The cost of relegation: what the drop really means for Sunderland, Middlesbrough and Hull City “The game is about glory,” read one of the signs at White Hart Lane before it was redeveloped, quoting Tottenham legend […]

“The game is about glory,” read one of the signs at White Hart Lane before it was redeveloped, quoting Tottenham legend Danny Blanchflower.

Is football still about glory? If he was alive today Blanchflower would have had to grudgingly accept that it’s increasingly about money.

The Championship play-off final is often referred to as the richest game in the world, while the race for the top four and Champions League status is as much about the riches that tournament brings as it is about prestige.

Vulgar perhaps, but it’s understandable. Especially when the consequences of dropping from the Premier League are factored in. Jobs on the line, careers at stake.

And the disparity between the earnings in the Premier League and the Championship becomes starker when the club has not been run efficiently.

So just how much does relegation affect the bottom line? We looked at the numbers.

TV revenue: the biggest impact

This is the big one.

The new TV deal came into effect this past campaign. For three seasons the league receives £5.1 billion from Sky and BT, a further £3 billion from foreign broadcasters, with some pocket change coming from Match of the Day highlights (a measly £204 million).

(By contrast, the first TV deal of the Premier League era struck in 1992 was for five years and amounted to £50.7 million.)

Premier League TV deal Sky Sports: 126 games per season – £4.2 billion BT Sports: 42 games per season – £960 million Match of the Day: Highlights package – £204 million Foreign broadcasting rights: £3 billion

As part of the new deal, every club receives £84.4 million. Around £47 million comes from the overseas rights, with roughly £38 million from the domestic rights, which are distributed differently.

On top of that, each club receives a basic £13.6 million in facility fees for 10 games shown live in the UK. Both Sunderland and Hull had eight but still get the full allowance. Each additional match nets clubs £940,000.

Then there is also the merit payment.

The bottom club is awarded £1.9 million for their lowly placing, with the payment increasing by the same amount with each position. Second bottom receives £3.8 million, third bottom gets £5.7 million and so on up to champions Chelsea, who get £38.4 million.

So even though they finished bottom, EPLIndex calculated that Sunderland just missed out on topping £100 million from TV revenue and merit payments. Middlesbrough were just shy of £102 million and Hull earned £104 million.

Average TV income per club, by league Premiership: £124.59 million Championship: £5-6 million (without parachute payments) League One: £1.3 million League Two: £900,000

Now is time for the directors of the relegated teams to look away. You are not going to like what you see. There is no TV bonanza waiting for you in the second-tier.

According to the widely respected Swiss Ramble, teams are given £2.3 million from the Football League and the same amount as a solidarity payment from the Premier League. Those clubs that receive parachute payments (which we will come to later) are not entitled to the solidarity payment.

Like the top-flight, there is also a facility fee for clubs involved in live games. Only it is £86,000 for the home team and around £10,000 for away teams. This is much to the chagrin of teams picked often for TV games, with Leeds United once involved in a stand-off with Sky.

Clubs who are not awarded a parachute payment generally make between £5-6 million from TV revenue. To extrapolate further, teams in League One get £1.3 million and those in League Two just £900,000.

Parachute payments: a consolation prize

This is where relegated teams are given a significant advantage over clubs who have been in the Championship longer than two or three years.

Clubs who suffered relegation from the Premier League are given a percentage of what they make in their final year in the top-flight.

Over three years, Sunderland will get 55 per cent of the £99.9million they made from TV revenue in the first year, 45 per cent the following year and 20 per cent in the third year, providing they don’t win promotion.

However, both Hull and Middlesbrough will only be entitled to the first two payments. Because they were relegated after only one season they don’t get the third and final payment. That’s because clubs had been criticised for going up and showing little ambition in the way of investment, appearing content to take the Premier League TV cash and subsequent parachute payments.

Of the 11 highest earners in the Championship in the 2015/2016 season, eight received parachute payments.

Wages: a balance between cost savings and ambition

Earlier we mentioned that the first TV deal amounted to a five-year total of £50.7 million. At that time the average annual salary in the Premier League was £77,000.

