Football Funding
Terry Clarke explains how funding for English football works.
Since its inception in 1992, the Premier League has become one of the world's most expensive domestic competitions, surpassing all the other major European leagues in terms of club value and audience size. But how has this financial dominance been achieved?
The key to the funding model behind the rise of the Premier League and the resurgence of English football is the billions paid by television broadcasters for the rights to cover Premier League football.
The desire to unlock the potential riches of broadcasting rights was one of the key drivers behind the top English clubs pushing for the creation of the Premier League in the first place. As the years have rolled by, the size of the television deals has continued to grow. The latest agreement, covering 2016 to 2019, was worth a staggering £5.13 billion, and the rewards for teams that can stay and prosper in the top flight are well over £100 million per season.
The injection of television money has transformed almost every aspect of English football, from fans' experience to the quality of the players on the show. It has turned a profoundly unappealing sports product in the 1980s into an investment vehicle. In the early years of the Premier League, many clubs floated on the stock exchange while others accrued considerable debt to chase the dream. Many of those efforts failed, but that hasn't stopped other clubs from doing so.
As clubs' values have risen, private investors have flocked to the Premier League. A Chinese investment group bought West Bromwich Albion, and Swansea City sold a 60% stake for £110 million. Everton sold half its shares to an Iranian businessman, and a 70% share in Crystal Palace was worth £100 million.
The attraction of English football clubs to private investors is not confined to the Premier League. Evangelos Marinakis recently purchased Nottingham Forest's championship side. The Greek shipping tycoon, who also owns Olympiakos, has praised the loyalty of Nottingham Forest's supporters and promised to invest in the former two-time European champions to return them to the Premier League.
Forest fans are keen to see the return of the glory days to their club. Like fans of other teams that have received significant private investment, they hope the additional funding will lead to better quality players and move up the league system.
As investment produces on-field success, many clubs can expand their grounds. Numerous clubs have built new stadiums or renovated older buildings in recent seasons, and by increasing the potential matchday crowd, they can generate additional revenue.
Of course, there are many sources of sports funding. Another model that has been explored is a fan-ownership system, in which ordinary fans own shares in the club and elect a President to run the club in their interests. That model has been tried at a few European clubs and works well for Barcelona, the Catalan giant. However, no major English club has yet gone down that route, presumably because restricting share ownership to one per person would deter major private investors who expect a degree of control over their investment.
Through the Premier League and FA Facilities Fund, football clubs, schools, councils, and local sports associations can access funding to refurbish facilities and encourage nationwide participation. The Football Foundation, on behalf of the Premier League, the FA, and the Government, manages the fund, which has helped many smaller clubs maintain and improve their structures and facilities. The influx of television and investor money has benefited England's lower leagues and the grassroots game.
Although English football is funded mainly through television money, there is no indication that broadcast revenue is about to dry up. New and even more lucrative television deals catering to overseas football fans will likely increase revenue in the years to come. The Premier League remains an attractive proposition for television audiences and private investors. The future for the world's original football league appears bright, and clubs like Nottingham Forest want to be part of it.
Page Reference
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- CLARKE, T. (2018) Football Funding [WWW] Available from: https://www.brianmac.co.uk/articles/article341.htm [Accessed
About the Author
Terry Clarke is keenly interested in English football and favours the Premier League.