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How Much Is Premier League Promotion Worth to Newly Promoted Clubs?

Written by Richard Francis // Posted on // Found in SportingLife

Now that the dust has settled after the end of the 2014-15 Barclays Premier League season, perhaps now’s a good time for a very brief look at some of its key talking points.

A Mourinho-inspired Chelsea cleaned up without having really tried, United fans are delighted to be back in Europe, Liverpool struggled, Southampton looked tidy, Mike Ashley continues to do more harm than good at Newcastle, and Di Maria and Falcao flattered to deceive whilst Costa and Fabregas were brilliant. Oh, and Harry Kane. There were fairy tale finishes, close-calls, scandals, euphoria, despair, surprise packages, heroes and villains, and truly sublime football – everything that we could possibly want from a spectacle befitting of the world’s greatest and richest league.

For Watford, Bournemouth, and Norwich City, the three clubs to earn promotion into the big-time this year, the popping of champagne corks can probably still be heard – they are the clubs which will start the new season with a seat at the top-table this August. The fans of these clubs are obviously ecstatic and understandably so. Rather than visiting the footballing provinces, Norwich, Bournemouth, and Watford will instead lock horns with clubs which rank among the global elite, such as Manchester United, Chelsea, Arsenal, and Liverpool, week-in, week-out, and their travelling fans will support their clubs at Old Trafford, the Emirates, and Anfield – footballing cathedrals of the English game. On the subject of cold, hard cash, the Premier League is as lucrative as it is prestigious. A payday of over £100million awaits them, according to Deloitte, which will instantly propel all three clubs into the top-tier of global football teams in terms of revenue – it’s no coincidence that Championship promotion is considered to be the biggest prize in football in some quarters.

Play-off final Wembley Norwich City 2002

Global demand means jackpot for our English top-flight – why?

But why do such riches await the competing teams in the Premier League? Where does this money come from? Well it basically boils down to the fact that English top-flight football is very popular and has an enormous global audience which spans every corner of every continent. Around eighty broadcasters across the world broadcast games to up to 653million homes and a potential TV audience of 4.7 billion viewers, across 212 territories globally. Here’s some perspective: in comparison to the 2 million or so people who watch the average game in La Liga and the Bundesliga, or even the 4.5 million or so followers of the renowned Italian Serie A, the average Premier League game pulls in at least 12 million viewers.

More viewers means more money, and to satisfy this demand broadcasters are willing to pay a princely sum for the right to show Premier League football to subscribers, and the resulting TV deals which are made means that the league and its competing teams are quids-in to the tune of over £3billion for the forthcoming 2015-16 season. And unlike in other top-leagues in Europe, a large share of this revenue is distributed equally among each of the Premier League’s participants – everybody benefits, in other words.

So everybody wants to watch the Premier League – why? Well that’s the easy bit: the Premier League is the greatest league in the world! It features many of the best players from across the world, it’s competitive, and it’s an absolute thrill-fest.

Unlike our continental cousins across the Channel who by-and-large offer a more tactical, technical brand of football to viewers, the English Premier League’s full-throttle game is the stuff that gets those who watch leaping from their seats. That isn’t to say that there is no hint of such a technical, passing game in the Premier League, of course – the influx of elite players and managers from Europe has seen a more cultured style seep into the pores of English football, a la Arsenal or Manchester City, for example.

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However this technical play is combined with a quintessentially English footballing mind-set where tactics succumb to passion – a caution-to-the-wind verve, if you will – and the never-say-die nature of EPL football means that no game is a foregone conclusion. As one might expect, the cream will always rise to the top over the course of a season but on a game-by-game basis things become altogether more unpredictable. As Leicester City’s 5-3 win over Manchester Utd and this season’s FA Cup game where Bradford beat Chelsea 4-2 at Stamford Bridge proved, anybody can beat anybody in the English game.

Technique and tactics with a dash of world-class flair are bedfellows with a crunching physical intensity, and thrilling direct play with scorching counter-attacks and lung-busting end-to-end football. There are incisive, defence splitting through-balls which could thread the eye of a needle and looping long-balls up the pitch. And then there’s Mourinho. Yes, our football is far from boring – it’s pure drama.

