Football Sport

Football’s finances could be their ultimate downfall

Photo credit: Wikimedia Commons

By Reece Chambers

Traditionally, football has been based on three key principles: respect, honesty and passion. However, just 26 years after the creation of the Premier League, football has transformed into a playground for the rich, millions of miles away from the respect, honesty and passion that once underpinned Britain’s most watched sport.

If one is to understand the sheer influence of money in British football, there is no better place to start than the battle for Premier League broadcasting rights. The latest auction of rights, in 2016, saw Sky claim five of the seven TV packages with BT purchasing the other two in a record-breaking sell-off.

More specifically, the latest TV rights deal – spanning from 2016 to 2019 – increased by 71% from the 2013-2016 package costing an astronomical £5.14bn. Sky were pushed to their limits with rival BT showing increased interest in the rights – meaning Sky increased their financial commitment to the Premier League by 83%.

For fans, it would be all too ignorant to dismiss rising finances in football. For, as shown by the recent increases in TV rights deals, finances in football only seem to be going one way. Subsequently, the impact this has on fans – who have to pay more for match-day tickets, merchandise and TV subscription fees – is undeniable. If football as we know it is to have a future, such dramatic increases in spending needs to be regulated.

Next, it is important to understand how Europe’s elite stay at the top of the financial ladder, and what this says about modern day football. In the UEFA Champions League, Europe’s most successful teams compete for unprecedented riches.

With that in mind, the finances earned after Real Madrid’s 1-0 win over Manchester City in the 2015/16 semi-final, make for a fascinating read. Even though Real Madrid went on to win the tournament (£15m reward), Manchester City still earned £3.8m more than Real’s £80.1m overall earnings.

How, then, can a team who won the tournament earn less than the semi-finalists they defeated?

In sum, the Champions League demonstrates a complex reward system that hinders on many different factors. For instance, a club’s overall earnings at the end of the tournament comprise of: participation fees, group position rewards, tournament advancement rewards and, most crucially, a share of their country’s television pool.

Paying close attention to the television pool, it becomes clear why Manchester City earned more than Real Madrid. With British broadcasting company BT boasting a £299m deal with UEFA, English clubs have the largest cut of television finances.

Therefore, the Champions League is a tournament that allows the financial superpowers of football to reign supreme over their domestic counterparts who struggle to keep up with such financial progression.

From a football club’s perspective, keeping up with the investment from multi-billion-pound broadcasting companies requires sophisticated strategies of making money. This is perhaps best executed by Roman Abramovich’s Chelsea.

It is a well-known fact that Chelsea have very few youth team players make it through to the first team. And, even with FA Youth Cup wins in 2014, 2015, 2016 and 2017, in addition to 37 players out on loan, Chelsea manipulate their academy products solely for financial purposes.

By farming a large number of players out on loan, Chelsea see their players gain valuable game time elsewhere whilst paying just a part of their salary. In reality, just a couple of sales from these players equals profit.

Indeed, the ethics behind such a strategy is questionable, but in an industry where business overrules any degree of sentiment, Chelsea manipulate the loan market better than any other team.

Overall, there is no doubting that fans still enjoy football as a spectacle. However, in an industry that is now dominating by increasing finances, fans should be aware of how astronomical spending by clubs and broadcasters alike is changing the face of the game.

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