Thursday, May 10, 2007

The Biggest Prize in World Football

On 28 May, the most valuable game ever in world football will take place, with the winner guaranteed around £60 million. In terms of the revenue that it will provide to its winners, the Football League Championship play-off final is more valuable than the World Cup final or Champions League final, according to football accountants Deloitte.

The reason for this is that the FA Premier League’s new domestic and overseas television deals begin to pay the Premier League’s clubs from next season. Clubs relegated this season will receive parachute payments under the FA Premier League’s previous TV arrangements, whereas clubs relegated next season will receive parachute payments under the new TV deals. The difference is striking, as extra figures, kindly provided by Deloitte’s Sport Business Group, illustrate.

The Premier League’s current domestic TV deals, which expire at the end of this season, are worth £1.2 billion with overseas deals worth a further £320 million, a total of £1.52 billion over three seasons. This equates to £507 million per season.

The new domestic TV deals are worth £2.1 billion with overseas TV deals worth £625 million, a total of £2.7 billion over three seasons. This equates to £900 million per season, almost double the previous amount.

Deloitte estimates that the cost of relegation will be £25 million to £30 million over two seasons and warns that should the relegated club fail to win promotion back to the FA Premier League, then that cost could increase further, as parachute payments will cease after two seasons. A relegated club stands to lose a great deal of money, which perhaps explains why clubs in danger of relegation are prepared to pay to employ legal firms to investigate possible action against the FA Premier League, after an Independent Commission decided to fine West Ham United for breaking FA Premier League rules rather than deducting points. This issue is examined in the May edition of World Sports Law Report, soon to appear on the site.

Andy Brown



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