The English Premier League announced a new domestic television rights deal on Tuesday, and it’s a monster.
Sky and BT Sport will pay a combined $US2.6 billion per year from 2016 to 2019 to broadcast matches in the U.K.
It’s a 70% increase from the current deal, which is worth $US1.52 billion per year.
The richest teams in the world are getting richer.
Of the 30 highest-earning clubs in Europe in 2013-14, 14 were from the EPL, according to a recent research report from Deloitte.
Premier League teams are doing so well because of TV money. The league has the biggest TV deals in the world, and it distributes the money somewhat evenly relative to other top European leagues.
The English team that earned the largest share of broadcast revenue in 2013-14, Liverpool, made $US148.7 million. The team that got the smallest share of broadcast revenue, Cardiff City, made $US94.5 million.
That 1.6-to-1 ratio between the league’s top and bottom club is unusual in Europe. According to a 2012 Sporting Intelligence report, Spain’s ratio is 14-to-1, Italy’s is 10-to-1, France’s is 3.5-to-1, and Germany’s is 2-to-1.
While all of those leagues have their megaclubs, none of them have the upper-middle class of clubs that’s burgeoning in the Premier League.
The EPL has yet to negotiate its new international TV deals (which account for 43% of total broadcast revenues) for 2016-19, but if those deals also rise by 70%, the list of the richest teams in Europe is going to be even more dominated by English teams than it already is by 2017.
Assuming a 70% increase in broadcast revenues, the EPL’s bottom club will make $US160.6 million in TV revenue alone in 2016-17. The top club will make $US252.8 million.
For comparison, the 25th-richest team in Europe in 2013-14 made $US143.5 million in total revenue. By 2016-17, all 20 teams in the Premier League will make more than that in TV money alone.
This matters so much because the explosion of Premier League TV money coincides with UEFA’s new Financial Fair Play rules — which ties the amount of money a club can spend to its revenue. The idea is to keep clubs from racking up huge debts on player spending and then falling into financial ruin. But in practice, it means that the teams that make the most money have a material advantage. Unless you’re already making a ton of money, you can’t spend your way to the top.
Going forward, Premier League clubs will be able to spend significantly more on players than their counterparts across Europe. The Real Madrids and Bayern Munichs of the world will still be able to compete, but the second-tier powers in places like Italy and Spain are in danger of getting outspent by bottom-tier Premier League teams that have more money to work with.
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