Tuesday, April 03, 2007

Notes on the wealth of the English Premier League

Ryan Mills of Bloomberg looks at the power of the English Premier League in global football:

Today, the most successful Premier League teams have moved well beyond their local fan base; they're worldwide brands. "There aren't many global sponsorship properties," says Nigel Currie, director of brandRapport, a London marketing consulting firm. "The Premiership has become massive, and because of the scale of media interest, it's particularly attractive to wealthy businessmen who have money to spend." In the world of soccer, the Premier League has a special place. Its teams are the best in the country that established the rules for the modern game back in 1863 and formed the first league in 1888. In the last decade, the league's popularity has spread across the globe to Asia, Eastern Europe and the US.

Four of the world's 10 richest teams by revenue play in the Premiership. The 20 teams in the league took in an estimated 2 billion euros (US$2.64 billion) in 2006 -- 47 percent more than the top Italian league, the next-biggest earner, according to accounting and consulting firm Deloitte & Touche LLP. With a new television contract in place, the Premier League's income is set to increase 25 percent by 2008 over its 2006 total, Deloitte says. There's no sign of waning interest on the teams' balance sheets. Premier League clubs earned a total of 1.97 billion euros in 2005 from TV rights, ticket and merchandise sales and corporate sponsorships, up from 513 million euros in 1996 and 992 million euros in 1999, according to Deloitte.

English soccer's new wealth is largely generated by television. UK broadcasters will pay a total of 1.7 billion pounds for the right to air Premier League games for the next three seasons, from August 2007 to May 2010, while overseas networks will shell out 625 million pounds. The total of 2.3 billion pounds is 77 percent more than the teams earned from television under the existing three-year contract. "For years, people have been saying the bubble will burst, but each time they do a new TV deal, the value goes up," says Paul Rawnsley, a partner at Deloitte. "Confidence in the league is very high."

Multinational companies clamor for the right to sponsor the Premiership's teams. Suwon, South Korea-based electronics maker Samsung Electronics Co is paying 14.5 million euros a year to put its name on Chelsea's jerseys. Man U negotiated a new shirt sponsorship deal last year with New York-based insurer American International Group Inc. that will increase revenue 57 percent over a four-year contract, to 56.5 million pounds. AIG said a global fan base that the team puts at 74 million made the contract good value.

To attract more fans and meet a government demand that they improve safety, England's 92 professional teams have spent almost 2 billion pounds on new venues in the past 15 years, according to Deloitte & Touche. Six Premiership teams play in new stadiums. Man U increased the size of its Old Trafford facility this season to 76,000 seats from 68,000. Liverpool FC's new stadium will seat at least 60,000, up from the current field's 45,000. In 2004, Arsenal signed a 15-year naming rights and jersey sponsorship deal with Emirates Airline worth at least 100 million pounds.

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