It barely seems a year ago, but we’ve just passed the first anniversary of the ill-fated launch of the so-called European Super League. At the time, my abiding memory upon first hearing the announcement was “just how much money do those greedy b**tards want?”
Both the Premier League and the ‘big six’ have always made themselves hard to love most of the time for football fans, with common perceptions of avarice, and seeking to attract maximum revenues purely for themselves.
Let’s be frank, though, and many fans will be reluctant to admit it, whoever they support, or wherever they are within the football pyramid, everyone wants more money.
Whether you’re regularly vying for a Champions League spot, aiming to gain promotion from the Championship, to the so-called Promised Land of the Premier League, or, even, muddling along towards your fourth season in the third tier, it’s all about the money.
Everyone wants more – it’s human nature.
Football is, of course, a meritocracy, performance-based, with promotion and relegation throughout the leagues. But the problem is money, or, more specifically, the lack of it throughout the majority of the pyramid.
The fundamental issue is obvious – the Premier League’s TV rights deals are hugely cash generative. Its domestic TV deals were rolled over during the pandemic and continue to accumulate revenues of £5bn for the three years, starting from 2022-23 season. The next rounds of overseas TV deals, again for a minimum of three years, will generate £5.5bn over the same period.
That’s £10.5bn combined – equivalent to £3.5bn per annum.
These deals dwarf the English Football League’s own deal, with its TV rights, over a five-year period, of £560m. Or, just over £115m per annum.
For context, that’s a whopping multiple of 30 times the difference between the Premier League and EFL’s own deals. Or, to put it in a different context, on an annualised basis, the EFL deal is equivalent to just over three per cent of the Premier League’s contracts.
If you’re unaware, the EFL splits its own media rights between its three divisions, with the Championship retaining 80 per cent of the pot – that’s the equivalent of £2.5m pa for each club in the second tier.
Additionally, for Championship clubs who are not in receipt of parachute payments, they also receive solidarity payments from the Premier League, equivalent to £4.5m pa for each team, giving combined TV revenues of approximately £7.0m each season.
One nuance of solidarity payments from the Premier League to the EFL is that they’re based upon its domestic TV deals only. As the overseas TV deals have increased in value, there’s been no pass-through of that upside to the EFL clubs, making the already huge differentials even greater.
Of course, it would be an easy win for the Premier League to link solidarity payments to all their TV revenues, not just the domestic deals, which would see an instant doubling in the pass-through of revenues to Championship clubs. Circa £15m pa in comparison to just £7.0m pa – who wouldn’t want that?
As an aside, the Premier League could also easily agree to pass on to EFL clubs any ‘unspent’ parachute payments that were due to be received by relegated teams in future seasons, but who were promoted back to the Premier League, rather than ‘hoover them up’ for use by Premier League clubs in future season.
However, given how the EFL thinks that parachute payments are, to use Rick Parry’s own words “evil”, and should be “banned”, it doesn’t currently seem to be a topic for discussion in the ongoing wider debate about redistributions across the leagues.
Just to highlight further the difference between finishing bottom of the Premier League, which currently generates approximately £95m pa in TV revenues, compared to finishing top of the Championship, which provides circa £7.5m. However, finishing twentieth place from next season is projected to increase to circa £110m pa, while the EFL deal will remain unchanged.
The gap is just getting greater and greater.
The EFL’s answer is to negotiate a greater share of the Premier League’s TV pot – they’re after 25 per cent. And, while I don’t think that there’s anyone who actually objects to that idea in principle (unless they happen to own a top-six club) it is counter-intuitive to suggest, as Mr Parry has done, that it would instantly make all of the EFL sustainable.
I’m sorry, but that’s absolute nonsense – of course it wouldn’t because sustainability isn’t just about income. The other side of the debate, which is equally relevant, is cost control, something that the EFL has been unable to comprehend or take satisfactory action to enforce.
Championship clubs, pre-pandemic, had a wage to revenue spend equivalent to £108 on wages for every £100 of revenue received. That’s before you add in the other costs associated with the day-to-day running of the club, meaning even greater losses.
Let’s not for one moment pretend that the Premier League clubs are faultless – they’re not, far from it – but, therein lies the nub of the issue…
As successful as the Premier League is (from purely a cash generative perspective) the gap between the first and second-tier is vast, self-funding, or not.
There are no easy answers, unless, of course, you know different?