The £180m+ Game: The Premier League Awaits…
Around this time, there are plenty of articles suggesting how much promotion to the Premier League through the play-offs is worth. It’s previously been labelled as the £120m+ game and the most lucrative game in world football. The aim of this short blog is to set out what the winners of the Championship playoff game are likely to earn this year.
- Central Distributions: This is by far the largest revenue boost for a promoted Championship club and there has been no better time in Premier League history to be in the top League. With the new £8bn broadcasting deal kicking in, in time for the 2016/17 season (read here for more details), the amount of global broadcasting monies and central Premier League sponsorship deals is rocketing. Based on the latest official figures provided by the Premier League for the current broadcasting deal , the bottom club will earn around £65m. Next season, finishing bottom will likely earn a club around £95m.
Central Distributions for a club in the Premier League next season will mean a revenue uplift of around £95m for a promoted club and significantly more if the club remains in the league.
- Parachute Payments: Parachute payments are funds provided by the Premier League to clubs relegated from the Premier League to the Football League Championship. They are primarily to provide a financial cushion for the relegated clubs to adjust to life outside the lucrative Premier League competition. (read here for more detail ). Should a promoted team be subsequently relegated, and depending on the length of time the club is in the Premier League, the parachute payments over 2 or 3 years could total £80m+.
Parachute payments for a subsequently relegated club could reach £80m.
- Sponsorship: The two largest club sponsorship deals are usually shirt brand and kit manufacturer agreements. For a promoted club, that has existing contracts, there will likely be uplifts for a team being promoted into the Premier League and if a team is out of contract, there will be a premium attached to a new shirt brand or kit deal. Nonetheless, the figures are unlikely to be too substantial. No promoted club is going to come close to Manchester United’s £53m yearly Chevrolet deal. At present, the smaller Premier League clubs are reported to receive annually in the region of £2m-5m in shirt brand deals and around £1m-£4m for a kit deal.
Headline sponsorship revenues could provide £4m-£5m in additional revenues.
- Matchday: From the latest figures provided in the always excellent Swiss Ramble blog, the majority of the lower Premier League clubs in the 14-15 season earned in the region of £7m (West Brom) to £16m (Sunderland). In the 13/14 season the average Championship match day revenues for the top 12 teams were £6.3m. The marginal increase from being in the Premier League, (unless heavy and likely very unpopular ticket hikes occurred) would be likely to be relatively small in revenue terms.
Additional match day revenues may increase a club’s bottom line by £1m-£3m depending on cup runs.
The other slightly less tangible benefit of being in the Premier League is the value that attaches to the club. Clubs promoted will be guaranteed significant sums as outlined above which can make them attractive to investors wanting to purchase a club due to the large broadcasting deals and the relative safeguards of financial fair play and the equivalent Premier League sustainability and cost control regulations. The effect of larger revenues combined with spending restrictions has made clubs more attractive to investors due to record Premier League profits in recent years (see here).
All of the above should of course be balanced against the need for paying out promotion bonuses to players and staff, new contracts at Premier League level wages, team performance payments and greater investment in the playing squad through large transfer fees having to be paid and subsequent increased agents payments etc.
Nonetheless, even if a promoted club is immediately relegated back to the Championship, the likely guaranteed amount will be in the region of £180m. Game on.
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