As football continues to grow, so does its economic impact – last season the Premier League, UK’s top football league and its clubs contributed £3.36 billion to the nation’s GDP. Across the field, the total ecosystem of the League and clubs supports employment of more than 100,000 FTEs and added around £2.4 billion to UK Government coffers through tax receipts.
Founded in 1992, the Premier League is the organisational arm of the UK’s top-flight football competition. The League, which hosts 20 teams, is globally one of the largest in the world in terms of revenue, with only the US Major League Baseball and National Football League (American Football) out ahead.
To gain insight in the financial impact of the Premier League, accounting and consulting giant EY annually conducts research into the economic contribution of the Premier League and its clubs. The study, titled ‘The economic impact of the Premier League’, was developed using the firm’s so-called Economic Impact Assessment (EIA) methodology, an approach which it previously applied to the 2015 Rugby World Cup. The EIA was split into two distinct sections: the economic impact of the Premier League as a company; and the economic impact of the clubs competing in the football league. The methodology takes into account the transfer of payments from the Premier League to the football clubs in order to avoid any double counting of revenue streams, and looks at both direct, indirect and induced impacts*.
According to the researchers the Premier League, which involves 380 matches across a nine month period, generates direct and indirect revenues from a range of commercial activities, activities that also further enhance and preserve the dominance of the sport. The success of the television rights for clubs has seen the sport broadcast to 185 countries, which results in an audience of an estimated 730 million homes. Since the early ‘90s income from television has increased from £40 million to more than £1.7 billion in the 2013/14 season. Further revenue streams come from ticketing – the sport enjoys a stadium utilisation of over 95%, with average attendance standing at 36,691. Other revenues generated come from merchandise, sponsorship and advertising.
The effect of the various revenue streams created by the Premier League and the involved clubs generates considerable direct, indirect and induced value to the UK economy. Together they generate more than £6.2 billion in economic output, of which £3.4 billion contributed to the overall UK GDP in the 2013/14 season.
In comparison, according to Sport England, all sports in the UK generate a direct GVA of around £20.3 billion, with EY’s study into the Premier League and its clubs finding a direct GVA of £2.22 billion, suggesting that £1 of every £10 of value is generated by football’s top-flight competition. Indirect activities generate £620 million, while induced economic activity adds a further £490 million.
The Premier League and its clubs also support a considerable workforce through jobs, numbering 103,000 FTEs in the 2013/14 season. The overlarge number of these jobs (95,483) stem from indirect (60,145) impacts, with induced impacts producing nearly 30,000 jobs, while direct impacts account for the remaining employment opportunities. The main reason for the large number of indirect employment comes from the labour intensity of its value chain, such as hospitality, catering and retail.
The Premier League itself employed only 99 people directly in 2013/14, but further supported 5,478 jobs through the value chain (which includes those supported as a result of parachute payments and solidarity contributions) and 2,294 through induced effects.
On the back of the massive economic impact, the Premier League generates considerable revenue for Government coffers, with the combined contribution of taxes hitting the £2.4 billion mark in the 2013/14 season. Employee PAYE contributions is the largest segment at £941 million, followed by employer National Insurance contributions at £475 million, while employees contribute around £276 million. VAT generates around £390 million, with corporate tax and business rates (on all facilities and stadia) generating £298 million and £25 million respectively.
The Premier League contributed £88 million in taxation in 2013/14, while twenty clubs accounted for the further £2.32 billion.
Football tourist spending
An analysis featured by Consultancy.uk last week revealed that the UK economy pockets €940 million, up from €815 million in 2010, from tourists who travel to Britain to attend a football matches in one of its stadiums.
* Direct effect arise from the initial increase in economic activity (e.g., the additional GVA generated, the additional employment created and the taxes that are contributed to public finances), while an indirect effect arises from the additional demand for goods and services along the sector’s supply chain. Induced effects come about as a result of households spending a share of the additional income generated on the consumption of goods and services.