Reports suggest that Liverpool FC is preparing a challenge to the current system of how overseas television revenue is distributed between Premier League teams. There is a sense of inevitability in the news that one of the ‘big clubs’ want a thicker slice of the pie. But is the ambition justified, or short sighed?
The twenty top flight sides in the Premier League each receive around £18million from the overseas TV contract, which is due to end in 2013. The current deal, which runs from 2010 to 2013 is worth £1.4billion. Ian Ayre, Liverpool’s commercial manager is putting fourth the argument (and one that may well be echoed by some of their illustrious rivals) that they could be making far more if they were to negotiate their own deals.
There is surely some truth to this. Along with Manchester United, Liverpool is the most famous English football team. They sell more merchandise for Adidas than any other club (including Real Madrid), they’re still arguably the most popular club side in Africa, and have recently begun making in-roads into the Asian market; and one of the reasons Standard Charter are parting with £20million a year to sponsor them is due to the club’s estimated fan-base of 130million. .
When I mentioned the inevitability of teams wanting to negotiate their own deals, I did so because of UEFA’s FFP (Financial Fair Play) rules. These are the rules that the governing body believe will halt (or at the very least slow) football’s descent into the chasm of debt. In it’s most simplistic form it implores club’s to ‘make’ the money before they spend it, putting a halt to the sugar-daddy’s who fund clubs with their own cash, but also leave them completely reliant on the said individual.
With regards to these rules, it seems only fair to allow Liverpool, and others to negotiate their own TV deals (overseas, and ultimately domestic). If the mandate from UEFA is for club’s to make as much as they legitimately can, television is the single biggest way of doing this. It wouldn’t be fair to handicap the ability of ‘big clubs’ to increase their own revenues, which will then allow them to spend more, be it on transfers or wages.
To not allow this would also severely restrict our top clubs’ ability to compete in Europe. The likes of Real Madrid and Barcelona already negotiate their own TV deals, allowing them to make double what Premier League clubs manage .
But there is another argument to this debate and Spain is a good place to begin. Specifically, Barcelona makes £156million a year from their current TV contract, whilst Real Madrid earns slightly less with £139million. One can imagine the big boys in England trembling at this type of income (for example: this year Premier League teams received approx £14million – domestic, and £18million – overseas: totalling around £22million).
Stats like these illustrate the immediate disadvantage even clubs of the stature of Man Utd have in competing with the two Spanish behemoths. But there is also a salient point when considering other examples. Sporting Gijon, at the other end of the table receive a paltry £2.2million from TV revenue. The Spanish league boasts arguably the two most glamorous football teams in the world, but the competition as a whole is suffering: six teams out of the twenty that began this year’s La Liga did so whilst in administration. Even Atletico Madrid had to sell Aguero and Forlan to balance the books. And going further back, one of the reasons for Benitez departing Valencia was the financial restrictions.