Scotland, England, Portugal, Spain, Italy, Greece, Turkey: rare indeed to see champions outside an elite bunch now. Holland is close to that, France and Germany slightly less so (although Bayern are pretty dominant in Germany).

  • avatar Phil

    There is indeed Tony, though for some of the later pieces I’m trying to get in touch with the relevant bigwigs in the clubs for comments and the like, because there are clear holes in their business plans.

    As for the TV money issue, it is a real concern. CLub’s gamble to get promoted then spend big in an attempt to stay in the big time, but if they go down they are in real financial trouble, even with parachute payments.

    Gooneraside: Chelsea play hostage to their players (five year contracts for Lampard and Terry at 30?!) so they tend to overplay. Plus we have a bench of young players on low contracts, they have a bench full of oldies on big contracts. Their wages weren’t spent effectively that year, this year they’ve raised their level marginally and benefitted from a decline in United.

    Donnyfan: my excel skills are limited, but it’s a good suggestion. I wanted the line graph more so we could see the upward trend as you went further up the table, but I see your point about the histogram.

    Som good point Rhys. However I’m very wary of tying wages to anything that would create a closed shop. Firstly, as a reform it wouldn’t get passed as many, many clubs know it would mean relegation for them as they slash wages to meet the criteria and secondly because I consider regulation such as this as a last step as it stifles competition.

    If the revenue gap between the EPL and the Championship was reduced, clubs wouldn’t come up with such worrying wage bills as a % of turnover.

  • avatar Dark Prince

    Phil- The concept is great but its very incorrect to compare different clubs in one year. There should be one graph showing how one single club has performed over 5-6 years. It should show the co-relation to its wages paid per point won over a number of years. Also the operating profit/loss has increased or decreased for a single club over a period of many years. Then we could make proper conclusions on the way the club has progressed. But still i’m delighted to see that you have tried to emulate how a club’s progress is scrutinized in a board room of directors :-)

  • avatar donkeykong

    the reality is most fans woul rather be in chelseas or man utd shoes because they win thinks we don’t

  • Dark Prince – if you would like to provide an analysis of single clubs over a number of years bringing in the accounts and performance on the field, I’d love to publish it.

    But can you go easy on the graphs, because they are real buggers to publish; and they can look different depending on which software you are using to view the internet.

  • avatar Phil

    Dark Prince: doing such an analysis for half the Premier League would cost me quite a bit (have to pay to download each set of accounts if they don’t publish them on their official website) as well as taking a hell of a long time for little gain.

    While I agree with the idea that a larger data set is more accurate, the fact is that the sides at the bottom are rarely (if ever) profitable and are always dependent on TV monies. Such trends are shown up in a single year’s accounts so it’s time and money effective for me to do it this way. I’m not limiting my data set to bend the statistics to back an agenda.

    Some clubs I will go back over the full five years, and that’s what I did for Arsenal, United and Chelsea. For these broader articles, it’s just too time-consuming.

  • avatar Gooner80

    Great work Phil

    I think the football bubble is going to burst, it is a reflection of the global economic state, clubs, businesses consumers have all over spent. It is like one big pyramid scheme and when the bottom falls out the whole thing crashes.

    England is now facing major cut backs, and these football millionaires who get paid way too much money to kick a ball about will be in for some tough times.

    When New TV deals come out that is going to be interesting because I can see a major stock crash of football as a product, the recession has taken a long time to catch up with football but I think it is coming

  • avatar Phil

    Thanks gooner80. Im wary of predicting a bust in the EPL, as football is incredibly resilient to recessions. If you look in the past, attendances actually rose as a result of recessions. Perhaps the game is too pricey for that now, but we haven’t seen a drop in attendances.

    The EPL does a pretty good job of distributing revenues fairly, so we don’t even have a massively lopsided league like Spain do.

    For me, the doomsday scenario would be banks pulling their credit to football clubs. Such a move would mean most smaller teams (the ones who turn an operating loss and have to borrow every season) reined in their operations, and you would have a lot of administrations and/or rapid retrenchment for most sides in the League.

    This would lead to a less competitive league, which is a worse “product” for fans and so would hit revenues of the top sides in the longer term, though not too substantially nor quickly.

