The Death of the Premier League?

In 1991, a group of 20 soccer teams in England entered into an agreement to break away from the existing English Football League and form their own, independent league.  They wanted freedom from the lower-level teams so that they could take advantage of increased revenue from TV and sponsorship deals (and not have to share their profits with the smaller teams).  In the Fall of 1992, the English Premier League was born, with the freedom to negotiate its own TV broadcast rights and sponsorship deals.

Fast-forward nearly 20 years, and the EPL has become the most watched and most lucrative soccer league in the world.  Its current TV broadcast deal is worth £3.2 billion (over $5 billion US), which according to Premier League rules will be shared equally by each of the league’s 20 teams.  Yes, Norwich City will be getting the same slice of the pie as Manchester United.  Seem unfair?  Executives at Liverpool agree with you.

This week, Liverpool Director Ian Ayre has been quoted as saying that he is in favor of each club selling its own TV rights rather than sharing them equally with the other teams.  He is suggesting a system similar to  Spain’s La Liga, where each team is able to sell its own TV rights.  It’s a great deal for teams like Barcelona and Real Madrid, who increase their wealth with huge TV earnings.  Not so great for teams like Levante, who lack the international appeal of players like Cristiano Ronaldo and Lionel Messi.

Ayre told the UK newspaper The Guardian that failing to keep up financially with leagues like La Liga could eventually mean the end of the Premier League. 

“What we are actually doing is disadvantaging ourselves against other big European clubs. If Real Madrid or Barcelona or other big European clubs have the opportunity to realise their international media value potential, where does that leave Liverpool and Manchester United?  The whole phenomenon of the Premier League could be threatened.

It has become increasingly clear in the past few seasons that many of the world’s top players will follow the money, and Ayre is concerned that the EPL will lose more and more players to Spain as the gulf in wealth increases.  Without marquee players, the EPL’s top teams will struggle to compete in the Champions League, and the EPL will eventually lose its status as an elite league.

Teams like Manchester United, Liverpool, Chelsea, Arsenal, and even up-and-coming Manchester City have a lot to gain by a deal like this, because they will command top dollar for their TV rights.  But what about teams like Norwich?  Like Stoke?  Where will a deal like this leave them?  If anything can be learned from Spain, it’s that when the teams negotiate their own TV rights deals, the rich get richer and the poor, well, they stay poor.  La Liga is generally seen as a two-horse race, a yearly battle between Barca and Madrid.  The gap between them and the rest of the teams is large, and continues to grow.  Right now, the EPL is the most competitive elite league in Europe, but that won’t last long if Ayre has his way.

Ayre’s plan will undoubtedly make a lot of money for the top five or six teams in England, which will allow them to compete with the rest of Europe’s elite.  But in doing so, will he actually destroy the Premier League, the very thing he is claiming to try to save?

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