Do we want more competition? Do we want to avoid losing clubs to the financial graveyard? Perhaps its time to rethink distribution of revenues...
“We are witnessing early, though distinct signs that the tide is slowly turning, moving towards greater support for a more level playing field in terms of the financial distribution of revenues”
Joe McLean, football finance expert for Grant Thornton
Financial competition is not welcomed at the top end of the Premier League. The Big Four (or Big Five or Six) need to remain as such because it is only this that allows them to be successful on the European stage and therefore attract the best players. Success breeds success, finance breeds finance.
For the rest of us, however, change is required. The gap between the rich and the poor has never been larger. Manchester City fans might not mind but the lower Football League clubs are on the knife-edge of economic oblivion.
Today a solution is proposed: the redistribution of broadcasting revenues within the Premier League. Could this be the answer to igniting competition in the Premier League, bridging the gap between haves and have nots?
The effect of the revenues of broadcasting rights on competition cannot be overstated. Accountancy firm Deloitte and Touche estimated that the television deal created £1.8billion for the twenty Premier League clubs last season. This effectively erodes away competition, with the formation of a handful of clubs with high media exposure.
Since the breakaway of clubs in 1992, the Premier League now negotiates the sale of rights to broadcast matches independently of the Football League, instantly forming a significant gap between the leagues.
At the moment, revenue is shared on a 50:25:25 rule. 50% is shared equally, 25% is distributed according to number of games screened, and 25% according to finishing position in the league. This system of sharing is intrinsically unequal. As a comparison, the NFL in America works on 95% of broadcasting revenues shared equally. All that results from this distribution is the creation of a series of mini leagues, with the top four or five clubs only ever threatened by massive influxes of foreign investment (leading to its own issues).
I would propose a significant reformation of the current distribution, through three crucial aspects:
The first significant change is the increased provision of funds to the football league clubs. The aspiration of this is to reverse the current trend of operating losses within the lower divisions. Forty-two clubs have entered administration in the last ten years, and these funds can ensure concentration on on-pitch success rather than off-field survival, also hopefully enabling them to initiate community schemes and putting greater funding into academies.
Secondly, over 85% of the money given to the Premier League clubs is split equally. This should hopefully eradicate the current trend of mini-leagues within the Premiership. 15% is still based on finishing position, and this combined with the lure and income of European football should provide clubs with ample ambition to finish as high as possible.
Finally, the current situation of clubs being paid more for the amount that they are shown on television is reduced. Broadcasters can continue to show certain teams as much as they like, but this will not affect the revenue of other clubs. This will help to cease the snowball effect of increased TV revenue for larger clubs, whilst the sponsorship and merchandising income will remain higher due to their high exposure.
I’m not saying that it’s perfect, and I’m not saying it will happen. All I’m showing is that I have thought about it long and hard. And perhaps that’s more than the Premier League have done.