MONEY MATTERS – Why the Premier League is still the financial king of football

If ever one match could truly signify the financial importance of modern football, it was the Championship Play-Off Final at London’s Wembley Stadium on Monday afternoon.

An injury time penalty from Kevin Phillips booked Crystal Palace a place in the Barclays Premier League for the first time in eight years, setting off delirium among fans, however, the true significance of the result goes much deeper than the promotion it gave the victors.

Colloquially known as the ‘richest game in football’, it is estimated Crystal Palace will now collect a staggering £145 million, shaping their future for years to come and placing them at the top table of English football where everyone is a winner – even the losers.

While fans and players will no doubt celebrate the fact that their club will again play at the highest level of the domestic game, the owners of Crystal Palace will also have huge satisfaction in seeing their investment rewarded so handsomely.

Placed into administration in 2010 with reported debts of £30 million, the club were deducted ten points and only secured their Championship status on the final day of that season after a dramatic 2-2 draw at Sheffield Wednesday, who were themsleves relegated as a result.

During the close season, a consortium of wealthy supporters was put together to buy the club’s stadium, Selhurst Park, and were eventually able to negotiate a deal for the club itself soon after. Led by Steve Parish, CPFC2010 worked hard both on and off the pitch to bring some stability to the football club, and in November 2012 current boss Ian Holloway was unveiled as the club’s new manager. The rest, as they say, is history.

Monday’s Wembley triumph immediately earnt Palace an estimated ten times the revenue they collected during the 2012/13 campaign, further explaining why promotion to the Premier League is so financially vital. In fact, international accountancy firm Deloitte say the Championship play-off final is the richest single game in any sport, anywhere in the world.

This season, the pot of gold is bigger than ever after the Premier League negotiated television deals that will net it’s clubs around £5.5 billion over the next three seasons – a £2 billion increase on it’s previous deal.

So what does this mean for Crystal Palce and the other clubs in the Premier League? Quite a lot actually if we compare the numbers.

Official figures recently released by the league show Manchester United picked up £60,818,999 for winning the title, yet under the new TV deal even the club that finishes bottom of the Premier League next term will collect payments in excess of that total. In fact, the club that lifts the title next season can expect to pocket almost £100 million – a staggering increase of almost £40 million.

By winning Sunday’s Play-Off Final, Crystal Palace are guaranteed at least £63 million in broadcast money, four years of parachute payments (should they be relegated) totalling £59 million, and an estimated £23 million in sponsorship that the added exposure of playing in the world’s most popular league brings with it.

To further understand who gets what, it is helpful to look at the way the Premier League distributes it’s television revenue. Half the money from domestic deals done with BSkyB, the BBC and new boys BT Sport, is split equally between the league’s 20 clubs while all overseas broadcasting money is also divided equally among the clubs.

The remaining 50% of domestic income is split into two areas. 25% is used as merit money, with a payment given to clubs relative to where they finish at the end of the season, while the remaining 25% is used as a facility payment, given to clubs every time they are featured on UK television.

It is the latter revenue that throws up some interesting anomalies. For instance, third placed Chelsea actually earnt less than fourth placed Arsenal and fifth placed Tottenham Hotspur, due to the fact that they were shown live on 16 occasions compared to Arsenal who were broadcast live 22 times and Spurs, who were featured in 21 live games.

These facility payments totalled £11,525,944 for Arsenal, £11,047,387 for Spurs and £8,654,602 for Chelsea. Champions Manchester United received the highest facility payments totalling £12,961,615, while runners-up Manchester City were just behind, earning £11,047,387. Bottom club QPR were given £6,261,817 for the 11 occasions they were shown live.

Merit payments rise in increments of £755,881 per place, with QPR receiving £755,881 and Manchester United taking away £15,117,620. The ratio in central earnings between the Premier League Champions and its bottom club is 1.53 to 1, making a much fairer split in TV money than leagues on the continent where the equivilent ratio in La Liga is 14 to 1, 10 to 1 in Serie A and 2 to 1 in the German Bundesliga.

Each club also received an equal share of £18,931,726 for overseas broadcasting rights, while domestic revenues where shared equally at £13,803,038 per club. To highlight the significant increase of the Premier League’s new television deals, over the next three seasons overseas rights will bring in £2 billion compared to £1.437 billion raised from the previous three campaigns.

What all of these statistics show is that the financial power of the Barclays Premier League shows little sign of abating. With revenue already far in excess of its closest rivals, English football is still the league of choice for fans and broadcasters around the globe.

The massive increase in revenue Premier League clubs will receive from its new television deals will also hand English clubs unprecedented buying power in the transfer market, and not just the likes of Manchester City, United and Chelsea.

With clubs desperate to retain their place in the Premier League, even those at the lower end of the table will invest huge amounts of money to strengthen their squads. Last season, QPR had a wage bill of almost £60 million – an increase of almost 100% from their 2011/12 total.

When compared to the two teams who played in Wembley’s other big game this weekend, the overwhelming dominance in TV rights is stark. Last season Bayern Munich earned a modest £32.22 million from TV, while Champions Borussia Dortmund collected £51.76 million from all its media rights combined – including radio, overseas rights and European competition.

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While Saturday’s Uefa Champions League Final may have received more publicity than Monday’s Play-Off Final, when the financial connotations are taken into account, there can be little doubt which game meant more overall to its winners.

With the Barclays Premier League set to bring in the highest revenue ever seen in football over the next three seasons, there has never been a more lucrative time to earn promotion to its ranks.