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The Global Competition Between Football Leagues

Fri, 31 August 2007

Despite its current strengths, the English Premier League should not take its success for granted.

The Spanish La Liga and the Italian Serie A both kicked off last weekend without the same degree of hype that the English Premier League attracts.

Through the European summer, and into the start of the new English season on 11 August 2007, the Premier League has dominated football headlines, first with the news of takeovers and transfers, then with the early form of clubs such as Manchester United and Tottenham Hotspur, which have been below expectations, and the pressure on managers even at this early stage of the season

The greater attention paid to the English Premier League is reflected in the fact that it has the highest revenues of any football league in the world. In 2005-06, the ten leagues with the highest revenues in the world were as follows:

League

Country

Number of clubs

Total revenue (2005-06) (US$)

1 Premier League England 20 2.6 billion
2 Serie A Italy 20 1.8 billion
3 Bundesliga Germany 18 1.6 billion
4 La Liga Spain 20 1.4 billion
5 Ligue 1 France 20 1 billion
6 The Championship England 24 600 million
7 Primera División de México Mexico 18 540 million
8 J League 1 Japan 18 504 million
9 Campeonato Brasileiro Série A Brazil 20 480 million
10 Eredivisie Netherlands 18 450 million

Yet, in terms of the UEFA coefficient used to rank clubs for European competitions for the current season, England is only third, behind Spain in first place, and Italy. The coefficient is based on results of clubs from each country in European competitions over the preceding five seasons. However, as the top three countries each have four clubs qualifying for the UEFA Champions League, lying third in this ranking is of no great concern to the Premier League. As the next three countries, France, Germany and Portugal, are some way behind the top three countries, the positions of Spain, Italy and England in the top three are unlikely to be challenged for some years to come.

While a higher UEFA coefficient arguably represents a higher quality of clubs in the top division of that country, despite lying third in this ranking, the English Premier League is far ahead at the top of the revenue ranking.

Broadcast revenue is a large factor. In Deloitte’s Annual Review of Football Finance issued on 31 May 2007, it was estimated that Premier League revenues would exceed Eur 2.5 billion (US$3.4 billion) this season, the first year of a new broadcast deal.

The Premier League’s first TV deal with Sky in 1992 was worth £191 million over five seasons. The current broadcast deal is worth £2.7 billion over three years.

The current state of the top levels of English club football is a far cry from the situation in the 1980s, when, after the Heysel Stadium disaster in 1985, and the Hillsborough tragedy in 1989, English club football was at its nadir. The reforms that followed, including the improvements to stadia, and ultimately, the formation of the Premier League, has brought the top flight of English football a long way, especially in terms of business organization and revenue, if not necessarily in terms of success in Europe.

English leagues have historical advantages over their European rivals. Football as we know it today originated in England in the 1860s and was exported to the rest of the world in the late 19th and early 20th centuries. English football has for a long time had a strong following in several of Britain’s former colonies, including Singapore and Malaysia. It is also a significant advantage that domestic and international media coverage of English football is ordinarily in English, the world’s lingua franca.

On the field, English club football tends to be fast and physical, sometimes even frenetic, which makes for compulsive viewing, even when the quality of football on display may sometimes fall short of those of French, Dutch or Portuguese sides, let alone Italian or Spanish teams.

The business and financial organization of the top levels of English football builds upon these traditional strengths. The Premier League has been most successful in marketing itself in Asia of any league or sport. It is estimated that TV audiences for Premier League matches in the People’s Republic of China alone are between 100 and 360 million. The FA Premier League Asia Cup, featuring three Premier League clubs, was inaugurated in Malaysia in 2003. It was held again in Thailand in 2005, and in Hong Kong in 2007. Each time, the local national team or a local club team has been the fourth team.

The strength of English football is reflected in the fact that the Championship, the second tier of English football, is ranked sixth in the world for total revenue in 2005-06.

The revenue stream of any league is from two ultimate sources – corporate sponsors and advertisers on the one hand, and the fans on the other. Fans pay for tickets to attend matches, TV subscriptions to watch telecasts and club merchandise. A significant part of the increasing revenue of the Premier League will be ultimately borne by the fans, wherever in the world they may reside.

The Bundesliga provides a useful contrast. In April 2007, the BBC reported that “Often lacking the pace and energy of the Premiership, the big star names of La Liga or the glamour of Serie A, the Bundesliga nevertheless has the highest average attendances in Europe and the greatest goals-per-game ratio of any of the big four leagues.” Although the interest generated by the 2006 World Cup in Germany is one factor, the BBC also put it down to the fact that German supporters are not exploited. Ticket prices at a top Bundesliga club can be as low as £9.50.

Average attendances in the Bundesliga are in fact the second highest for any professional sports league in the world, after American football’s National Football League. The Premier League is only fourth, after the Australian rules football’s Australian Football League.

The revenue that football can earn from fans is not limitless. There is only so much that football fans, who are largely from middle or working class backgrounds, can afford to spend on football.

Other football leagues, and even other sports, would like to share, if not take, the Premier League’s global market. If the Premier League becomes too expensive for the fans, what is to stop the fans from looking elsewhere?

At the present, it is the lack of real alternatives. Yet the Italian Serie A, the Spanish La Liga, and American baseball and basketball are constantly working on their profiles in the global market for professional team sports. As far as the Asian market is concerned, the J-League has shown that a well-organised domestic league is capable of competing in the global marketplace. Even within England, the lower tiers of English club football are of sufficient quality to provide an alternative.

Much of the current attraction of the Premier League is the hype that surrounds players, clubs, owners and managers. Apart from actual events, the media is constantly full of speculation about private lives, transfers, takeovers and jobs on the line.

If the cost of following the Premier League becomes too great for its international audience, football fans may start to look beyond the hype, at the alternatives. The Premier League should be wary of killing the goose that lays the golden egg.

(The article as appeared in the Weekend Today on 1 September 2007)

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4 comments

  1. [...] Posted by rajiv on Thu 12 February 2009 Deloitte’s Sports Business Group publishes two reviews each year which I look out for: [...]


  2. [...] the two, the two-tiers of the Premier League appears to be nothing more than a re-negotiation of TV money.  This could be achieved by discussions between the Premier League and the Football League, [...]


  3. [...] no longer make publicly available their ranking of leagues by revenue, which is now part of their Annual Review.  However, it continues to be reported in the media.  [...]


  4. [...] against other top European clubs, incomes are likely to be greater, what with bigger crowds, more TV money and more merchandising, while not having to maintain extra large squads to deal with competing on [...]



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