    If the banks opened their eyes to who they’re lending to, then this is a viable scenario. But it didn’t happen during the credit crunch, so it won’t happen now.

  • avatar walter

    Great article Phil, I must admire this and the work you put in to those articles. Great job, and keep them coming

  • @Phil,

    In fact, average attendances have dropped in the Premier League in each of the last two seasons, though much of last season’s decrease could be attributed to Newcastle’s relegation:

    2007/08 – 36,144
    2008/09 – 35,663 (down 1%)
    2009/10 – 34,215 (down 4%)

  • avatar Phil

    Fair point, but even a 1% drop would represent a kind of success given the economic backdrop. Your theory about Newcaastle would make sense, moreso when you consider Boro too didn’t do too badly in terms of attendances and one of the replacement sides was Burnley

  • avatar Richard B

    Do not the wages paid by each club include the bonuses paid for league position? If they do, then the correlation between amount paid out and ‘return on investment’ (points gained) is somewhat of a self fulfilling prophesy.

  • @Phil,

    My thoughts. Clearly television has been the driving force behind the Premier League’s finances with the sale of TV rights not only defying the economic recession, but still growing apace. In fact, the most recent deals for 2010-13 have been mighty impressive. Domestic rights were up 4% to £1.8 bln, but the overseas rights more than doubled to £1.4 bln.

    However, I think that there are four major threats to the Premier League business model:

    1. Customers – if the TV companies get into financial difficulties, e.g. Setanta went bust and in Spain Mediapro have filed for bankruptcy protection.
    2. Competition – if the Premier League becomes a less attractive product overseas, e.g. if the Asia market became more interested in La Liga.
    3. Regulatory – Ofcom have already ordered Sky to give rival broadcasters cheaper access to their TV rights, which might make the bids lower next time round.
    4. Technology – the Premier League has put all its eggy into television’s basket, but they need to find a solution to the internet.

    I have explored this theme in detail in my latest blog:

    http://swissramble.blogspot.com/2010/06/when-will-premier-league-bubble-burst.html

  • avatar Gooner80

    undoubtedly top work Phil at expense and time to yourself

    What I mean is that most clubs are under the assumption that revenues are only going to go up, just like with house prices, the dot com era they get over confident and think the good times are never going to come to an end and so they spend spend and some spend more than they should and when the bubble inevitable falls out things take a severe down turn and then clubs over compensate and spend so much less.

    I think Chelsea and now man city have been keeping the market afloat and have caused the inflated prices of players wages but from what your saying and I might have this wrong all this revenue is very dependent on TV money?

    If it is dependent on tv money, surely joe bloggs, who has lost his job, has to pay increasingly higher costs for things may be unable to renew his sky sports package and then sky as a knock on affect will offer less for these rights as less compete for the right to host games and then when supply exceeds demand prices fall, just look at what happened to satanta! There is an increasing number unwilling to pay these high prices, especially when they see these millionaire footballers swanning round and producing such dire performances for england.

    I think the PREM was a fast growing market 10 years ago but as a product it is holding on and I think in the decline, as I said supply will outstrip the demand at some point and everyone thought there was never going to be a crash in the 1920s, in the70, dot.com boom and the housing market, but all of these things were built on unsteady ground and when the bottom falls out who knows

    I think another interesting thing is the online watching of games, like with arsenal tv online,it means you can choose which games you want to pay for, I mean who in the neutral corner wants to pay a sky subscription to see blackburn versus stoke, as the broad band speeds increase and the whole fibre optic revolution online TV could cause the death of sky’s monopoly of PREM football, This year for the first time I watched online games and it wasnt too bad and I may subscribe to arsenal TV online because that is the only team I really want to watch

    it is an interesting period in PREM football for sure

  • avatar Phil

    Richard B: I had pretty much the same question put to me in an email. I’ve copied what I said back to them below, but in a nutshell, performance related is barely used in the Premier League:

    “On the wage:point analysis front, I can see where you are coming from but from speaking to a Professor of Sports Finance, he made it clear to me that contracts only have a small performance component in them, nothing that is going to substantially increase a wage budget. If we look at the size of say, Manchester United’s wage bill compared to a mid-table side, it’s not lower bonuses that account for the mid-table side’s lower wage bill, but lower base wages. Indeed, a midtable side’s bonuses could technically be higher than United’s depending on the criteria: United are expected to be in the top three every year, and their bonuses will reflect that as not being too much of an achievement given their squad. However a side like Stoke who finished mid-table after being promoted could well pay substaantial bonuses for greatly overachieving compared to expectations.”

