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Championship clubs eye Premier League money
England - 04 May, 2007
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With money to be made off the English Premier League, it is attracting money from overseas.
A number of clubs have been taken over by international businessmen in recent years and, with football finance analysts at Deloitte valuing promotion to the top flight this season at around GBP 60 million per club, it might even be prudent financially to pursue a second-tier club.
Alex Byars, senior consultant in Deloitte's sports business group, believes it may not be long before investors look to tap into the earning potential of often lower-valued Championship clubs.
"Certainly, the gaps in revenue between Premiership and Championship clubs will be greater than it's ever been in 2007-08," Byars told PA Sports. "Within the Championship, I would imagine there will be people out there who will look at the financial rewards of achieving promotion to the Premiership and may ask themselves 'How much would I have to invest in order to make that dream a reality?'
"It's difficult to know how successful a strategy that might be because, at the end of the day, there are only three promotion spots at the end of the season, so if all or even half the clubs in the Championship are taken over by foreign investors all trying to achieve the same goal, there are only three slots available."
Deloitte estimates Birmingham, Sunderland and one between Derby, West Brom, Wolverhampton, Southampton, Stoke, Preston and Colchester, the clubs potentially jumping to the next level, will make roughly GBP 60 million, much from TV contracts.
Most of the money comes from domestic and overseas broadcasting deals. Domestic TV rights generated GBP 1.7 billion, with BSkyB paying GBP 1.3 billion for its four packages of matches and Setanta GBP 392 million for its two.
Overseas rights were sold for GBP 625 million.
Even if the clubs fail to maintain their spots, they will earn around GBP 30 million for one season in the Premier League, plus 'parachute payments' of more than GBP 10 million in each of the subsequent two seasons.
With that money to be had, Byars said a major concern is seeing stable clubs over-reaching to claim a spot in the big-money Premier League.
"We would certainly expect that there will be a large number of clubs who have seen the increase in the financial prize of promotion and who may have been tempted to spend more than they otherwise might have in order to gain promotion," he said. "In the Championship, there have always been some clubs who have been able to balance the books, break even or make profits and other clubs who have spent slightly more than they can afford in the long run."
A Wembley playoff final on 28 May will decide the third club to win promotion.
On Sunday, the last league games of the season will determine the four teams to fight it out for the remaining place.
"The immediate revenue boost can provide promoted clubs with finances to help bridge the gap between Championship and Premiership revenues," Byars said. "Excluding the biggest five or six clubs, most of the other Premiership clubs will be relatively evenly-matched in financial terms in 2007/08.
"Carrying the winning mentality from the Championship, whilst raising the club's operations to a Premiership level, is likely to determine whether or not the promoted clubs stay up."
A number of clubs have been taken over by international businessmen in recent years and, with football finance analysts at Deloitte valuing promotion to the top flight this season at around GBP 60 million per club, it might even be prudent financially to pursue a second-tier club.
Alex Byars, senior consultant in Deloitte's sports business group, believes it may not be long before investors look to tap into the earning potential of often lower-valued Championship clubs.
"Certainly, the gaps in revenue between Premiership and Championship clubs will be greater than it's ever been in 2007-08," Byars told PA Sports. "Within the Championship, I would imagine there will be people out there who will look at the financial rewards of achieving promotion to the Premiership and may ask themselves 'How much would I have to invest in order to make that dream a reality?'
"It's difficult to know how successful a strategy that might be because, at the end of the day, there are only three promotion spots at the end of the season, so if all or even half the clubs in the Championship are taken over by foreign investors all trying to achieve the same goal, there are only three slots available."
Deloitte estimates Birmingham, Sunderland and one between Derby, West Brom, Wolverhampton, Southampton, Stoke, Preston and Colchester, the clubs potentially jumping to the next level, will make roughly GBP 60 million, much from TV contracts.
Most of the money comes from domestic and overseas broadcasting deals. Domestic TV rights generated GBP 1.7 billion, with BSkyB paying GBP 1.3 billion for its four packages of matches and Setanta GBP 392 million for its two.
Overseas rights were sold for GBP 625 million.
Even if the clubs fail to maintain their spots, they will earn around GBP 30 million for one season in the Premier League, plus 'parachute payments' of more than GBP 10 million in each of the subsequent two seasons.
With that money to be had, Byars said a major concern is seeing stable clubs over-reaching to claim a spot in the big-money Premier League.
"We would certainly expect that there will be a large number of clubs who have seen the increase in the financial prize of promotion and who may have been tempted to spend more than they otherwise might have in order to gain promotion," he said. "In the Championship, there have always been some clubs who have been able to balance the books, break even or make profits and other clubs who have spent slightly more than they can afford in the long run."
A Wembley playoff final on 28 May will decide the third club to win promotion.
On Sunday, the last league games of the season will determine the four teams to fight it out for the remaining place.
"The immediate revenue boost can provide promoted clubs with finances to help bridge the gap between Championship and Premiership revenues," Byars said. "Excluding the biggest five or six clubs, most of the other Premiership clubs will be relatively evenly-matched in financial terms in 2007/08.
"Carrying the winning mentality from the Championship, whilst raising the club's operations to a Premiership level, is likely to determine whether or not the promoted clubs stay up."
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