The fate of the EPL

[johntheclaret]

Reading some of the posts on different threads about finances in th eEPL, it got me thinking about the importance of Sky's revenue.

Sky shell out approximately £800m per year out of a total revenue of around £1.9bn, thats just short of 50% of the total revenue for the EPL.

Having heard that Setanta are all but broke and bust, and ITV (that's our commerial terrestrial stations) also bust and broke, who the hell could step in to replace Sky? What prompted Sky to throw so much at the league was the competition from BBC, ITV and laterly Stetanta.

Now with none of the above in a position to take up the slack, what is to stop Sky from even halving thier investment when it's time to negotiate again, and what would happen to the EPL if this happened.

The big losers in this would be the smaller clubs like Burnley, Stoke, Hull, Fulham, etc, whose TV revenues represent a much higher proportion of thier income, and then those vulnerable big guns like Man U, Liverpool, Arsenal, who don'y have wealthy backers who can finance the blackhole left by Sky.

Whilst all the clubs could embark on a resturcturing process that would result in the big earners and big transfer fees disappearing out of the game (not necessarily a bad thing), there would no doubt be some significant casualties, with clubs tied into contracts with players for years after the Sky money has dried up. (Hence the parachute payments for the relegated sides). Bradford was a casualty many years ago, when they were tied into a couple of big £30k+ a week earners when they lost thier place in the EPL.

OK, so at this time there is no indication that Sky will reduce thier contract fee with the EPL and I am only thinking aloud, but such is Sky's dominence of the EPL, my personal opinion is that the bubble will burst, it's just a matter of when.

[Strawb]

Interesting read there JTC and you are correct in your writings on the financial state of the EPL. With players wanting more money and record transfer prices how long til the bubble bursts and the clubs start crying poor.

[johntheclaret]

I guess the only driving force behind the level of revenue Sky pumps into the EPL, is the potential damge it would do it if reducrs that revenue. It's almost symbiotic. Skysports is one of it's premium channels and a huge money earner, and the EPL sucks $$$bn's out of sky for the rights. One hand gives to the other.

I've been thinking about this a lot recently

[Bully]

sounds interesting but doubt all this would happen.

[Dogwatcher]

I posted this in November last year. It was taken from notes I made during a presentation at a football conference in Melbourne.
The bottom of the yarn provides an insight into the $$$$ involved in EPL.

Draft benefits

Everyone has a different story to tell when recounting how they came to support the football club that they love.
Ian McLeod, managing director of Coles supermarkets, chose St Kilda as the people who settled the beachside community were originally from an island of the same name in Scotland, just north of the island where he was born.
While, he has only been here for about six months, he has managed to see a few Saints games and has learnt a lot about the AFL.
In fact he has lovingly embraced the game and has some advice for administrators and clubs alike.
A former CEO of Glasgow Celtic PLC, and also a former board member at Fulham FC, McLeod informed the audience at the recent AFL futures conference that the national competition has it right in regards to the draft.
He believes that ensuring a balanced competition is only good for the clubs involved and will ensure their survival into the future.
Unlike in the English Premier League and its sub divisions, where clubs are continually going to the wall and mount up magnificently sized debts.
“What we have in other sports is a survival of the fittest,” he said.
“In England a club’s success is decided by the owner’s bank balance.”
McLeod said the draft means that teams are mostly well balanced and it provides a level of unpredictability not seen in the upper echelons of English football.
Citing his attendance at a Western Bulldogs game, McLeod said he learnt early that the scoring nature of Australian rules means the game can change in a beat.
“The Bulldogs were five goals up and lost the game,” he recalled.
“It shows the level of unpredictability and certainly it’s something you should be thankful for because it keeps the game interesting.”
While McLeod said the draft system is about right, the AFL still faces challenges; including fighting off three other codes in a nation of 20 million people, retaining the grass roots and sponsorship retention.
While some AFL clubs are struggling financially, McLeod provided a bit of a look at the monetary issues facing EPL clubs.
In 2007/08, the EPL had a $5 billion estimated revenue.
That is a lot of money but when you consider that in the previous financial year costs used up 93 per cent of the EPL’s revenue, the figure is not so bright.
Adding further grist for the mill is that 75 per cent of EPL clubs lost money.
It is a sobering insight into a competition regarded as one of the best sporting leagues in the world.
“By and large, most (AFL) clubs are in with a sporting chance, rather than just the top three or four, as in the EPL,” he concluded.
It is probable that many of the club presidents, CEOs and bean counters present at the conference took some note of this comments as they returned to their offices to work out how to get more money into their coffers.

[johntheclaret]

Interesting post DW, but I'm not sure I agree with all of it. The quote regarding "so many"clubs going to the wall is a bit of an over exaggeration. Some smaller clubs have gone into administration and then come out the other end with a new financial backer but I can't recall a club actually going to the wall.

I would say that in many ways, what is happening with the AFL closely mirrors what happened to English football with the inception of the EPL. Like the EPL, the AFL sucks all the talent and $$$ out of the lower league. Just look at what has happened to the SANFL since the AFL entered SA.

