Tuesday 11 December 2018

Match day revenue relegated as clubs rely on broadcast income

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Ellie Donnelly

Ellie Donnelly

Broadcasting revenue has become the most important source of income for Europe's leading football clubs, according to a report from credit ratings company DBRS Ratings.

Commercial revenue has been relegated to second place, while match day revenue is third.

That's despite Europe's largest stadiums such as Old Trafford and the Nou Camp in Barcelona having the capacity to hold 75,000 and 99,000 fans respectively. However, for clubs throughout Europe, the distribution of broadcasting income varies depending on the football league in question.

In Ireland, the FAI has broadcasting deals with both Eir and RTE.

However, the financial details of the agreements have not been disclosed and the revenue generated is not distributed directly to the League of Ireland clubs.

The situation in Ireland could not be more different from England, where the Premier League distributes half of the income from domestic television revenue equally among the 20 league clubs.

A further 25pc is awarded based on each club's final finishing position in the league.

The remaining quarter of the income from domestic television broadcasting is a "facility fee" that is distributed depending on how many times a team is featured in a prime-time or high visibility time slot.

This method of distribution, coupled with the high broadcasting fees that the Premier League negotiates, means that traditionally smaller football clubs in the England such as Crystal Palace and AFC Bournemouth have become some of Europe's richest clubs. However, there are signs that the market may have reached its peak for Premier League rights.

Earlier this year Sky and BT bought five of the seven Premier League packages covering 2019 to 2022 for a combined price of £4.5bn (€5.1bn) - lower than the two behemoths paid the last time around.

Two packages were not sold the first time around.

Revenue from the sale of foreign broadcasting rights is also distributed evenly among Premier League times, where, unsurprisingly China is a large market for the league when selling foreign broadcasting rights.

In Spain, home to Barcelona and Real Madrid, clubs negotiated their rights to broadcasting revenue individually before 2015.

The result was that Barcelona and Real Madrid between them pocketed around one-third of the revenue on offer, according to the DRBS report. Since 2015 Spain's La Liga has looked to implement a more balanced approach, whereby 10pc of broadcasting revenue from television is now given to second division clubs.

Of the remaining 90pc, half of the income is split evenly among the league's 20 clubs.

A quarter is based on a club's results over the previous five years, while the remaining 25pc of revenue is split based on a number of criteria including the size of match day crowds and number of members the clubs have.

Unsurprisingly, this has reduced income inequality among clubs, according to football events company Soccerex.

In Italy the league has since 2011 resumed negotiating rights for its clubs collectively and a more equal distribution of revenue has followed, according to the DRBS report.

Going forward, as player wages increase leagues may look to generate revenue from other sources, including streaming.

Irish Independent

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