Sports League Analysis Paper: English Premier League

SPORTS LEAGUE ANALYSIS PAPER

ENGLISH PREMIER LEAGUE

The Premiership was created after the 1985 European Cup Tournament at Heysel Stadium in Brussels; some clubs received a 5-year ban from Union of European Football Associations from playing because they were neglecting stadiums. In 1992, The FA Premier League was formed, and the first games were played in August. Originally, there were twenty-two clubs in the league and then was reduced to twenty. In 2007, The FA Premier League’s name was officially changed to The Premier League (EPL). The league is at the top of the English Football League System. Since its inaugural season, the competition has been dominated by a small number of participants; roughly fifty clubs have played in the league and only six different clubs have won the league. Stated in Economic Times, “Beamed to over 600 million homes in 212 countries, the EPL is the world’s most-watched football league with a potential global audience of nearly five billion people.”

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The English Premier League has a basic scheduling system; the season lasts from August to May and scheduling consists of each club playing the other 19 clubs, once at their home stadium and once at the opponents for a total of 38 matches. The league has no postseason tournament; thus, the champion is determined by the club with the most points at the end of the season. The EPL season format is as follows, a club will receive one point for a draw and three points for a win. If there is a tie at the end of the season, the tiebreaker is determined by goal differential, if need be then by the number of goals scored. The top four point-scoring clubs each year qualify for the next season’s Union of European Football Associations (UEFA) Champions League Tournament. This competition places the most successful domestic clubs in European Football against each other for the annual title of the Best European Club. According to V. K. Borooah and J. Mangan, “They confirm the widely held conjecture that, in its present form, the EPL is segmented into several noncompeting groups: the top five clubs who really aspire to League and European Championship honors; those competing for admission to lesser European competitions; and the lower groups whose sole aim is simply to be part of the EPL.” They also suggest that the solution to make the EPL balanced competitively is to reduce the number of clubs in the League, which will never happen because revenues would go down thus, making the league in debt.

Prior to the formation of the Premier League, which was created as a breakaway entity in 1992, the English Football League consisted of four divisions comprising 92 clubs. The Premier League, which is governed separately, sits atop the three Football League Divisions: Championship, League One and League Two. In the current state, Richard Craig Scudamore is the Executive Chairman of the Premier League, a position he has held since June 2014. The Premier League is a private company wholly owned by its 20 Member Clubs who make up the League at any one time. Each club is independent, working within the rules of football, as defined by the Premier League, The FA, UEFA, and FIFA, as well being subject to English and European law. The Premier League is structured as a business with 20 football clubs holding an interest in the league. Each participating club in the EPL is treated as a shareholder and is entitled to one vote. When voting on rule changes or contracts it requires the support of at least a two-thirds vote or 14 clubs. The hierarchy of Chairman, Chief Executive, and Board of Directors oversee daily operations of The Premier League are elected by the clubs.

During the 16/17 season, the Premier League reported £6.4 billion in revenue, according to a report from Deloitte’s Sports Business Group. The clubs in the EPL have recently agreed upon a new contract detailing the agreement of shared TV revenue. As of 2019/20, increases in International Broadcast income is to be distributed based on where clubs finish in League. From season 2019/20, clubs will continue to share current levels of International Revenue equally, but clubs will also receive an increase based on where they finish at the end of the season. According to the Premier League Website, they state, “there are an International Revenue caps the ratio at 1.8:1. The highest revenue club can only be 1.8 times larger than the lowest earning club”(Premier League). The English Premier League is one of the highest grossing leagues in the world, which makes it interesting due to the fact a club has to pay transfer fees and high salaries since there is no payroll cap.

There is currently no sharing of gate revenues in the EPL, but the average matchday revenue from ticket sales food, and hospitality relating to the football clubs is roughly £41.55 million. Sponsorship/commercial revenue is interesting in the EPL because it earned from advertising and partnerships, it is displayed on the wall of the pitch, around the stadium and on the jerseys of the players an average of £72 million (Appendix A). In the EPL, sponsorship deals are uneven, low tier clubs have a sponsorship revenue of around £8 million, and the top tier clubs generate on average roughly £136 million, with Manchester United topping off the revenue spectrum with £276 million. Sporting Intelligence reports that the total average of 20 clubs generated £281.8 million for the 2017-18 season which increased from £243 million. European soccer relies on a system of promotion and relegation where good clubs are promoted into higher leagues and losing clubs are relegated to lower divisions. To gain entrance into the English Premier League, a club would have to win the Championship which is the league below the EPL. The bottom three clubs of the EPL get relegated to help with expanding the sport across the country and the world. For ticket pricing, since there are tiers of clubs across the Premier League offers tickets from £9 to £97. Arsenal tops the league at £97 when they play clubs that which are categorized, “category A” opponents. The least expensive ticket is approximately thirty euros and the most expensive is roughly sixty euros (goal).

