Terry Clarke explains how the funding behind English football works.
Since the inception of the Premier League in 1992, it 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 as a whole, is the billions of pounds 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 the same thing.
As the value of clubs has risen, private investors have flocked to the Premier League. A Chinese investment group bought West Bromwich Albion; Swansea City sold a 60% stake for £110 million. Everton sold half their 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. Championship side Nottingham Forest was recently purchased by Evangelos Marinakis. 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 glory days return to their club. Like fans of other teams that have received significant private investment, they hope that 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 is a model tried at a few clubs in Europe, and it works well for the Catalan giants Barcelona. Although 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 for their investment.
Through the Premier League and FA Facilities Fund, football clubs, schools, councils, and local sports associations can access funding targeted at refurbishing facilities and encouraging participation throughout the country. Managed by the Football Foundation on behalf of the Premier League, the FA, and the Government have helped many smaller clubs to maintain and improve their structures and facilities. The influx of television and investor money has also benefited the lower leagues and the grassroots game in England.
Although the funding of English football depends mainly on television money, there is no indication that the broadcast revenue is about to dry up. New and even more lucrative television deals catering to overseas football fans will likely increase the revenue flow 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.
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About the Author
Terry Clarke has a keen interest in English football and favours the Premier League.