    The Swiss Rambler: Some good points there. If we’re talking financial concerns though, La Liga is much, much more likely to go into difficulty than the Premier League in my opinion, so I wouldn’t be too concerned by them stealing the overseas market. Moreover, the overseas rights are only just starting to get tapped: surely there is a lot more money to come from this aspect? I’m unsure on this, but am I right in thinking recent TV rights have risen despite the OFCOM action, or was the TV deal agreed before OFCOM’s involvement?

    I agree TV is just one revenue stream and over-reliance is not the best way to run a business, but Sky’s business is reliant on football, so I can’t see TV revenues falling dramatically due to sky always being there. Greater competition within the TV market could bring down prices for consumers, but I’d imagine the bidding wars for packages would potentially push the revenues the clubs receive up.

  • avatar Phil

    Gooner80: the issue is that club’s are already overspending, yet get away with it. I’m writing an article on owner-sponsored clubs like Wigan, Blackburn and Bolton and they all basically rely on the banks to provide their financing needs. Only if the banks pulled the credit would they have issues.

    naturally, a fall in revenues would mean they needed more from the banks, and the banks may not be willing to provide. This theory of course depends on where you see revenues going in the Premier League in the future, and relies on the banks having the common sense to say enough is enough.

    As I said before, football is very, very resilient to recessions. Even if attendances do fall as the Swiss Rambler points out, it wouldn’t surprise me if matchday revenues rose due to greater increases in ticket prices than the fall in attendances.

    Arsenal TV is ok, but you can’t watch them live which ruins it for me. If clubs acquired live rights, they could make a killing off their own TV channels. Last year I paid for sky sports but basically only watched Arsenal games 90% of the time as I was too busy to idly watch TV. If the option was there to pay for just Arsenal games I would’ve taken it.

    Would revenues from this cover the drop in the value of TV money? That’s the question

  • avatar Richard B

    Phil – thanks for the clarification re bonuses. I agree they won’t make the difference between say 1st and 12th but they might help to differentiate between 4th and 5th where Champions League qualification may also play a part in bonus allocation.
    Looking forward to your review of Spurs’ finances!

  • avatar Phil

    Very true about 4th and 5th, good example. From what I’ve been told it seems around 10% of a players wage packet is performance related.

    Spurs is some way away yet, but will be done :)

  • avatar Dark Prince

    Tony- It will be one big time consuming task to get all the data for five years of all the premier league teams. And we dont even know that the data for the lower placed teams for the past 5 years would be available or not.

  • avatar Dark Prince

    Phil- Rather than going for a 5 year analysis of half of the premier league, it would be great if you could do it for the top 10 clubs of the world, including Bayern Munich, Inter Milan, etc. It would be fantastic to see how we fare against our european competitors. Financially Arsenal are the best in EPL, but where do we stand in europe? or in the whole world? It would be interesting to see that…

  • avatar Gooner80

    Does anyone know how many games are actually televised for the revenue they get?, what percentage?

    and

    Would showing more games devalue the Prem or increase revenue?

    I think Phil and Swiss rambler are right the brand is strong in the medium term,but I think the online thing is going to take off, you can watch some games for free online and we all know what happened with copy right issues with the CD’s and DVD markets

  • avatar Fem Dee

    EPL and the Championship leagues may have the same owner, the FA, but they are managed with two different business models. The EPL is marketed as high – end English soccer and to an increasing international market (I read in someone’s contribution that international TV rights revenue for EPL is set to outstrip the revenue from UK). As a result, there may be very little room for bridging the revenue gap between the two products. Yet, I agree that some way must be found for closing the yawning and growing divide for the marginal clubs without shutting the door on clubs dropping out or gaining promotion into EPL.
    A real business model management bummer for FA!!