Now, it is roughly £2.5 million, which equates to just under £50,000-a-week. The next highest-paying league in world football is La Liga, which is still far behind the eye-watering English salaries.

These figures have been compiled by Sporting Intelligence in their annual Global Sports Salaries Survey, which was released towards the end of 2016. It is not a definitive list, and it needs to be analysed with a pinch of salt, but it does provide a good barometer.

They have looked at average first-team pay, and it does not take into account end-of-season bonuses.

Using these figures and an average squad of 25 players, we can speculate that the basic wage bill for the three relegated clubs are as follows:

Sunderland: £1.87m per year/36k per week per player = £46.75 million Middlesbrough: – £1.22m per year/23k per week per player = £30.5 million Hull City: £1.22m per year /23k per week per player = £30.5 million

These do look low compared to some figures in the public domain, but don’t take into account staff costs and bonus payments.

Swiss Ramble point out that Boro’s wage bill was £32 million the last time they were in the Championship, which included promotion bonuses, while Hull’s was £30 million.

According to ex-Hull boss Steve Bruce, when the club were last relegated from the Premiership players had clauses in their contracts which reduced their wages by between 40 and 50 per cent.

Sunderland’s financial accounts from previous years show that the club had a wage-to-turnover ratio of more than 75 per cent. A number of players have already or will move on, but fans will hope that the club has inserted a similar clause for those who stay.

Matchday takings: how loyal are the fans?

In terms of matchday earnings, Sunderland shouldn’t be too affected by the drop to the Championship. Their gate receipts were among the lowest in the Premier League despite having one of the higher average attendances.

Average attendances Premier League: 35,805 Championship: 20,199 League One: 7,944 League Two: 4,751

In the 2015/16 season they made £10.4 million. Only once in the last ten seasons has the average attendance at the Stadium of Light dropped below 40,000.

The club, prior to their relegation, announced that they were freezing ticket prices. While fans will be paying the same for Championship football, they will get an extra four home games.

The Mackems support is passionate and loyal. With some positive signs during the summer they should still fill the ground most weeks.

Middlesbrough will likely take a heavier hit. They topped 30,000 this season. In their promotion season last year it was under 25,000 and the season before that it was below 20,000.

Hull City have provoked anger from fans with a ticketing policy that replaced season tickets with a membership scheme. In their promotion season they averaged 17,199, jumping to more than 20,000 this past season. However, with no manager and little direction, there will be a steep drop-off.

Commercial: less exposure puts sponsorship deals at risk

During the 2015/2016 season, Leeds United made the most in the Championship through commercial income, earning £16.7 million. Middlesbrough made £8 million, while Hull brought in £3.1 million.

In contrast, for the same period Sunderland’s was £26.1 million, a large chunk coming from conferences, banqueting and catering. It would be highly surprising if that figure did not take a significant dent.

The club is on the lookout for a new sponsor after their £6 million-per-year deal with Philippines-based Dafabet ended. It was the 10th most lucrative in the league.

Boro have another year to run on their £1 million-a-year deal with Ramsdens. Hull City have two more seasons on their £3 million deal with Kenyan betting firm SportPesa. It is unknown if either of those are affected playing outside the top-flight.

But it does point to the importance of the exposure provided by the Premier League.

In conclusion

The Premier League is obviously where the money is. If clubs make a financial loss in the top tier they will make a financial loss in the Championship.

Sunderland’s most recent accounts, 2015/2016, showed that while they reduced the net debt to around £110 million, their loss after tax was £33 million.

Middlesbrough lost a similar amount in their promotion-winning season, while Hull recorded a £21 million loss despite receiving a parachute payment.

Winning promotion within two years is crucial. There are plenty of examples of teams who haven’t done so who are now struggling.

Ipswich Town have disappeared into mid-table obscurity, and Cardiff City could join them. Blackpool have just been promoted to the third tier, while Wigan Athletic have gone in the other direction.

The parachute payment is a life-raft. What the relegated clubs do with that money is pivotal to their fortunes – both on the pitch and off it.