Just where has all the money in football come from?

The financial aspect of sport is one that has often been the cause of controversy. Far gone are the days when top-level sport was still considered a leisure activity, with football being the frontrunner when it comes to British sport and the money surrounding it.

The top-earning players in the Premier League are Wayne Rooney, Robin Van Persie (both of Manchester United) and Yaya Toure (Manchester City), who earn around £250,000, £240,000 and £240,000 a week respectively. These figures are approximately nine times the average UK annual salary. To any member of the general public, whether they are football fans or not, this may seem like an absurd amount for someone who essentially runs around a field kicking a ball.

Some players, like Arsenal forward Nicklas Bendtner, says that players deserve such high wages because they aren’t allowed to do activities that may injure them, such as go skiing. However a lot of players prefer to remain quiet on the topic due to the nature of it, especially in the current economic climate. Retired striker Alan Shearer is one of the more recent people directly involved in football to extend his opinion on the matter, saying it isn’t right that players get paid so much.

On top of that, transfer fees are getting higher and higher every year. Gareth Bale’s world record transfer of £85 million from Spurs to Real Madrid set a benchmark that shouldn’t be surpassed for some time, but it could easily be. Players are becoming more and more valuable in the transfer market as they become more and more valuable to their teams, which prices them over and above what they would normally be worth. Another good example lately is Marouane Fellaini. The Belgian moved from Everton to Manchester United on transfer deadline day for £27.5 million, a figure that surprised fans and critics alike. They also agree that Fellaini has been quite substandard this season so far, and that United may have overpaid for the midfielder.

But the real question, in my mind, isn’t whether players should be earning so much. It’s how and why do they earn so much.

I consider there to be two main reasons for this: Foreign Owners and TV Rights. There then comes the question of whether spending will ever decrease.

TV Rights – Every Broadcaster for Themselves

 The other major financial factor surrounding football is the media. Since TV is the biggest broadcaster of the sport, this section will concentrate on that more than radio.

The three major broadcasters of football in the UK, Sky Sports, BBC and ITV, have fought over the rights for the Beautiful Game for years, with Sky often winning out for the right to show Premier League games. With other channels such as Setanta and ESPN entering the fray in recent years before opting out, it remains to be seen whether big-spending BT Sport can hold firm.

The evidence from the past year suggests they can, with the new-boys spending around £750 million last year to show 38 games per season for the next three years. They then shocked the footballing world in November by paying nearly £900 million across three years to be the only UK broadcaster allowed to show Champions League games.

The infograms here show how much UK broadcasters have spent to show football, whether it be live or highlights, for the 2012/13 season.

This chart shows the amount of money it cost broadcasters to show the Premier League this season

This chart shows the amount of money it cost broadcasters to show the Premier League this season

This chart shows the amount of money it cost broadcasters to show the FA Cup this season

This chart shows the amount of money it cost broadcasters to show the FA Cup this season

Football League

This chart shows the amount of money it cost broadcasters to show the Football League this season

This chart shows the amount of money it cost broadcasters to show the Champions League this season

This chart shows the amount of money it cost broadcasters to show the Champions League this season

As it stands, according to the FA, 50% of revenue is divided equally all 20 clubs, 25% is awarded depending on a club’s final league position, with the final 25% distributed as a facilities fee depending on how many games are shown live on TV. Income from any foreign broadcasters, such as Al Jazeera Sport in the United Arab Emirates and NBC Sports in the USA, is divided equally amongst every Premier League club. Last season this amount was £18,391,726.

The amount it costs per season to show football has increased every single year, meaning that Premier League teams earn more and more revenue each year from simply playing in the league. In the 2012/13 season, QPR finished bottom of the Premier League and earned £5.8 million from media revenue, along with an extra £0.75 million from the FA for finishing 20th.

The winners of the league, by contrast, will rake in approximately £72 million for their hard work as opposed to the £61.4 million Manchester United earned in 2013. They earned £15 million on merit for finishing top, and this amount decreases by around £0.75 million the lower down a team finishes. The ratio of earnings from Manchester United to QPR was 1.53:1. Each team also received nearly £14 million from the FA for competing on top of the overseas broadcast payments, a number which fluctuates from season-to-season depending on their income.

Arguably the most interesting statistic, and certainly the most useful, is that a team is paid a minimum of 10 ‘facility fees’ – no matter how many times they are shown on live TV. Last season, the sides on TV the most were Manchester United (25), Liverpool (22), Arsenal (22) and Manchester City (21). The facility fee was around £550,000. This leads to the conclusion that if a team wasn’t on TV at least 10 times a season, the broadcasters (which was only Sky Sports at the time) must feel that they will bring in more money from advertising and sponsors by showing a game involving better-supported sides and paying facility fees to the teams that missed out as well as those involved.