Promotion to the Premier League club equals promotion into World football’s global rich-list

But back to the subject of money, promotion will see a significant boost for the coffers of Norwich, Bournemouth, and Watford when the TV money starts to roll-in. The riches available are phenomenal and the Premier League’s newest entrants can expect a cut of at least £130million next season. This, by default, means that they now rank among the world’s richest football clubs, according to Deloitte, who publish a table of global football’s rich list each year.

Their most recent Football Money League 2015, which ranks the world’s top 40 richest football teams from top to bottom in measure of annual revenue, doesn’t feature some Premier League clubs from the 2014-15 season, it features all of them. Nearly half of the top 30 rankings are made up of our own top league clubs. West Ham and Aston Villa – mid-table teams in the EPL – have a higher revenue (€137.4m and €133m respectively) than established elite European clubs like Marseille (€130.5m), AS Roma (€127.4m), and Benfica (€126m) – clubs with an impressive Champions League pedigree, and perennial contenders for the title in their own respective leagues. Stoke, a team who by their own admission would not consider themselves to be a European superpower, don’t fall far behind these clubs with an annual revenue of €117.6m – a figure which places them 30th in the richest list.

With such huge sums of money at stake, it is unsurprising that the competition among Premier League clubs is fierce. The league superpowers will yet again do battle for the title and those prized Champions League spots, as the more established teams below them seek to strengthen and nab a European spot if the opportunity arises. The newly promoted teams will have more modest goals, however, and will more likely than not scrap it out with a group of fellow strugglers whose only goal for this season is survival. Bearing in mind the quality of the teams that they will be facing, survival would represent a successful first season and at first glance, Norwich appear to be the best placed of the three to manage this because they have retained almost all of their Premier League squad from the 2013-14 season. For Watford, survival would be more commendable whilst for Bournemouth, who have already managed a beautiful footballing miracle by getting to the Premier League in the first place, it would be the stuff of legend if they avoided relegation. But again, the Premier League is an unpredictable beast so pre-season conjecture counts for little – only time will tell. However if they can avoid relegation this season, Norwich, Watford, and Bournemouth will see their £130million Premier League jackpot balloon to a staggering £230million, as a result of a new TV deal which will begin in time for the 2016-17 season.

New 2016-17 TV deal will see a super-rich Premier League get even richer

The new 2016-17 TV deal, which will see the Premier League pocket £5.136billion in TV revenue from next year, will mean that rather than receiving an estimated minimum of £60million from domestic and abroad-based TV deals, instead clubs will receive a baseline figure of £90million or more. These estimated annual revenue figures are variable because whilst 50% of a team’s total TV revenue comes from an equal share of the pie between all 20 Premier League clubs, the remaining 50% will be determined by a club’s final finishing position in the league, along with the number of times that their games were shown live – aka ‘merit fees’ and ‘facility fees’.

In addition to this revenue, the newly promoted clubs will also enjoy anywhere from £24.7million, in the unlikely event that they win the league, to £1.2million if they finish bottom of the table in prize money, and a significant amount of money in parachute payments if they are unable to avoid relegation. The parachute payment scheme, which will be cut from 4 years to 3 years, will see relegated club receive successive payments each year to soften the financial blow of relegation through a first year payment of at least £30million, followed by further payments of around £25million and £20million for the second and third year after, respectively. And here’s some food for thought: this revenue could increase further still because there is scope for the already huge £5billion TV deal to rise to around £8billion – nearly triple that of the current deal.

A festival of football awaits Norwich, Bournemouth, and Watford this August

It’d be something of an understatement to suggest that Watford, Norwich, and Bournemouth are all set to do pretty well from their hard-earned promotion, irrespective of whether or not they manage to hold their Premier League spot. The global exposure of playing in the Premier League will put all three clubs, and the towns/ cities which host them, on the map. In terms of money, the cash injection of over a hundred million pounds should secure their financial futures, so long as there is a sensible policy of strategic investment and player procurement. And last but by no means least, fans of all three clubs are going to have (at least) a season long jolly as they watch their teams go toe-to-toe with the biggest and best in the country.

So once more, congratulations to Norwich, Bournemouth, Watford, and all who support them – best of luck for next year!

Written by Richard Francis // Posted on // Found in SportingLife

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