  • avatar Phil

    Dark Prince : it’s a good idea and I’ll give it a go once I’ve finished up the Premier League articles. May take a while though to track down all the accounts and translate bits and pieces!

    Gooner80: of the TV money clubs get, 50% is equal for all. 25% is based on league position (£750,000 per league position I think) and a further 25% is based on how many games you get televised (which again biases the top sides).

    So roughly speaking, you get more the higher up the league you are, though there are some discrepancies due to the “Number of times featured” thing.

    The internet will take off, once the technology is there. I would rather pay for sky sports than pirate on a stream due to the poor quality of the latter. Once they’ve got good online streaming (like bbc.co.uk/sport having world cup games) online viewing on a team by team basis will take off.

  • @Dark Prince,

    You may be interested in the comparisons I did between Arsenal’s finances and those of Barcelona and Bayern Munich, as examples of the Spanish and German models. You can find them at:

    http://swissramble.blogspot.com/2010/05/how-can-barcelona-afford-cesc-fabregas.html

    http://swissramble.blogspot.com/2010/06/how-can-bayern-munich-pay-franck-ribery.html

    I also reviewed Real Madrid’s finances, though not as a direct comparison with Arsenal:

    http://swissramble.blogspot.com/2010/06/will-real-madrid-be-able-to-fund.html

  • @Phil,

    The only point I would add on the distribution of TV rights is that the overseas rights are distributed equally among all Premier League clubs, which may be an issue, as this now accounts for a significantly higher proportion of total TV rights.

    In other words, the bigger clubs are possibly unhappy with the distribution of overseas rights, while the smaller clubs are unhappy with the distribution of domestic rights.

  • avatar Phil

    Thanks for adding that, I completely forgot the overseas rights. It’s great for fairness that they are shared equally. Yes, abroad they are paying to watch the big sides and not the Stokes and Boltons of this world, but the big clubs have enough going for them already with Champions League match and TV revenues.

    I’d very disappointed if they changed that and would regard it a step in the wrong direction.

    What makes you say the smaller clubs are unhappy? While there is a bias towards the larger clubs, it’s a very fair system with the right bias towards rewarding success

  • avatar Gooner80

    Would it be breaking rules if say the top 4 sides played in a pre season tournament in say asia for big money paid for by some rich billionaire,sort of like 20 million pound tournament in 20/20 ATm the tournaments are seen as exhibitions but I have a feeling they could become serious ASIA is mad into football and sooner or later that demand is going to want to see the players in the flesh.

    I would love to see a premier league all stars in a tournament against la liga all stars, serie A, bundersliga etc, Now that I would pay money to see

  • avatar Phil

    In terms of clubs, I’m sure there was a pre-season tournament in Asia last summer but I can’t for the life of me remember what it was called. I know Hull played in it, but and one Chinese side but apart from that I don’t know much.

    Exhibition friendlies could be fun, but I can see the fall-out already. They’d be a fantastic moneyspinner, but can you imagine if Messi or someone got injured? For the risks, clubs would demand a slice of the revenues, maybe divide the money up into eleven parts, and allocate to teams according to how many players from that team make the cut? An interesting idea nonetheless!

  • @Phil,

    Personally, I also think that the allocation of domestic TV rights is a good balance, but some clubs would argue that all rights should be allocated equally – like the overseas rights.

    Last summer’s pre-season tournament in Asia (China) was called the Barclays Asia Trophy, featuring Hull, Spurs, West Ham and a local Chinese team. It is held every 2 years and was previously called the FA Premier League Asia Trophy. It has also taken place in Malaysia, Thailand and Hong Kong.

  • avatar Dark Prince

    It doesn’t seem right that the overseas rights are distributed equally. Its quite obvious that very few clubs in the EPL earn those rights. It would be fair that the overseas rights be distributed in the same ratio as of the domestic rights.

  • avatar Phil

    Dark Prince: for me, it’s not about fairness. What matters most is competitive balance. TV money already provides an advantage to the top clubs over the smaller sides, I wouldn’t do anything to increase that.

