The Premier League has announced a 70 percent rise in its new British television rights deal set to kick off in 2016 and run till 2019. The deal will see broadcast rights holders pay a staggering £5.1 billion ($7 billion) and represent yet another milestone as the world’s most lucrative football league has, again, widened the gap between it and the rest of its competitors. Having announced the Premier League’s new deal, it is time to critically examine what the new deal means for English football and how much of an effect, if any, it will have on the game.
Essentially, the biggest effect the deal will have is an increase in the revenue for the Premier League as they have, for the fourth negotiation round, secured an increase in the value of its television rights. In 1992, the year of its inception, the Premier League received £191 million for a five year television deal. Since 2001 however, the Premier League have negotiated its television deals based on a three year period and since that time, the body have seen the value of its television rights dip in only one three year span; between 2004 and 2007 when it received £1.02 billion having bagged £1.2 billion for the previous three year period of 2001 to 2004. This is also the second consecutive negotiating window in which the values of the rights have increased by at least 70%. Clearly, the Premier League will receive a bump in its revenues. How though, will the increase in the Premier League’s revenue, affect other components of the British football economy? The best approach will be to determine how the new deal will affect clubs, the fans and grassroots as well as players.
Clubs: Bigger piece of the pie.
The Premier League’s new deal automatically means that the 20 Premier League clubs will also receive far higher percentages than they currently receive. Last season, runners-up Liverpool received the highest percentage of revenue (£95 million), however, in the period between 2016 and 2019, even the lowest grossing clubs could bag as much as £99 million eclipsing Liverpool’s share last year while the highest grossing team could rake in as much £160 million. This allows English clubs operate at a higher level thus positioning the biggest clubs in England, as well as the Premier League, as the favoured destination for premium talent. However, the downside to this is that selling clubs will hike the values of wanted players knowing that English clubs have a few extra pounds in their coffers.
With the deal and higher revenues from the 2016-17 season, English clubs will have a better chance of staying on the right side of UEFA’s Financial Fair Play rule and this represents a significant triumph for clubs like Manchester City who have exploited the success model of getting funded by a super-rich owner without paying too much attention to incoming revenues as the owner writes off what debt is incurred on the path to success. Having been fined as much as £50 million recently, Manchester City will be pleased to hear that its revenues will increase starting from the 2016 season.
With Premier League clubs ranked among the world’s richest clubs, the new deal is set to further their place in the global football economy while others watch on with more than a tinge of envy.
Fans and Grassroots: Not much to hope for
Over the last few years, very little of the Premier League’s new millennium windfall of multi-billion pound deals has found its way to the lower rungs of the football economy however, eminent personalities are starting to call for the disparate balance to be addressed. Clive Efford, a Labour Party politician and the shadow Minister for Sport has led the call for more funds to be diverted towards the grassroots saying that anything otherwise will be ‘criminal’.
“These are incredible sums of money and it would be nothing short of criminal if none of this extra money goes to expand participation at the grassroots of football. The grassroots of the game must benefit from this bonanza through a boost in participation and improved facilities,” he said.
In many ways, it is hard to pick holes in his argument as many feel that only the players at the higher end of the football economy enjoy the merits of the new money rain. Another crucial component of the football economy who will not be hopeful of enjoying perks of the Premier League’s wealth are the fans. With Premier League games ranking among the expensive in the world to purchase tickets for, fans have campaigned ceaselessly for cheaper prices with one of the more popular banners seen at various grounds in English football reading; Supporters not customers.
Chair of The Football Supporters Federation, Malcolm Clarke has also lent his thoughts to the new deal saying that it is about time the Premier League’s windfall found its way to the fans. “Billions of pounds have fallen into clubs’ laps and there’s a real chance for them to do something positive with that wealth. Over the past couple of decades players, owners and agents have all gained from this windfall and now it’s time for fans to benefit via lower prices,” Clarke said.
It is not just fans who will attend games in person that will be affected as the major players in the new Premier League deal Sky Sports and BT Sport are expected to hike fees to their subscription package after shelling out £2 billion more than they currently pay to secure the 2016-2019 rights deal.
Players: More money, more contracts
The players, being the talent that fuels the football economy itself, will be direct beneficiaries of the new mega deal as an increase in their respective clubs revenues will mean that these clubs can afford to pay better wages and offer larger contracts. In the 2012-2013 season, the Premier League’s entire wage bill stood at £1.8 billion per annum however, the season after, which saw the Premier League kick into the first year of its first ever £3 billion television deal, the wages rose by 22% to reach £2.2 billion. The logical conclusion is that increases in club revenues will mean that the players will get better deals and every negotiation window will see a bump in annual wage percentages. Also, given that there is a possibility that the general expectations of a continuing rise in the value of the television rights, players may also begin to negotiate shorter contracts to allow for renewals to coincide with the Premier League’s three year windows.
