Saturday, 14 January 2012

Who do you think you’re kidding Mr Wenger if you think that Sky will run?


Arsenal manager Arsene Wenger, never a man to stray away from controversy re-entered the arena with his claims that football has “sold its soul’ to television companies and said Premier League bosses must intervene to ensure fixture scheduling was fair to clubs. However he does accept the importance of the money that TV rights bring into the game. Does Mr Wenger have a point or should he be grateful when considering the reliance that many English clubs have on the income received from TV rights and broadcasting deals?

Mr Wenger’s claims of unfairness stem around the fact that all five of Arsenal’s games in January have been moved for the television cameras. I’m sure he has a point but the bigger picture remains that for many clubs in the league without the money brought into the game from TV broadcasting rights they’d be facing the wall. Arsenal luckily for Mr Wenger remains one of the best run clubs on a financial basis anywhere in the world. Only Bayern Munich can realistically be in with a shout of being able to claim they are run on a better basis.

In 2010 Arsenal’s turnover was £382 million of which over one fifth was derived from TV and Broadcasting monies received to the tune of £85 million. Arsenal finished with a pre-tax profit of £56 million. Arsenal’s debt stood at £136 million most of which was occurred after the building of The Emirates which had helped to bring in more revenue than TV standing at an impressive £94 million. The interest due on the debt annually stands at £19 million. With turnover up £66 million on the previous season and a sensible transfer policy, Arsenal are well on course to reverse their debt in the next few seasons. Interestingly the owners at Arsenal didn’t put a single penny into the club for that financial year. Compare that with Aston Villa for example where £206 million was pumped into the club; £116 million in cash and £90 million in loan notes or at Blackburn Rovers where £104 million was put in made up of £100 million in capital and £4 million in interest free loans. Of Aston Villa’s £91 million turnover 57.14% was from TV money. Blackburn’s total of £58 million was even more reliant with 74.14% of the total coming from TV money. So Arsenal in theory can afford to be able to moan a bit louder than most clubs but you cannot escape the fact that football income from TV if offset against wages would have allowed Arsenal to pay off 77.27% of their final wage bill which stood at £110 million.

Whilst Mr Wenger bemoans his fixtures being re-arranged for the sake of television, over in La Liga television plays an even bigger part in the gulf between the clubs in the Spanish top flight. Arsenal may have finished 22 points behind eventual League winners Manchester United last season they finished 29 points above Birmingham City who were relegated to the Championship having finished 3rd bottom. Contrast this with La Liga and Villarreal who finished 4th the same position as Arsenal in the Premier League. Villarreal’s point haul of 62 points was 34 points behind the total of League Winners Barcelona who finished the season with 96 points. Second placed Real Madrid finished the season on 92 points, 12 more than the English Champions Manchester United. Barcelona’s goal difference was a staggering +74, Real Madrid’s +69. In comparison Manchester United’s were +41 and Chelsea’s +36.

The most astonishing fact for Villarreal was that they finished closer to the 3rd relegated team Deportivo than they did to the eventual winners Barcelona, separated by just 19 points. Villarreal were even closer to Almeria who finished bottom on 30 points than they were to catching Barcelona at the top.

Television revenue in La Liga has created the wide gulf. Clubs in La Liga are able to negotiate individual deals with TV companies and ultimately it’s made La Liga into two leagues. One between the top two of Barca and Real and a separate league between the remaining 18 competing clubs. This occurrence isn’t however just a Spanish problem, just look north of the border where the Scottish Premier League is dominated by the two Glasgow giants Rangers and Celtic. Last season’s champions Rangers finished with 93 points one ahead of their closest rivals. Third placed Hearts finished the season on 63 points, 30 off Rangers or to look at it another way a full ten wins behind just to have drawn level on points. Equally as impressive as the top two sides in La Liga Rangers finished with a goal difference of +59 and Celtic +63. Although Scottish football doesn’t have the same levels of income from TV that English football has and certainly not of La Liga’s top two with their own deals, the revenue generated on the turnstiles and from European competition year in year out has created its own two tier league structure in Scotland to mirror that of Spain. In England you can claim that on their day any club is capable of beating any other where as in Spain and Scotland such a claim wouldn’t hold as much weight even if you do get the occasional shock defeat in both leagues from time to time.

It’s estimated that combined Barcelona and Real Madrid receive 125 million Euro’s per season from TV deals. That figure is just on the domestic market and doesn’t include income from the Champions League deals. That figure in context to the Premier League is three times the money that Champions Manchester United got from TV income. Villarreal received 42 million Euro’s from their TV deal. Some of the smallest clubs in the league had deals worth only in the region of 15 million Euro’s. It’s not hard to work out how the Spanish League ended up with their players going on strike when 50 million Euro’s went unpaid from the end of last season. Under a new proposed shared domestic TV rights deal in La Liga, Barca and Real are still set to receive a combined 35% of the revenues coming in with the rest being shared between the remaining 16 clubs.

So unlike in England with Mr Wenger’s comments, you’re unlikely to hear the same murmurings coming from Spanish clubs as you do here. The real issue for them is the complete imbalance of TV money instead which presents such a wide gulf in their league. I’m sure given the opportunity to be able to receive the same amount of money as Arsenal do every season from TV income, the remaining sixteen clubs would quite happily play at 2am on a Thursday morning every week to be given the same.

The bottom line and the crux of the matter is football and TV now walks hand in hand. Since Sky entered the game back in the nineties the two parties would not be able to exist without each other anymore. Why did Sky TV pay an astonishing £1.782 billion for the rights to screen 115 games a season between 2010 and 2015? Because they make their money back and some.

Arsenal have the right as I mentioned to moan when they can boast gate receipts higher than the money they receive from TV deals and can feel rightly aggrieved to have had to change all five fixtures in a month to suit TV. However the coverage they receive will be worldwide. They will be watched by fans all over the world who will watch the likes of Robin Van Persie which will translate in shirt sales for example resulting in a higher income for the team. The wider the audience the more they will be able to claim from sponsors. If you can say to a sponsor that your advert will be shown in five consecutive games on TV in one month, in puts you in a much stronger position than a side like QPR for example who are reliant on the money of new owner Tony Fernandes to pay the reported wages of Joey Barton who is said to be on £80,000 per week when their ground Loftus Road has a capacity of just 18,360 and wouldn’t generate the required amount to pay the total wage bill every season.

So in conclusion whilst Mr Wenger might be bemoaning the rescheduling of the fixtures I’m sure the Arsenal board and commercial department aren’t singing from the same hymn sheet. Perhaps he should spare a thought for the teams outside of the top two in the Scottish and Spanish Premier Leagues as they search for a more level playing field. Football is a business first and foremost now. You cannot escape that fact. If you get into bed with Rupert Murdoch sadly you have to pay the price. So instead of moaning I’m afraid you’re just going to have to accept that football is no longer what is used to be, namely a sport. What happens on the pitch for 90 minutes is now simply a by product or an afterthought if you will.

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