The Beautiful Revenue Game: The Premier League’s Financial Dominance

The Barclay's Premier League dwarfs other European leagues in revenue.

These days, you’d be forgiven for thinking that every Premier League team was bankrolled by a sheikh or oil baron; at least, that’s what their revenue streams suggest.

Of late, the nation’s national team have not fared well in major international competitions financially or competitively, but England’s domestic league is a class of its own. The English Premier League revenue from 2013-2014 dwarfs Europe’s other major leagues. In total revenue, the Premier League nearly doubles its closest competitors in the Bundesliga and La Liga, with Seria A and Ligue 1 even further behind. In light of the recent television contract negotiations, the broadcast revenue makes the most difference.

Structure of Broadcasting Deals

8142Premier League
“Ratio of 1.53:1 between of the club finishing top and that finishing bottom in 2014/15 and works as follows:

  • 50% of UK broadcast revenue split equally between the 20 clubs
  • 25% of UK broadcast revenue paid in Merit Payments (“Prize Money” per place in the table)
  • 25% of UK broadcast revenue paid in Facility Fees each time a club’s matches are broadcast in the UK.
  • All international broadcast revenue, and central commercial revenue, is split equally among the 20 clubs.” (source)

Serie A
In Italy, Seria A champions Juventus received  5.25 times what Sassuolo banked. The Italian structure divides funds using a combination of equal share, league position, historical results, city population and the “Supporters Index Element,” which is used to reward the most popular teams in the country with more money. The SIE is 25% of the TV deal. Thus, Juventus, AC Milan and Inter Milan, who have large national fan bases, are paid far more than the vast majority. More money is flowing into the league thanks to a new TV deal, but the top team will still bring in more than six times the revenue of the last-place team.

La Liga
In Spain, Real Madrid and Barcelona combine for almost 40% of TV revenue. They each make over 7.5 times the amount as any of the bottom five. Meanwhile, the top four clubs garner almost 50% of the total payout. For comparison, the top four Premier League teams rake in a shade under 25% of their deal. Additionally, when Atletico Madrid finished first in 2013-2014, they still made almost €100 million less than the squads that jostle in El Classico.

The Bundesliga uses a points system based on the previous four years that rewards more recent form. The current season counts for 40%, the prior one 30%, the third is worth 20% and fourth is worth 10%. Ideally, this creates a 2:1 ratio between the top team in the table and the one propping it up at 18th place.

Ligue 1
France’s TV revenue has a large spread, with PSG making almost 3.5 times more than the Ajaccio’s deplorable €13.4 million. Half of the TV revenue is split evenly between all teams. The next 30% is based on team performance in the league while the last 20% is distributed using on TV audience ratings.

To learn more, check out this article on Bleacher Report: Television Revenue and Distribution in the Top European Leagues.

The magnetic pull of Premier League TV revenue has lured stars such as PSV's Georginio Wijnaldum.

Quality and parity

In general, the cream of the international talent crop will go to a few top teams – Barcelona, Madrid, Bayern Munich, to name a few – across Europe, the Premier League has won the battle for nearly everyone else, leading to higher competition with the multitude of players that compete within the league. Most teams in the Premier League have relatively flexible spending, with the income to splash cash for signings. Top continental teams share this luxury, but most teams in other leagues cannot do the same. Bottom dwellers in the Premier League have the financial muscle to compete with second tier and top clubs in other big leagues. For instance, Stoke City were able to sign Xherdan Shairi from Italian giants Inter Milan, and Swiss national and Napoli stud Gokhn Inler will most likely sign with lowly Leicester, though a list of top clubs sought his services. The list goes on: French star Yohan Cabaye traded French champions Paris Saint-Germain for the modest Crystal Palace, and Georginio Wijnaldum, who captained PSV Eindhoven to the Dutch Eredivisie title last year, signed with 15th-placed Newcastle.

Leverkusen's Charles Aranguiz is one of the few examples of teams with lower revenue winning out.Some hope remains for continental teams; some players have chosen European success over the financial incentives available in England. Charles Aranguiz, a Chilean star, chose the prestige of German giants Bayern Leverkusen, refusing to speak to Leicester City despite the 5 million extra pounds offered by the British club. Nonetheless, the fact that this is the exception shows the wonders that the Premier League’s financial structure has done for the league.

Within the leagues, the number of international players in the Premier League was second only to Cyprus in 2013. In the Bundesliga many of Bayern Munich’s players are German, and homegrown players fill the lesser teams. While the top clubs of La Liga, Ligue 1, and Serie A have more diversity in their player’s nationalities, the poorer teams are more local. On the other hand, the Premier League’s lesser teams have more flexibility on their payrolls and can afford to recruit and train more international players. The 2013 statistics are damning: the Premier League fielded only 36.5% English players, plus handfuls from Scotland, Ireland and Wales; Serie A was next lowest with 48.5% Italian players, and the Bundesliga, Ligue 1, La Liga, and the Dutch Eredivisie all topped 50% (90min).

It is often in history for the inventors of something to ironically lag behind newcomers to that invention (US in baseball, England in cricket, Italians in pizza…actually, I’ve never had authentic Italian pizza but I don’t think it can beat NY pizza), and England is no exception in regards to quality of play in soccer. Its national team has not made it past the quarter-finals in the European Cup since 1996 (including Euro 2008, which England did not even qualify for) and hasn’t done better than the quarter-finals since 1990 on soccer’s very biggest stage. Nonetheless, the British have mastered the art of finances for their domestic league, showing the world how the beautiful (money) game should be played.