Sunday 16 June 2019

Soccernomics: how football's financial goalposts keep on moving

Huge inflation in broadcast rights means top soccer players are commanding transfer fees and salaries that defy understanding. And with Amazon and Facebook reportedly taking an interest, it's not over yet

Windfall: Philippe Coutinho became the world's second most expensive player when he moved from Liverpool to Barcelona for €160m last week
Windfall: Philippe Coutinho became the world's second most expensive player when he moved from Liverpool to Barcelona for €160m last week
Robbie Keane playing in the emerging Indian Super League
John Meagher

John Meagher

Raheem Sterling has been having the season of his life. The 23-year-old striker has been a key component in Manchester City's superb run in the Premier League, and the runaway leaders are keen to ensure he stays put. One of his goals could well deliver victory in tomorrow's clash away to his former club, Liverpool.

Right now, Sterling is paid £170,000 per week but both he and his club knows it's not nearly enough in today's market. Contract talks are due to commence shortly and it's expected that after a hefty salary increase, plus payments based on performance, the England international will be taking home at least £250,000 - or €281,000 - per week.

Huge amounts of money have long sloshed around football, but the figures bandied about today seem to have escalated beyond belief in just a couple of years.

In 2016, Manchester United paid Juventus a world-record fee of £89m to sign the French international Paul Pogba - who had once been on United's books - but within 12 months that had been blown out of the water by Paris Saint Germain, which spent €220m to buy Brazilian forward Neymar out of his contract with Barcelona.

Robbie Keane playing in the emerging Indian Super League
Robbie Keane playing in the emerging Indian Super League

Last weekend, Liverpool pocketed €160m from Barcelona for another gifted young Brazilian, Philippe Coutinho. The newspaper photos of the star traveling aboard a lavishly appointed private jet en route to Barcelona only served to highlight how removed today's top players are from the people who pay to see them play.

Rob Wilson, a lecturer at Sheffield Hallam University, is one of the UK's leading experts on football finances. He has been struck by the dramatic increases in transfer fees and salaries in recent years and says it is easy to identify the source of the riches. "The money is largely driven by the huge broadcast rights that have been secured by the major leagues over the past decade or so," he says. "The price of Premier League rights was up by 70pc the last time around, and I expect them to increase by maybe 25 or 30pc when the next three-year terms are brokered.

"TV deals are the biggest source of income for clubs and there's huge money involved so that has had a knock-on effect in terms of how much players are going for and what they expect to be paid."

And it is not just the European giants who are offering players windfall salaries. Emerging markets, such as China, are offering pay packets even the Barcelonas and Chelseas of the world can't match. Carlos Tevez, the former Manchester United and City player, is thought to have the highest weekly wage in football - an astonishing €690,000 courtesy of Chinese Super League side Shanghai Shenhua. His fellow Argentinian, Ezequiel Lavezzi, pockets €450,000 per week with Hebei China Fortune - although, to date, his time in the world's most populated country is more remembered for his decision to pull a 'slanted-eye' expression in the official team photo than any exploits on the pitch.

Keane in India

India has also been offering huge salaries to players in the twilights of their careers, including Ireland's record goalscorer, Robbie Keane, who, at 37, is playing at Atlético de Kolkata (ATK) on a one-year deal for, according to some reports, more than £50,000 a week.

"It's simple market forces at play," Rob Wilson says. "There is an enormous global TV audience to be tapped into, and that's something all the world's leading leagues are acutely aware of."

The Premier League has led the way and the latest data from Deloitte shows that its boast about being the world's greatest league is true in financial terms, at least. For the most recent verified figures, the 2015/2016 season, England's top flight pulled in a revenue of almost €5bn. The next highest, Germany's Bundesliga, earned €2.7bn, followed by Spain's La Liga at €2.4bn and Italy's Serie A at €1.9bn.

Broadcast rights accounted for 53pc of all revenue earned by Premier League clubs that season, with sponsorship covering a further 30pc. Only 17pc was from 'match day' revenue - tickets and associated spending.

"It's one of the reason why ticket prices have remained static over the past few seasons," Wilson says. "Putting up prices wouldn't generate a significant revenue increase in the overall picture, but it could alienate fans - and the clubs are conscious that it's important to have full stadia for their product to be attractive to broadcasters."

Next month will see negotiations commence for the next three-year package of Premier League football. It's widely thought that Amazon Prime will be in the running and some suspect that Facebook may be keen for a slice of the pie.

Ronan Murphy, European football journalist for, says it makes sense for the big streaming services to get into football rights. "Amazon has enormous money at its disposal - look at the amount it spent on its version of Top Gear [The Grand Tour, whose first season had a reported £160m budget]. If they're willing to spend that much on a car show, there's no reason to believe that they wouldn't want to get into a very lucrative, globally popular sport, too."

Murphy says broadcast rights may be helping to fuel big transfer fees and even those where, in the description of Roy Keane, "mediocre" players are changing clubs for £30 to £35m, but he also believes that ultimately it's the fan who helps pay for it. "When they carve up the TV rights, it means that you no longer need to subscribe to one broadcaster, such as Sky, you need to have several subscriptions if you want to have as full a choice of games as possible."

There are 380 Premier League games in any given season, and the next batch of rights will see 200 of those games up for grabs. Murphy thinks it won't be long before every game will be available to view legally - for a price. "It's certainly heading in that direction," he says, noting how much choice today's armchair fan has compared to those at the outset of the Premier League era. (Football prior to 1992 was free to air on terrestrial TV, but very little of it was shown live - most fans had to make do with scant highlights on Match of the Day.) "And it makes sense to the Premier League to carve it up among a number of broadcasters - it will help maximise the amount they can get for it."

