Meddling in Premier League's affairs

The season is almost over and it is time to draw some conclusions. For example, in Premier League Chelsea has won the title a few days ago succeeding in what everyone thinks to be a big company. However, how much money earns the team which wins the championship? The team’s revenues depend on many factors: the most important parameters are the position reached at the end of the season and the percentage of live games. To these two discriminating factors, a fair share of national and international television revenues is added to all teams.

In Premier League, the teams’ revenues are divided into three parts. The first which applies to all teams represents 50% and it is equally distributed. The other 50% is divided into two parts: 25% made up of the so-called “Facility Fee”, and another 25% generated by the “Merit Fee”. While the first is subdivided according to the number of times a game is broadcast live, and the second depends on the final position of each team in the league table. In a league such as PL, which has seen its revenues rise exponentially over the past three years, the club’s ability to create interest is of vital importance. From the collected data, the Premier League has ended 2015/2016 loss-making after two consecutive years of benefits. Nevertheless, despite the teams’ aggregate turnover has reached 4.3 billion euros, mainly thanks to City and United, wage costs have increased dramatically, affecting negatively on the final results. However, according to Dan Jones, partner and head of the Sports Business Group at Deloitte, it is to be expected that for 2016/2017 PL will return to generate profits, also thanks to the new TV rights agreement.

In this dynamic context, it becomes vital for the Premier League teams to be able to create a medium/long term project in which regularity of investments will determine the success or the defeat. Thanks to winning the championship, Chelsea will receive about 44 million euros, while Tottenham, in the second position, will collect a nice sum of 42 million euros. This collection is generated by the so-called “Merit Fee” which is applied based on the ranking position. At the same time, even the teams which have been relegated in the current season like Hull City will be paid a weighted figure: the Tigers will get about 6.5 million euros.