Drafting players out of the SANFL sides has a detrimental effect on the skill levels of the state league, and ergo, affects the attendances at state league games. Having AFL sides in the SA draws crowds away from the SANFL and of course valuable sponsorship $$$.

McClead also fails to note the number of Melbourne AFL clubs that have either folded or forced to move interstate to find the revenue, and fails to mention how many AFL clubs are currently reliant on AFL donations.

I agree the draft system does even out the league, but to the detriment of all the other state leagues and in some ways to gras root footy. But even with the draft system in place, there are still a few elite clubs that earn the $$$ and many that don't. In that instance the AFL is no diferent to the EPL in my opinion.

Personally, I don't think the draft system is the way to go for the EPL and not good for the game in Australia either. I would prefer a salary cap system coupled with a limit on transfer fees. But it would need to be a global policy, that is the problem. Soccer is truly a global game unlike Aussie rules, and being a global game, getting every national FA to agree to salary and transfer caps is no more than a pipe dream.

Salary caps don't suit the rich footballing nations of England, Spain, Italy and Germany, and let's face it these leagues are the worlds powerhouses when it comes to influence and dominance. Poorer leagues, Poland, Ukraine, basically all of Eastern Europe, Africa and South America rely on hefty transfer fees to fill their FA coffers and wouldn't be in favour of any resrtictions that might limit the $$$ flow.

I would actually go two steps futher, and apart from the salary cap and a ceiling on transfer fees, I would like to see an introduction to the level of foreign players that can sign for any club, therefore allowing national leagues to retain their own "stars", and secondly I would like to see a reintroduction of the zonal system, something like the system currently used by the state league clubs in Australia.

Many years ago in the UK they had a similar system which guaranteed the smaller clubs could retain or at least gett good $$$ for their up and coming stars, which went a long way to evening out the top flight. Part of the problem with the current format is that the bigger clubs can comfortably poach potential stars whilst giving the smaller clubs next to nothing.

Whilst I despise Platini for his racism toward England and English clubs, he raises some valid points concerning the restriction of foreign players and the damaging effect they are having on the Eglish league and in particualrly to the English national side is sadly apparent.

Still, as long as the $$$ rules the game you can be sure nothing will change anytime soon.

[johntheclaret]

As a sidenote, Setanta have failed to make the next installment of £3m to the SPL and it looks likely that they will miss the £30m installmant due to the EPL this week.

Here's the story thanks to all media outlets.

It's a bit of a book but I thoughtthe bits about the FA Cup and England internationals was intersting.

If ESPN or ITV do pick up the extra games on offer, you can bet your can of beans that it won't be for the price tag that Setanta was originally going to pay.

The bubble hasn't bust but it has a small hole in it, that's for sure.

SKY REBUFF SETANTA

BSkyB chiefs have confirmed they refused a £50million lifeline to Setanta, who have held another emergency board meeting to try to stave off administration.

Sky's chief executive Jeremy Darroch said they were "a broadcaster not a bank", but insisted they had no wish to see Setanta go into administration.

Setanta had asked Sky for £50million and in return offered access to the live rights to 46 Premier League games next season as an add-on option to Sky Sports.

The Irish broadcaster is in crisis with a payment of more than £30million due to the Premier League this week and backers refusing to advance them any more money. There have been some reports Setanta could go into administration as soon as Wednesday.

Darroch told a Sports Industry Group event in London: "Our job is not to fund other companies. We have been talking to Setanta, and trying to work with them and help them. At the end of the day we are not a bank, we are a broadcaster, not a supplier of working capital to a business and rights holder. Our job is not to fund other companies. This is a huge amount of money."

Another broadcaster, ESPN, is favourite to step in and take over Setanta's Premier League games if they go into administration but they refused to comment.

Meanwhile, Setanta's subscription services for new customers became unavailable on Tuesday. Website applicants were flashed a message saying: 'Oops! Something has gone wrong....'
Setanta's customer services confirmed to callers that new subscriptions were unavailable but they hoped the situation would have returned to normal by Wednesday.

The Premier League should not be too badly affected should Setanta go into administration as they have only won one of the six live broadcast packages for 2010 to 2013.

The Football Association, who have a £150million deal for England and FA Cup games with Setanta, and the Scottish Premier League have more significant problems, however, even though their agreements have been front-loaded in terms of cash being paid in advance.

Under a pre-arranged deal, ITV would take over the rights to up to eight England away friendlies for a pre-agreed sum.

The FA Cup would provide more problems but it is understood the FA would approach ITV in the first instance to see if they want to take over any live games. If ITV were not interested, they would approach other broadcasters - both terrestrial and subscription services.

Scottish Football Association chief executive Gordon Smith admitted he was concerned about the situation.

Setanta failed to pay the final instalment of this season's TV deal last week, leaving the SPL to dip into their own coffers to distribute around £3million, the amount due, to their 12 member clubs.

In April, the SPL clubs agreed to Setanta's request to change the terms of the contract due to begin at the start of the 2010-11 season, which was initially worth £125million.

Smith said: "We don't really know what is going on, it is an SPL broadcasting deal but obviously it is a concern if there is a problem for the league."

I thought the web message must be the understatement of the year