Promotion to Premier League worth £170 million

14 June 2019 Consultancy.uk

English football is famed around the world for its high-spending clubs and colossal revenues, but life is deceptively precarious beyond the top-tier of the national sport. While several clubs entered financial distress in 2018/19, a new report has estimated promotion to the Premier League can generate an additional £170 million over three seasons, illustrating the widening gulf between football’s haves and have-nots.

At the end of the domestic football season, a report by Big Four firm KPMG revealed that Real Madrid had become the ‘most valuable’ football club on earth, by becoming the only club besides Manchester United to see its enterprise value surpass the €3 billion mark in 2018. Amid the on-going hyper-commercialisation of modern football, fans are constantly bombarded with big money statistics like this, making it all too easy to be swept along with the belief the beautiful game is something of a bottomless piggy-bank. This is particularly true of English football, thanks to its seemingly unstoppable ability to better monetise its television rights.

Beyond the hefty broadcast revenues of the English Premier League, however, many of English football’s oldest clubs are in a financially precarious state. Illustrating the level of risk many clubs face in the scrap to access elite football’s proverbial land of milk and honey, more than 23% of English Championship clubs and 40% of Scottish Premiership teams believe their finances need urgent attention, or are a cause for real concern – evoking memories of 2008 FA Cup winners Portsmouth and former Scottish champions Glasgow Rangers’ respective periods of administration in 2012.

Promotion to Premier League worth £170 million

To the despair of their loyal fans, then, throughout the 2018/19 season a number of lower-tier sides have flirted with collapse. While Notts County’s beleaguered ownership endured a face-off with tax authorities, the club was relegated from the Football League for the first time in its 157-year history. Elsewhere, Blackpool FC entered into receivership and administrators were also placed in charge of Bolton Wanderers at the end of the season.

Now, new research from professional services giant Deloitte has revealed a further stratification of the English football league system, with the news that promotion to the Premier League is set to generate an additional £170 million over three seasons for the three clubs promoted from the Championship this year. According to analysis from Deloitte's Sports Business Group, that figure could even increase to £290 million over a five-year period if champions Norwich City, runners-up Sheffield United, or play-off winners Aston Villa avoid relegation in their first season.

In the last ten seasons, 19 of the 30 promoted clubs avoided relegation in their first top-flight season, showing it is a more than doable proposition for the trio. However, even if the Canaries, Blades or Villains do face the drop in 2020, they will receive relegation parachute payments in 2020/21 and 2021/22 totalling around £75 million. The £170 million incremental revenue is therefore a combination of extra revenue which the Blades United would earn from playing in the Premier League in 2019/20 (at least an extra circa £95 million, mostly from broadcast and commercial revenue from the Premier League).

Commenting on the news, Sam Boor, Senior Manager at Deloitte's Sports Business Group, said, "Promotion to the Premier League provides clubs with the financial resources to make strategic investments… given the relatively equal distribution of revenue amongst Premier League clubs, it provides promoted clubs with a chance to avoid relegation when they get there. However, significant investment in playing talent in an attempt to retain Premier League status is risky and does not guarantee safety. Recent seasons have seen some promoted clubs survive after restrained spending, while others have gone down despite big spending."


Profiles

More news on

×