The English Premier League (EPL) is among the most widely followed football leagues globally, attracting a vast global audience. This immense popularity translates directly into significant financial gains for the league. Revenue streams such as broadcasting rights, sponsorship deals, and global viewership contribute hundreds of millions of pounds annually, solidifying the Premier League’s status as one of the most lucrative sports leagues in the world.
Here we will try to explain in detail what impact it has on the PL clubs, how the money is distributed and how it affects the promoted and the relegated clubs.
Criteria for the payout to the Premier League clubs:
The payment made to all PL clubs depends on six components – three fixed and three variable components. The fixed payments depend on equal share for domestic broadcasting rights, international broadcasting rights and a central commercial revenue system.
The other three variable components depend on the final position in the league table, the number of times their games are broadcasted in the UK (also known as facility fees) and their portion of the merit-based revenue from international broadcasting deals.
Facility Fees are the fees determined by the number of televised games for a particular club in the league. Based on the 2023/24 amounts being paid out, Arsenal, Manchester City, Liverpool, Chelsea, Tottenham Hotspur and Manchester United earned the most. The facility fees are normally consistent with the traditional or historically big clubs irrespective of their performances in a particular season due to their larger stadiums and global viewership.
Just to mention one thing here, whoever wins the league isn’t entitled to a separate prize money, they are just paid the highest amount in the variable component which is based on league standing and merit-based revenue, the facility fees though could be more for another team who had more games televised than them.
In the 2023-24 season, each of the 20 clubs received £31.2 million from domestic broadcasting, £55.7 million from international broadcasting, and £8.2 million from central commercial deals which amounted to £95.1 million for simply being part of the Premier League.
When Manchester City won the PL in the 2023/24 season, they earned a whopping £175.9 million across all six revenue streams. In contrast the team at the bottom i.e., Sheffield United earned only £109.7 million which shows how much difference league position and broadcasting revenue can make.
Below is the payout to clubs based on PL position for the 2023/24 season –
Criteria for payout to relegated clubs:
Relegation from the Premier League isn’t just detrimental to a club from a sporting perspective but also from a financial standpoint. The lower a team finishes on the table, the lesser the variable component payout gets. The clubs that get relegated from top flight also suffer losses due to drop in ticket sales, lack of sponsorships and broadcast deals.
However, to help these clubs counter the financial loss and try to remain competitive, the Premier League has a system called ‘Parachute Payments’ in place. Under this system, the relegated clubs receive a portion of the PL broadcasting share for up to three seasons.
As per the system, a relegated club will receive 55% of the amount that they would have earned from broadcasting rights in the PL, in the second season the amount drops to 45% and if they had survived relegation for a season, they are eligible for 20% in the third season.
The only exception to this rule is if they get promoted within the next three seasons. In that case, their parachute payment gets cancelled and is redistributed amongst the remaining Premier League clubs.
Over the past few years, this parachute payment has reportedly amounted to £30 million to each relegated club.
Though the clubs competing in the Championship have often complained that it offers these relegated clubs an unfair advantage as the same clubs keep getting promoted and relegated over and over again.
Criteria for payout to promoted clubs:
Even though the English Championship is one of the most competitive tier two competitions, promotion to the top flight is still considered as the prime goal for teams playing there. Similar to the PL, the championship also doesn’t offer any prize money to the winner of the Championship. The promotion to top flight is decided by direct qualification (Top two teams in the table) with the third place being decided by play-off games. Next four teams in the table, play in two-legged playoffs out of which two teams make it to the final. The one who wins the final seals the third spot in the PL promotion.
The earnings occur from a combination of the income from the English Football League (EFL) and some amount that trickles down from the Premier League. This results in reportedly £11 million earnings for Championship clubs every season.
The rest of the income again depends on facility fees which are paid depending on the number of televised games for a club. Again, the clubs which have bigger stadiums, legacy and fanbase are given more televised games and hence earn more facility fees as compared to the smaller clubs.
The surprising thing to note here is that the top two teams that get direct entry in the PL earn less money than the other two teams that compete in the play-offs. The reason for this anomaly is that the Championship play-off final is one of the most lucrative games in football. As per Deloitte, the previous playoff final played between Leeds United and Southampton earned somewhere around a whopping £170 million – £300 million. This would mean that Southampton that was promoted through play-offs will be assured of much more money than the one who went through direct promotion.
Leave a Reply