These figures are only going to continue to rise and it will only be a matter of time before broadcasters pay over £1 billion for one season of Premier League rights, which is an astronomical amount of money, even in sport. The chart below shows how much money each team made from broadcasting rights last season: Premier League amounts by team

As a rule here, the amount earned by a team is directly proportional to their league position; the higher up they finish, the more money they receive. There are odd exceptions, like Newcastle United finishing 16th but having the 13th highest income, but this is likely because of their 5th-place finish the season before. On top of being one of the most well-supported clubs in England, broadcasters will have hoped they could have had another similar season so they could be shown on TV more. The Magpies ended up being shown on Sky Sports 16 times last season, the 6th most in the league.

Infogram sources

Premier League: http://www.bbc.co.uk/news/business-18430036

http://www.theguardian.com/media/2012/may/25/bbc-premier-league-highlights

FA Cup: http://www.theguardian.com/football/2012/jan/16/fa-cup-england-internationals-itv

http://www.bbc.co.uk/news/business-21577676

Champions League: http://www.theguardian.com/media/2011/apr/27/itv-sky-sports

Football League: http://www.bbc.co.uk/news/business-12965536

http://news.bbc.co.uk/sport1/hi/football/7080696.stm

http://www.bbc.co.uk/sport/0/football/18153109

Will Spending Ever Decrease?

Now comes the time for the Premier League, European Leagues and UEFA to put their heads together and work out the best method to regulate spending. Financial Fair Play was introduced by UEFA in 2011, which essentially stops clubs from spending more than they bring in. Money brought in includes prize money for winning tournaments and gate money, with money going out including transfers and wages. If a team fails to comply, they can be fined or banned from European competition.

However some of the richer sides, such as Manchester City whose owner Sheikh Mansour is worth over £20 billion, are able to rely income like on massive sponsorship deals to make sure they don’t overspend. Despite spending over £100 million and bringing in just £10 million in the 2013 summer transfer market, it is unlikely that they will get reprimanded by UEFA.

Another idea that has been considered, more so by the English FA than UEFA or any other European FA, is the Salary Cap. This system is already implemented in the MLS (Major League Soccer) in the USA, with no player able to earn more than $368,750 a year (approximately £225,000) and no team able to spend more than $2.95million (approximately £1.8 million). The exception to this system is the Designated Player (DP) rule, which enables a franchise to pay up to three players above the individual salary cap, with it only counting as $368,750 towards the team salary cap.

The salary cap also exists in many other sports, including the four major “American Sports” leagues (NFL, NBA, NHL and MLB), and Rugby League in England and Australia. The rule in the Super League in England has been much criticised in recent years for not being high enough and causing top class players, such as Sam Tomkins, to go to the National Rugby League (NRL) in Australia where the cap is higher. In some cases, such as with Sam’s brother Joel Tomkins and New Zealander Sonny Bill Williams, players change codes to play Rugby Union where the caps are considerably higher.

In the Super League, a team can only pay £1.65 million to the top 25 earners within the squad, whereas in the NRL a team can spend up to $5.85 million (approximately £3.26 million) to the top 25. This doesn’t stop the cap being breached in either league though, but it is far more common in Australia with seven teams being fined in July this year. The last Super League breach was by Wigan Warriors in 2007, although new Salford City Reds owner Marwan Koukash claimed he’s willing to break the cap if it isn’t raised.

To get an idea of whether this could work in the Premier League, I asked a group of New York Red Bulls fans, an MLS side, on Facebook about money in football in general, and whether the salary cap could work. The results were not only similar, they were quite unsurprising.

43% of the respondents said that they thought TV Rights were a bigger factor in the amount of money in football, 43% said they believed it was down to Foreign Owners whilst the remaining 14% said they thought it was down to both equally. I also asked them about whether they thought there was too much in money football, which provided me with a greater variety of answers because they were given the option to expand on their thoughts.

One of the respondents agreed that there was too much money in football, and went on to say: “Money will always have a pull on the game. But it is at the point where players move for money not to a great team that suits. There are so many examples of local Australian players going to the Middle East and Asian leagues to pick up their last pay cheques instead of helping the game in Australia.” However they also argued that the money is good for the game in certain aspects, saying: “Look at Tottenham, sold Gareth Bale for 90mil or whatever it was. They have since bought an entire team for that much.

As for the salary cap system, another respondent said that it works in the MLS because it provides parity and makes the playing field more level: “There is a limit to the amount of dominance you can have, which is vital. In La Liga and Bundesliga, Barcelona, Madrid and Bayern Munich all have a duopoly and monopoly of their respective leagues.” But when it comes to the Premier League, the overwhelming reaction was that it was too late for it to be implemented. One respondent said: “It is too far into the life of the league to make such a big change. In the current age of the mercenary footballer, many would most likely leave elsewhere for more money if they could get it.”, whilst another said: “No teams would be able to make it work at this point.

This interview with Clarke Carlisle, retired Premier League defender and former chairman of the Professional Footballers’ Association, on BBC HARDtalk encapsulates the financial aspect of football perfectly. (Video courtesy of YouTube channel News via BBC HARDtalk)