Have the Changes Been for the Better?

In February 1992, the clubs in the English Football League’s First Division decided to ‘break away’ from the then ‘Football League’ and form the English Premier League (EPL).

The League continued to consist of the same number of clubs (20) that were present at the end of the 1991/1992 season.

The decision was made to take advantage of a lucrative television rights deal which would see the EPL become the world’s most watched football league. The current British broadcast agreement, which runs for three years from the start of the 2010/2011 season, is worth 1.782 billion pounds.

The fortunate broadcasters are Sky and Setanta. This figure is almost six times the initial figure paid in 1992.

In addition to the current broadcasting agreement, the EPL is known to generate more income through match day revenue and sponsorship than any other national league and is the fourth highest of any sporting competition in the world: behind only the National Football League (NFL), Major League Baseball (MLB) and National Basketball Association (NBA).

Some argue that this leads to the following scenario: with so much money and reward available to the clubs, others are desperate to gain promotion to top flight football or alternatively, have a great fear of dropping down a division.

Arguably, this fear has led to clubs spending above their means to remunerate and acquire players in attempts to remain part of the (very) financial EPL.

Experts in world football are divided as to whether the change to the EPL has been for the better of the game; if only from a financial perspective.

Many point to the fact that as the EPL is now more global, the different styles bring a more attractive brand to the League. Further, whilst it has taken some years, attracting international players of quality, different clubs are getting opportunities to compete in the European competitions each year.

But what of the financial situation?

Prior to the establishment of the EPL, if you won the title you were considered the best club in England for that season. In recent years, it could be argued that the champions of the League are no longer the ‘best club’ as two of the most successful clubs of the modern era are carrying significant debt.

Manchester United: the most successful club in terms of titles since the EPL began are reported to be over 700 million pounds in debt. Arsenal is better off but still carries a debt of just over 200 million pounds.

Whilst Liverpool has not won an EPL title they are over 300 million pounds in debt.

Out of the so called ‘big four’, the current title holders in Chelsea are reportedly ‘virtually’ debt free.

This situation supports the notion that irrespective of success, some clubs have spent above and beyond their means.

During the same period, one notable club struggled financially which can be directly attributable (in part) to the amount of money available to clubs in the EPL. At the end of the 2003/2004 season, Leeds United was unfortunately relegated only three years after competing in the UEFA Champions League semi-final.

A desire to compete in the EPL and be rewarded with European competition season after season led to financial risks being taken. Unfortunately for Leeds, this did not eventuate.

The financial gap between the top and the next division is quite remarkable.

If teams relegated to the Football League Championship (FLC) fail to win back immediate promotion a season later, they are hit hard financially: some to the point of liquidation or administration.

This is highlighted by the fact that, on average, an EPL club receives approximately 45 million pounds each season from television revenue whereas the FLC clubs receive, on average, approximately 1 million pounds.

Since the EPL began, Leeds United, Charlton Athletic, Nottingham Forest, Oldham Athletic, Sheffield Wednesday, Bradford City, Leicester City, Southampton and Wimbledon have struggled financially as a result of not being able to win immediate promotion back to the EPL

Result: one relegated club every two years either experiencing some form of financial problems or having their current plight magnified by virtue of remaining in a lower league for more than one season.

In the current environment it can be argued that clubs like Manchester City (for example) will continue to make it difficult for clubs looking for promotion to the EPL to compete financially.

Given City’s significant financial status since September 2008, they have shown a willingness to purchase players at prices some may say are inflated. A few experts say they do this simply ‘because they can’.

Whilst this would bring satisfaction to many Manchester City fans worldwide (and so it should in the current environment), it will continue to make it difficult for other clubs to compete financially alongside them.

However, having highlighted the Manchester City and Leeds examples, the situation with Manchester United and Arsenal demonstrates that ultimate or some success can be achieved irrespective of financial status.

One would gather from the events of the EPL so far that strong management, astute squad and youth development and confidence that the entire club is ‘pulling in the one direction’ plays a significant part in a club’s success on and off field.

Whilst businessmen all over the world continue to want to gain private ownership of EPL clubs due to the significant revenue that is available for the successful clubs, there will always be a significant risk that more clubs will increase their debt.

Chelsea started the practice of buying top quality players at a whim a few years back but the Abu Dhabi backed Manchester City seem to be taking it to a new level.

Many football followers around the world will watch the Manchester City story unfold in the next few years with great interest.

Will money ultimately bring long term sustainable success?

It may still be too early to tell whether the changes have been for the better but the financial signs for the EPL clubs as a whole don’t appear healthy.

About Stephen George

I am an avid sports fan who admires anyone who can play or participate in sport at pretty much any level. My favourite sports are AFL, soccer, Major League Baseball, Rugby League and NFL. I have recently finished my Diploma in Sports Journalism and I am interested in improving my skills by contributing to the Footy Almanac

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