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In an article written by Terry Robinson and Robert Simmons, they investigated the abolition of gate revenue sharing (GRS) in the English Football League in 1983 by concentrating mainly on player mobility before and after this event. This change is particularly useful for the research since there were no other substantive changes in labor market regulation when the league abandoned GRS. Since the clubs in the English Premier League were already created, and they chose to form the league we know nowadays, the EPL is unique in the way they move amongst players, players are contracted to the franchise. The EPL has a transfer window, which only allows transfers or players to be moved between certain dates. In the Premier League, these windows are from the end of the season to August 31st and even a shorter window of 1st to 31st of January. During these windows, a club can offer money to tempt another club to sell a player or tempt them to join. When a transfer occurs in the league, they usually do not trade players, essentially, they trade contracts. “One of two ways, many players will have a buyout clause in their contracts, which states that any bid of a certain amount must be accepted” (SBNation). When the player is still under club contract, they need to see how much money the selling club has and how much time is left on a player’s contract. On the contrary to American Professional Leagues, these contracts are binding. An under-performing player can not simply be released, the contract must be honored, the only way a player can be released is if it is mutually terminated. The only roster and movement restrictions in the EPL is that a club must have eight homegrown players from their system on their 25-man roster. In the Premier League, the highest paid player is Alexis Sanchez of Manchester United, in a leaked contract, revealed he earns £391,000-per-week, “Sanchez receives £75,000 for every game he starts, as well as a £1.1m annual signing fee. He will also be given £2m if he reaches a combination of forty goals and assists in a season. That means he could possibly earn around £25 million a year if he hits all his targets” (Independent).

There are only two glaring issues that I have found through research of the English Premier League, they are discrimination of all types and competitive imbalance on the field is affecting ticket sales. In sports, the sad truth is that there will always be discrimination, an organization called Kick It Out which challenges discrimination among other things. Lord Ouseley, Chair of Kick It Out, states, “Overall there has been a 59% increase in incidents of discrimination this season across the top four leagues. There have been 282 incidents reported to Kick It Out so far this season compared to 177 incidents last season” (Kick It Out). In the EPL, discrimination is not a huge problem because it is the most diverse League in all of Europe but there is no need for that in the game watched worldwide. I acknowledged earlier that there is a competitive imbalance but that leads to, “supporters of the home club, prefer to see their club play a much inferior club rather than attend a game that is predicted to be close in score. Essentially, home fans prefer to see their club win rather than watch a draw or see the home club defeated” (Buraimo and Simmons). This is the opposite of popular belief, I think this would only apply to the middle of the pack because the top tier clubs always sell out. In the article, it compares the EPL to the MLB, and they find more fans in American will enjoy the uncertainty of an outcome than the European fans. Because relegation, franchises have to spend money to make money, each season a club will receive around £100 million. If a club gets relegated, it will hurt financially because even though a club will receive parachute payments that equal to 55% of the broadcast revenues in the first year after relegation, all other revenues will drop drastically leaving a club in uncertainty.

In conclusion, the English Premier League is as strong as it has ever been. The League is being watched all over the world, even though the on the field product is not as good as it should be. The English Premier League started off in a black era of the sport but has grown into a giant. The EPL has a chance to compete with American sports because of a growing interest in soccer.

Works Cited

• https://economictimes.indiatimes.com/definition/english-premier-league
• Measuring competitive balance in sports using generalized entropy with an application to English premier league football
• https://www.premierleague.com/news/707720
• https://www.goal.com/en-us/news/premier-league-ticket-prices-in-2018-19-how-much-does-it-cost-to-/p3a46sx6u8kr14mmpp7kn5dwt
• https://www.sbnation.com/soccer/2014/7/28/5923187/transfer-window-soccer-europe-explained
• http://www.kickitout.org/wp-content/uploads/2016/01/1953_Kick-It-Out_Annual-Report_Web.pdf
• http://www.econ.unt.edu/~jhauge/Teaching/Sports/Buraimo.pdf
• https://www.independent.ie/sport/soccer/premier-league/manchester-united/bonus-clauses-see-sanchez-deal-worth-a-potential-25m-a-year-36899116.html

Appendix

Appendix A