Thursday, May 31, 2007

How the English Premiership is the world's richest

English Premier League players will earn more than £1 billion for the first time next season thanks to television, sponsorship and merchandising deals. Leading players could command as much as £200,000 per week, or a record £10 million a year, over the next three seasons, accountancy firm Deloitte said in its Annual Review of Football Finance report. "The Premiership is the richest soccer league on the planet with leading clubs like Manchester United, Chelsea and Arsenal enjoying a following among millions of fans around the world with more than 200 countries showing Premiership matches," Elena Moya reported for Reuters. The growing wealth gap between the English league and its European counterparts is set to widen as the Premiership's revenues continue to rise. It generated £1.4 billion in revenue last year, ahead of Italy's £1 billion , Germany and Spain's £800 million and the £600 million in France and, next season, the EPL's operating profit is expected to double to £260 million pounds, from this season.

"Whilst the players will be the main financial beneficiaries from the new TV deals, English clubs will continue to invest in their stadia and youth facilities, which is a vital element of a successful business strategy," said Alan Switzer, a director at Deloitte's Sports Business Group. English clubs will continue to invest in their stadia and youth facilities, which is a vital element of a successful business strategy. The clubs are expected to improve their marketing and expand sales outlets to boost profitabilit. The game will transform into more of a longer, family activity with food, drink and shopping outlets located inside new stadiums while advertisers and sponsors will aim to strengthen their relationship with clubs by using popular team brands to sell more products.

"The industry is attracting billionaires from around the world, including the United States, who are likely to continue buying English clubs over the summer. Manchester United and Liverpool are already owned by US. tycoons Malcolm Glazer, and George Gillett and Tom Hicks, respectively, while former Thailand Prime Minister Thaksin Shinawatra has made a formal bid for Manchester City. "Football teams aren't trophy assets, they're real businesses," Ken Goldsbrough, European head of the media, communications and entertainment unit at GE Commercial Finance, a General Electric unit expanding in the European soccer market as a lender, told Reuters.

Seeking a return on their investments, the new owners are expected to import some ideas from abroad. The more American and American-influenced owners in the UK and in Europe, the more potential for American ideas being implemented, particularly from the National Football League," said Lawrence Schechter, a director at Schechter & Co, an investment bank that has raised debt for football clubs. "I am a devout capitalist, more right-wing than Attila the Hun, but the NFL is a perfect example of socialism working in a capitalist market," Schechter said. "Certain elements will be brought, others won't work."

The new investors aren't expected to introduce changes that affect how the game is played on the field, however, said Dan Jones, head of Deloitte's Sports Business Group. "I see the Premiership becoming more commercial. That's not a bad thing, but excessively commercial would be a bad thing," he said. Stadium food and drink outlets are seen expanding and improving, while deals with commercial sponsors are likely to go beyond just showing a brand on a shirt, Jones said. "Football is played in front of more people, bigger sponsors and bigger stadiums, but the essence remains the same and that's where the value is," Jones said. "I can't do what Ronaldinho does, but it's the same game that I played as a child and that my children play now."

Leading UK football agent Sky Andrew believes "it is only right" that Premiership players benefit even more from the league's increasing wealth. Andrew, whose clients include Sol Campbell and Jermain Defoe, feels players' salaries should increase as a result. "The money has increased and as we saw in the recent play-off game, it was worth £60 million to the winning club. Derby are now in the game, they are in the Premier League. It is only right if clubs are generating that kind of money from merchandising, gate receipts and Sky (TV) money that footballers should be rewarded accordingly, " he told BBC Radio Five Live. Andrew also suggested that clubs will need to keep paying increasing amounts in wages to compete at the top. He added: "Competition in the Premier League is getting more and more fierce. In order to stay in the Premier League they have to get the best players. It is supply and demand."

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