There are few signs that football's big money deals are helping to raise all boats, and one could argue that Ireland's domestic league remains in the backwater compared to its glittering equivalent across the Irish Sea. But Ronan Murphy argues that a European run has helped certain clubs - especially Dundalk and even reigning champions Cork City - pull in significant revenues. "It's allowing clubs to put players on two-year contracts or more, whereas previously you'd have players looking for new clubs at the end of every season. That's not just good for the player, but the club too because if an English club comes in, they can negotiate a better fee and a sell-on clause."

Much was made of the sale of Dutch defender Virgil van Dijk from Southampton to Liverpool for £75m earlier this month. Celtic stood to be paid 10pc of that due to a sell-on clause struck when the Glasgow club sold him to Southampton. That £7.5m is almost double the prize money awarded to the winner of the Scottish Premiership.

But how sustainable is football's business? Rob Wilson believes financial fair play regulations, initialled by football's European governing body, UEFA, may ensure that clubs don't go into receivership as has happened to both Portsmouth and Glasgow Rangers, but he argues it's inevitable that the gulf between the clubs will widen.

"Twenty years ago Sheffield Wednesday would have been seen as being in a stronger position than Manchester City, but there's a huge divide between them now as City attempt to become one of the biggest clubs in the world. Wednesday fans would no doubt look on with envy about the huge amount of money that's been poured into City and wonder what might have been had a super-wealthy owner come in there.

"But one thing that's made the Premier League more attractive to broadcasters than other leagues is the sense that any club can beat another on a given day and if that diminishes, it may be less appealing for bidders. You'd still want some of the romance to be left in the game, rather than for it to become predictable and inevitable that the highest spending clubs will win the league year in, year out."

Leicester City's improbable Premier League victory in 2016 suggested that those with most money don't always get their way - that season, the club's wage bill was 15th highest out of 20.

But it wasn't quite as the fairy tale it seemed. The club is owned by Thai billionaire Vichai Srivaddhanaprabha and he had poured hundreds of millions into creating a team capable of mixing with the league's big boys. More recently, he's had more to worry about than climbing the Premier League table: he faces the prospect of being sued for almost €350m in Thailand over money allegedly owed to the government there.

Amid all these astronomic sums, stadium staff at Manchester City's home ground, the Etihad, are on the minimum wage. While the club's superstar players command weekly wages higher than that of the annual salary of UK Prime Minister Theresa May, the hundreds employed on a part-time and casual basis are still not paid the recommended hourly 'living' wage of £8.75 (€9.85).

Only a handful of clubs, including Liverpool and Everton, have agreed to pay their casual staff such a rate but City - and Manchester rivals, United - have so far refused to do so. The Mayor of Greater Manchester, Andy Burnham, called on both clubs to pay this rate in advance of the recent Manchester derby but guarantees were not forthcoming from either.

For campaigners, it's a brutally stark sign of the yawning gap between football's haves and have-nots.

Michael Pugh of Citizens UK, which launched the Living Wage campaign in 2001, has noted that "it is shocking to hear Manchester United and Manchester City are still not paying a real living wage to all staff, despite earning a massive £972m between them in revenue last year [2016]. Premier League clubs can easily afford to pay hard-working cleaners, stadium staff and other low-paid workers enough to live on but are choosing not to, so we're encouraging United and City fans to demand better from their mega-rich clubs."


Money talks: transfers that shook football

Willie Groves

ir willie_groves.jpg

£100 was a lot of money back in 1893 and there was shock in the embryonic world of professional football that Aston Villa would pay such a fee to lure the player from local rivals West Brom. Within a dozen years, Newcastle United was paying neighbours Sunderland 10 times that amount for the services of Alf Common.

Trevor Francis

ir Trevor Francis.jpg

In January 1979, David Mills moved from Middlesbrough to West Brom for a British record of £516,000. The following month there was disbelief when Brian Clough's Nottingham Forest put £1,180,000 on the table to secure the services of Francis, then a hotly tipped property at Birmingham City.

Roy Keane

ir roy keane.jpg

The Corkman was one of the most exciting young talents in the old First Division in the early 1990s and Blackburn Rovers thought it had secured his signature for £4m after his club Nottingham Forest were relegated. A clerical error meant manager Kenny Dalglish would have to wait until the Monday to get him to sign, allowing Manchester United and Alex Ferguson to swoop in over the weekend. Keane was sold for £3.75m.

Alan Shearer

ir alan shearer.jpg

Newcastle United smashed the world record in 1995 by bringing Southampton's Alan Shearer back to his hometown club for £15m. It would be the last time, until Paul Pogba's move to Manchester United in 2016 for £89m, that an English club would break the record. Spanish giants Real Madrid and Barcelona would dominate the big-money spending from the mid-90s on, despite the Premier League attracting far higher broadcast revenues than La Liga.


ir neymar.jpg

Paris Saint Germain has become one of the world's wealthiest clubs thanks to its oil-rich Qatari owners and in the past five years the chequebook has been constantly out. They paid €220m for the services of Brazilian superstar Neymar last summer in order to buy him out of his contract with Barcelona - doubly, roughly, what Manchester United had to pay Juventus the year before for Pogba.

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