Mind the Gap, Part 1: The EPL's TV Billions

Two weeks ago, the EPL reached an agreement with domestic TV outlets Sky and BT Sport, covering the next three seasons, and worth, in total, £5.14 billion, or nearly $8 billion. No, that’s not a typo: $8,000,000,000. That’s more than one dollar for every human being on the planet.

What’s more, if you watch England’s top flight teams from a bar or your home within the United States (or Indonesia, or Japan, or anywhere outside of the UK), then your local broadcaster doesn’t even factor into that revenue; the EPL stands to earn even more from their international markets, likely also in the billions, if rather fewer billions. Still, we’re counting in ten-figure numbers here—annually.

This is a sh*tload of money; that’s inarguable. What we could argue about, however, is what that money might leave in its wake.

Let’s.

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The Gap Plot Thickens

Roughly a week after the lucrative deal was struck, on the same day, Sports Illustrated and the Wall Street Journal ran two contrasting, indeed antithetical headlines in response. Gabriele Marcotti, writing for the WSJ, published an article entitled “TV Deal Widens Soccer’s Wealth Gap.” Over at SI, Peter Berlin seemed to opine the opposite in a piece plugged “New TV deal spells trouble for bigger EPL clubs as financial gap closes.”

Um, what?

There are a few issues at play here, but the easiest explanation is that Marcotti and Berlin are using slightly different metrics, different foci for their arguments; Marcotti is discussing the EPL more or less as a whole, while Berlin is looking at (dis)parity among clubs within the EPL itself. The stark difference in opinion isn’t completely reducible to this general difference in focus, but before we get to that, let’s give each approach its due, beginning today with the EPL as a whole.

EPL vs. The World: The British Footballing Empire

Several years ago, on a flight from London to New York, I struck up a conversation with an English woman sitting beside me on the plane. She was flying with her teenage son to the US on holiday, noticed my football scarf, and we got to chatting. To be honest, I can’t remember precisely where in England she was from, or even what club she supported, but one moment sticks in my mind: after we’d been talking about English football for several minutes, she turned toward me in her seat, looked me in the eye and, speaking with the authority of a schoolmaster teaching a child straightforward arithmetic, declared, “It’s the best league in the world.”

Full stop.

To be sure, her statement was fueled by a nationalistic hubris—but that doesn’t make it untrue. One potential measure of a league’s quality is simply how close the title race is, the general level of equality, or parity, among title contenders. And in terms of parity, during the 2013-2014 season, the EPL outstripped all of its European counterparts. The gap in points between first place and fourth in the EPL, Manchester City and Arsenal, in this case, was a mere seven points. Further, all of the top four teams were within no more than three points of one another—the difference of a single win, rather than a loss. Take any single match day of the 38, reverse two or three match results among the top teams, and the top four look completely different.

Look for parity among the top four elsewhere in Europe, and things start to get ugly.

Among the five major leagues of Western Europe (England, France, Germany, Italy, and Spain), the Spanish La Liga was tied for second-closest point differential—but the margin is a full 13 points more than that in England. There were 20 points separating first-place Atletico Madrid, and fourth-place Bilbao, the same as Ligue 1’s gap between Champions PSG and Saint-Etienne (second and third place were much closer in Spain, as Barcelona and Real Madrid were in title contention, as usual, until the last match of the season).

Next in line is the Bundesliga, where Bayern Munich ran away with the title, 19 points ahead of second-place Dortmund, and a whopping 29 points beyond local rivals Bayer Leverkusen. But it was the Italians whose disparity took the cannoli. Champions Juventus’ 102 points were a full 37 above fourth-place Fiorentina, who had 65; that means that, had Juventus lost ten more games, and Fiorentina won ten more, Juventus still would’ve finished ahead of the Florentines. Not. Close.

Part of this is simply down to how the leagues sell their television rights. In Spain, for example, individual clubs sell the right to air their games on their own—a major contributing factor in the wealth gap within La Liga. Malaga are an excellent team, and deserve credit for their 0-1 victory over Barcelona, at the Camp Nou no less, on Saturday. But are people packing the bars in Nicaragua, Los Angeles, and Jakarta to see Malaga take on Real Madrid? On the pitch, anything can happen, and one of the great thrills of watching the sport is seeing little fish take down the Leviathan. But when it comes to the coffers, the Leviathan will always win.

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The Rich Get Richer?

In fear that the ensuing increase in EPL TV revenue might further marginalize his own club, Jean-Michel Aulas, the president of Ligue 1 side Lyon—who not too long ago saw their keeper, French No. 1 Hugo Lloris, lured away by Tottenham Hotspur—encouraged UEFA to alter their allocation of Champions League prize money in order to offset the EPL clubs’ outrageously lucrative television windfall.

In addition to sore feelings about the loss of Lloris, Aulas has some harder data to lean on. Over the next three years—unless Ligue 1 renegotiates their television rights for a great deal more cash (unlikely)—the team that finishes last in the EPL stands to earn three times as much as the champions of Ligue 1.

That’s right: just by being entered into the competition, in 2016, whichever club is promoted from the Championship stands to earn at least three times as much as French powerhouse PSG, even if the English side finish last, and PSG wins the league. We hear over and over that “the game is about glory,” not the bottom line; but if you’re an investor, or even someone who supports your team with a fair amount of awareness about the impact of global markets on football clubs, this is a flag of fire engine red. In flames. Next to a thirteen-year-old boy holding a jar of kerosene.

In response to Aulas, UEFA president Michel Platini—who has long campaigned for caps on wages and been instrumental in the implementation of UEFA’s financial fair play regulations—essentially, scoffed. Although his suggestion that French clubs ought to simply “play a bit more, to attack” is perhaps not the most salient piece of advice, (I’m not convinced that Lyon playing a 2-4-4 will suddenly create a leap in TV revenue), Platini made a good comparison to Belgium’s Jupiler League, and the reigning Champions, Anderlecht of Brussels. True, the EPL’s bottom side stands to earn more than the top clubs in France, “But by means of comparison, Anderlecht earn less than the team that finishes last in Ligue 1, but no-one bats an eyelid. People only do that when it’s others who earn more than them.”

Newsflash folks: the global distribution of capital is unequal. And another earth-shattering revelation: when it comes to football, as with most things, human beings tend to be self-interested; if you’re the one raking it in while the little guy gets bread crumbs, you’re far less likely to kvetch.

Next time, we’ll look at what’s happening within the EPL, in terms of the wealth gap, and try to hash out whether, at the end of the day, this monstrous amount of cash widens, or closes, the wealth gap.