The European Super League has raised questions about how football clubs are funded and why they end up swimming in debt. Here’s what the experts say.

Super League

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The new European Super League (ESL) came crashing down recently after nine football clubs pulled out of the plans following huge backlash from fans, politicians, and players.

The 12 teams that were about to join the elite breakaway league would have been handed between 100 million to 350 million euros ($120 million to $420 million), the Financial Times first reported.

The ESL was also planning to receive $4.2 billion in debt financing from JPMorgan over a 23-year period, before the US investment bank said it “misjudged” the deal after the majority of the teams withdrew from the league within 48 hours.

Now, a fan-led review into English football will take place to assess clubs’ finance, ownership, and supporter involvement in the game.

But it begs the question: where does all this money come from in the world of football? Overall, there are three main sources of revenue: broadcasting, commercial, and matchday revenue. 

TV broadcasting revenue

TV deals are one of the most important sources of income for football clubs. which can be sold domestically and internationally. Leagues, such as the highly popular English Premier League, own the television distribution rights of all their games.

TV channels bid for the rights to air the matches and the football leagues sells them to the highest bidder. For the Premier League, this happens every third season and is typically Sky Sports, BT Sports, and most recently, Amazon Prime. 

Robert Wilson, football finance expert and lecturer at Sheffield Hallam University, told Insider that broadcast revenue typically makes up around 70% of the income of most Premier League clubs.

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Although each club gets an equal share of the deal from the Premier League, they also receive merit payments — if they’re shown on TV more, they get paid more.

Wilson said that last year, Liverpool, who won the Premier League, earned around £150 million ($208 million) from the domestic TV rights deal, while Norwich City, who came last, earned around £110 million ($153 million). Relegation is therefore a costly and daunting prospects for clubs near the bottom of the league.

Read more: What Wall Street bankers really thought about JPMorgan’s $4.2 billion European Super League deal

The rights to show Premier League matches between 2019 and 2022 were sold for nearly £4.5 billion ($6.2 billion) in 2018, with Sky Sports getting hold of the majority of the games. This was a drop from £5.1 billion ($70 billion) in the 2016-2019 seasons.

Reports suggest that when broadcasters bid for 2022-2025 TV rights this summer, they won’t be prepared to spend as much as they did in previous years. Since BT Sports and Sky Sports agreed to a content-sharing deal in 2017, competition dropped between TV channels for the need to bid big, The Guardian reported in January.

“They were trying to produce — in my view — more football and the market was probably saturated,” Wilson said.

Commercial revenue

Another big money pot for football clubs is commercial revenue — in other words, income from sponsorship and …read more

Source:: Businessinsider – Sports

      

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