  • avatar Dark Prince

    Phil- I’m not against the idea of competitive balance in the league, but what about competitive balance in europe? Does the spanish league/italian league follow the same procedure of dividing the domestic/overseas rights equally? If not, wont teams like Real Madrid or Barcelona earn a lot more than United or Arsenal? Then the competitive balance would certainly be disturbed in europe.

  • avatar walter

    An interesting debate Phil and Dark Prince. A problem will be where do you stop in balancing those things. Do you allow every league to have its own ruling or do you let an organisation like UEFA divide the TV money.
    I think you will always have a difference between the leagues and also within the leagues. I do agree that there should be something that makes the difference as little as possible.

    On the other hand when you like in the EPL have a tough competition with the little teams having more money than before (not saying that they spend it wise) and this getting better players themselves it makes live harder on the top team. This maybe is great for the EPL itself but it has as a result that the tougher the competition (and it was more difficult this year for the top teams) the more difficulties the top teams have in Europe. Madrid or Barcelona can send half of their team to the bench before an European game if they play a lower placed team. In England it is mostly the day that the top teams drop points, after a CL match that is.

  • avatar Phil Gregory

    Dark Prince: Nope they don’t Spain sell their rights individually, so the top two sides in Spain get an absolute fortune in TV money, more than any side in England gets from TV.

    Your argument is valid, but I wouldn’t want to follow their route as I believe it isn’t the correct model. Look at La Liga, apart from the top two, the financial issues are enormous, much more than what we have in the Premier League. They will eventually switch to collective bargaining once they realise they need a competitive balance. Italy have made the change (or are going to shortly) and it is only a matter of time until Spain sees the light.

    Yes, it puts us at a disadvantage, but financial fair play in Europe is a matter for the European authorities. You’ll never get equality in Europe – think about the imapct of different top bands of income tax will have on clubs finances. A take-home wage of say £100,000 a week would need to be £123,000 in salary paid in Spain under the Beckham Law (income tax for big earners was only 23% for the first five years) whereas the same example in the UK would’ve cost £140,000 and now up to £150,000.

    Total financial fairness is a pipedream, all we can do is elvel the field as much as possible. But I wouldn’t sacrifice equality of earnings of the overseas TV deal to keep up with Barca and Madrid, not at all.

    Walter: good point. Though financially, an uncompetitive league comes back to haunt a team. People may go and see Barca romp the League for the first couple of years, but if they did it for five or more years, attendances will suffer. It’s proven that a match is more appealing to spectators the more unknown the outcome is, and that will filter into ticket sales.

  • avatar Dark Prince

    Phil- There seems to be double drawback for the EPL big teams. They earn less than their spanish counter-parts and also have to pay more wages to offer the same in-hand salary bcoz of higher taxes. But then the spanish league lacks the competitiveness. So a team finishing 5th in EPL will be better (both financially and as a team) than a team finishing 5th in La Liga. But then again, the top two clubs of La Liga earn more money than us and hence attracts all the world’s best players, which in turn makes them more attractive to negotiate better broadcasting deals. A vicious circle perhaps.

  • avatar Phil

    I wouldn’t be too concerned, it is easier to read too much into these percieved advantages. Do clubs ever spend the maximum they can? Not often, so they rarely feel constrained by the size of their income.

  • avatar GOONER80

    i ALSO THINK THERE Is TOO MANY PLAYERS AROUND FOR REAL AND BARCA TO GET THEM ALL.

    have you seen the odds the bookies offer for the big two in Spain they are always really short even against a top 4 side because the league just isn’t competitive.Obviously it isa much better league than scotland but thats what spain reminds me of, there is a huge gulf between the top two, whereas england down to about 8th place there is good competition

    I agree with Phil who wants to see the same team win it all the time and clear up all the trophies? that is why I have never watched a Scottish game.the only thing la liga does have going for it,is that most teams play attractive football which makes up to a certain extent for the uncompetitive league, the teams play in the right way,the boring slow nature of the seria A killed me watching their league, I guess the frantic pace of the prem sells it overseas.

    I know this is a little off the mark but anyone got any idea how much of turnover or expenses is attributed to agent fees, those agents are just leeches,and are at the root cause of why wages is at such high percentage of turnover