Earlier in the week, in the first part of this article, we looked at what the huge increase in revenue from the EPL’s new domestic television contract might do for the Premier League as a whole, compared to the clubs occupying other European leagues. To take this tack is to follow Gabriele Marcotti, who suggested that the influx of billions is likely to widen the wealth gap between English teams and the rest of the world.
On the other hand, Peter Berlin suggested the opposite, that the new deal would in fact close the wealth gap; Berlin, however, was speaking in relationship to the teams within the Premier League, not comparing the EPL to other leagues. In this second installment, we’ll start by examining what the new £5 billion deal will mean within the Premier League itself, and ultimately try to hash out what all this money means: is, in the end, “soccer’s wealth gap” smaller, or more pronounced?
Come On Now Mourinho, Share Your Toys
Although the EPL earns exponentially (some would say, grossly) more than other leagues from its TV revenue, it also shares its spoils more evenly than some other major European leagues. In Spain, for example, La Liga clubs all sell their own television rights independently. What might seem a privilege to control your own destiny financially, ultimately amounts to the big clubs staying big, and the small clubs continuing to lose out. While, in the EPL, the international star power of Arsenal, Chelsea, and Manchester United may eviscerate the likes of Leicester City on the pitch (though, fair play to the Foxes, they did inflict some damage on Man U this season, winning 5-3…which accounted for more than 20% of their total goals), but in the piggy bank, Eden Hazard, Wayne Rooney, and Alexis Sanchez all help to power the TV revenue of the EPL, revenue which even the bottom-of-the-table team has a significant share in.
The fact that, unlike in La Liga, even the bottom teams in the EPL can profit from the big clubs’ star power suggests that, at least within the English top flight itself, increased TV revenue does stand to shrink the gap between the richest and the poorest clubs. Berlin does well to point out that, according to Deloitte’s recent figures on the richest football clubs in the world, two of the three new faces in the top twenty—Everton, Napoli, and Newcastle United—come from the EPL. Further, the lion’s share of each club’s revenue comes not from match day ticket sales, not from commercial merchandise and sponsorship, but from television broadcasting. For Newcastle, 60.3% of their overall revenue in 2013-2014 came from television; for Everton it was a whopping 73.5%.
Without signing new stars, without improving facilities, without so much as raising the price on fish and chips within the football ground, what already comprises the majority of revenue for these ‘smaller clubs’ stands to soar in 2016—provided, of course, they don’t get themselves relegated. Said differently, presuming they finish in precisely the same spot as 2013-2014 (admittedly, unlikely), after the imminent 70% increase in TV revenue for EPL clubs, Everton would stand to earn nearly 180 million Euros from the EPL’s television broadcasting alone—more than reigning La Liga Champions Atletico Madrid currently earn from television, match day sales, and commercial ventures combined.
The Rich Do Get Richer:. . .And The EPL is Rich
The landscape of Deloitte’s so-called “Football Money League” stands to see at lot more Crosses of St. George in the near future, as the 70% rise in EPL TV revenue will certainly push even more EPL clubs into the top-20 echelon of top-earning football clubs. But within the Premier League itself, the teams that seem to be perennially just beyond the top four—teams like Everton and Tottenham—do stand to gain some ground on the biggest clubs in the league.
Of course, teams like Manchester United and Arsenal will get their share of the spoils, too, and with massive, world-wide merchandise marketing, will continue to outstrip clubs like Everton and Newcastle in the “Money League.” Even after the 70% increase in TV revenue, Everton’s projected 180 million Euros from television is a full 50 million shy of what Manchester United already earns from their commercial ventures. Still, even if Tim Howard jerseys with the Everton crest will never sell as well as Wayne Rooney kits in the famous Manchester Red, the gap is closing. Further, as Marcotti himself points out, those teams in the EPL that are already splashing the cash on wages, with total wage bills over $80 million, won’t be allowed to use the TV revenue to bloat their payrolls even further; these top-paying teams can only increase their salaries by $6.2 million per season from the TV revenue, though they can pay more commensurate with increased earnings from ticket and merchandise sales.
Ultimately, both Marcotti and Berlin are right. In terms of cashflow, the EPL is moving further afield from its continental rivals (even as its teams struggle on the pitch in the Champion’s League). Point to Marcotti. But within the EPL itself, because of the financial restrictions on paying out the TV revenue among the already high-salary payrolls, and because of just how massive this income is going to be compared to ticket sales and other sources of revenue, teams like Southhampton and Everton are going to be able to compete more aggressively in the transfer market than ever before. Although Berlin’s essay has some problems (For example, he claims that Arsenal’s cheapest ticket is £96, which is, in fact, the most expensive ticket, to the most expansive match category, at the Emirates; the cheapest for non-members is £27.), he’s right to suggest that this television windfall makes mid-table teams more competitive financially.
“We. Are. The 0.000001%!”
But there’s still the elephant in the room—a big, oily elephant. Although teams like Arsenal and Manchester United may find that Everton and Newcastle have gained some ground, the impact of foreign oil billions has meant that a pair of teams need not concern themselves. When it comes to wealth and spending-power, Chelsea and Manchester City are in a whole new class, thanks to their sugar oil daddies. Roman Abramovich at Chelsea, and Sheikh Mansour bin Zayed al Nahan at Manchester City have plenty of cash on hand to re-up their clubs’ coffers, should the likes of Everton start sniffing around the players they’d prefer. As a friend of mine once said, their war chests’ impact on the transfer market “is akin to playing Football Manager using the cheat code for infinite money.”
Although the wealth of Chelsea’s owner Abramovich is more reasonable—a mere $9 billion—Mansour’s is almost incomprehensible. Last year, due to a violation of UEFA’s Financial Fair Play regulations, Manchester City was forced to pay nearly £50 million in fines. That is more money than most of us are likely to see in our entire lives. But for Sheikh Mansour, whose fortune has been estimated at $1 trillion, it’s a pittance.
These numbers can be mind-boggling, so let’s break it down. Knock off a few zeros—six, to be exact—and let’s say that Sheikh Mansour’s fortune is the equivalent of $1 million, instead of $1 trillion. Now, put yourself in his shoes. You like sports, you have, say, a semi-pro soccer team you sponsor join your spare time, with your $1 million fortune. Well, you paid more for cleats than you’re allowed to in the league rules, so the powers that be slapped you with a fine. The equivalent to Manchester City’s actual £49 million fine, in dollars and scaled down, would be $78. Of your $1,000,000 fortune, because of not abiding by the league’s financial rules, you have to pay $78. You’re a millionaire, and this is, essentially, a parking ticket.
That’s what Manchester City brings to the table. Financial Fair Play is a noble idea, but so long as this magnitude of cash is involved, for teams like Manchester City, it’s little more than a gnat, a mosquito, a parking ticket—an annoyance soon forgotten.