A tale of two cities…
On Saturday I watched Stoke City toy with Manchester City at an even windier than usual Britannia Stadium. In line with the views expressed on Stoke supporter websites by many fans of a similar age to me, I believe it was Stoke’s best performance in at least 40 years.
…that is hard to believe.
The four main attacking players in Stoke City’s team were Afellay, Bojan, Arnautovic and Shaqiri, all have won the Champions’ League. In footballing terms, this is remarkable when we remember that Stoke City were in the third tier of English football in 2004. But then add to this the fact that Stoke is a very challenged post-industrial city without the resources one would imagine to support the recruitment of world class players.
More generally, the Premier League increasingly seems to offer the opportunity for advancement. Leicester City currently sit on top of the League having only been promoted 18 months ago while Chelsea, last season’s Champions, find themselves in the bottom half of the division
The key is the business model…
The Premier League business model is based around “The cycle of growth”, this has four elements:
- Generate and increase demand and interest in supporting, attending and watching the competition;
- Convert the interest into a sustainable commercial success;
- Distribute the returns from the commercial success reasonably equally as well as supporting football and society more widely;
- Invest in stadia, facilities and talent.
…with fair distribution at the core.
At the core of the business model is the decision to distribute revenues, especially broadcasting revenues in a manner that reflects both performance and equity. This process ensures that the competition remains strong by creating the opportunity for even the initially weaker teams to become stronger, such as Leicester City. This means the “cycle of growth” becomes a virtuous circle.
The Premier League has the most even distribution of broadcasting revenues of all of the major European leagues. In 2013/14, Cardiff City, the team finishing 20th in that season, earned more from TV rights than the 3rd place finisher in Spain.
The distribution works because it maintains incentives are maintained but the element of sharing acts to ensure the long-term health of the Premier League. Teams can get stronger and close the gap to the wealthier clubs and this ensures the high degree of competitiveness which in turn adds to the unpredictability of matches – another important element of the appeal of the competition.
Success breeds wider benefits: the Premier League has a real economic & social impact…
The business model generates sufficient returns to allow investment in causes outside of the direct operation of the Premier League. Some of these benefits accrue to the wider football family thereby reinforcing the appeal by crating opportunities for clubs to rise up the football pyramid. But there are also additional benefits create din the economy and society as a whole.
EY’s recently published report illustrates the significant impact that the Premier League has. In the 2013/14 season, EY estimated that the Premier League:
- Generated around £3.4 Billion in Gross Value Added;
- Supported over 100,000 jobs in the UK;
- Saw its players pay £891 million in income tax; and
- Sold overseas Television rights for £722 million
But the impact goes beyond this. Outside of the economic effects summarised above, the Premier League has a wider impact:
- Paying over £225 million in football solidarity payments in 2013/14;
- Engaging over 546,000 young people in community projects last year; and
- Reaching 4,158 schools with sport and education programmes
…driven by the football.
The Premier League continues to prosper because its business model is a football-centric one which is designed to support the long-term health of the competition. Rather than allow the rich to get richer, the model recognises that some element of sharing to balance opportunity is important. By allowing fans to dream, and on days like last Saturday to live the dream, the Premier League reaches way outside its boundaries to create a huge range of benefits and sustains its own success.