June 26, 2018

Can the Premier League handle the money?

By J Hutcherson (Jun 26, 2018) US Soccer Players – The Premier League has decided it’s time that their big clubs get a greater share of the money. Specifically, the overseas TV rights. The 2019-20 season will mark the start of a kicker for those overseas rights, similar to what the league already does with the domestic rights. On the surface, the scenario is simple, finish higher in the table, make more money.

Since complicating financial rules seems like part of the point of sports business these days, there are limits. Specifically, the overseas rights have to be worth more than the current $4.37m before where a team finishes matters. There’s also a ratio, with the top team only allowed to make 1.8 more than the last-place team from that additional overseas rights money. The Guardian’s David Conn explain that as the caveat that got the deal done. Still, in the big picture, it’s rewarding the teams most likely to finish well. That normally means the biggest clubs turned brands in English soccer.

When announcing the change to the overseas rights on June 7, Premier League CEO Richard Scudamore said, “when the Premier League was formed in 1992 nobody could have envisaged the scale of international growth in the competition which exists now. Back then the clubs put in place a revenue sharing system that was right for the time and has served the League well, enabling them to invest and improve in all areas. This new agreement will continue that trend with a subtle change that further incentivizes on-pitch achievement and maintains the Premier League’s position as the most equitable in Europe in terms of sharing central revenues.”

Maybe, but it’s also once again stressing the economic might of the Premier League. That broadcast money both domestic and overseas is creating a different economy for the Premier League as a whole, much less its biggest clubs. We’ve already seen the Premier League premium in international transfers with the rest of the world well aware all of that league’s members can afford to pay more. Now, it’s more internal separation for the big clubs.

An editorial in the July/August issue of When Saturday Comes, made an old point about elite status in English soccer. It’s far from static. Stressing that might border on cliche since we’re all aware of the relative wonders of promotion and relegation. However, it’s worth the reminder that the super version of European soccer means freezing it. If enough of those current primary earners are willing to try, it’s likely to happen. The same scenario UEFA and Europe’s domestic leagues have stared down since the early 1990s.

The impact in the Premier League a season from now will be pretty much what we’ve come to expect. A greater economic disparity between the top and bottom of the table in the one league making the most money in European soccer. They’re setting up a lead to follow. It’s also where the conversation stalls.

Why would the elite clubs focus on anything other than their own businesses? These are global sports brands extending reach and market to compete with each other directly and indirectly. It doesn’t take much to see that the biggest brands in the Premier League have more in common with their European counterparts than they do with the bottom half of their domestic table.

Liverpool owner John Henry stressed that in comments to the Associated Press prior to the rights deal. “Everyone in the league knows what the large clubs bring to the value of foreign rights,” Henry said days before the vote. “But the large clubs do not have the votes to change something that should have changed as media rights changed over the past 25 years.”

Perhaps, but there’s also the basic issue of competition. An evolutionary approach to the business of European club soccer would’ve seen a breakaway a long time ago. It’s that pesky problem of Europe’s elite clubs having more in common with each other than the rest of their domestic leagues. Nothing new, and somehow the existing order has held. Playing the “but for how long” game started in the 1990s. We’re still here, in an era marked by UEFA and the Champions League model adjusting to maintain their position as the most valuable club tournament in the sport.

With all of that in mind, is it even worth asking a different question? What would happen if the Premier League opted for a distribution that didn’t focus on a competitive imbalance model? Instead of rewarding league place, maybe keeping things like they were with the subtle acknowledgment that even super clubs need the rest of the league to fill out the schedule. If that day comes when we do see a breakaway European league, it’s the same scenario. Right now, that may be the main thing holding the European domestic league structure together.

J Hutcherson started covering soccer in 1999 and has worked as the general manager of the US National Soccer Team Players Association since 2002. Contact him at jhutcherson@usnstpa.com.