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New EPL TV rights deal is gargantuan; Spanish clubs want fairer distribution

The window for Spain to get its act together is swiftly closing, and for the most of the rest of Europe to compete financially with top English clubs as well.

The financial success of the English Premier League continues to amaze and frighten.  The current TV deal, which began in the 2013-14 season, gives the league just over a billion pounds per season, which was a hefty increase on the 550-600 million that had been in place since 2007.

But the new deal, announced today, is mind-boggling.  Sky and BT have agreed to pay 5.5 billion pounds for the three seasons beginning in 2016--1.7 billion pounds per season.

Already, half the top 30 clubs in earnings in Europe are English, and all 20 English clubs are in the top 40.  Yes, the EPL distributes TV money far more equally than Spain, Italy and the like.  Yes, some of this money will doubtless find its way down to clubs in the 'lower divisions'.  But this sum of money will simply swamp the Financial Fair Play regulations and make a joke of the 'level playing field'.

If we simply take the increase in the contract (700 million/year) and divide it by 20, we get a 35 million increase per team.  If we add that 35m to the moneys the clubs reported late year (per the Deloitte Money League report) you can see the big effect is not so much at the top--Real Madrid, Barcelona, Bayern Munich and Paris St. Germain are still going to be in the top five, though the gap between them and Manchester City, Chelsea and Arsenal will be much reduced--but in the next ten, where clubs such as Tottenham, Newcastle and Everton should be able to leapfrog Atletico, Napoli and Inter Milan.

How will this affect the transfer windows and player movements?  I'd expect a further stratification of the market into two tiers--those players who teams in the top 10 of the money league fight over (a €50m David Luiz, for instance) and the remainder, who move for €10m or less among clubs who are not so well off.  When the new deal comes in (which is not for a couple of more years) expect the uninspiring mid-to-lower table EPL teams--Swansea, West Brom, Stoke, etc.--to be willing to throw more money around in the hope of remaining in the EPL.  After all, spending €20-30m on players in January is nothing if by getting them you are able to garner €80-90m in TV revenues.

My personal feeling is the financial disparity between the English Championship and Premier League is becoming too great, and maybe some of this increase should be diverted to that second tier.  And maybe the clubs will decide to use some of the increase for infrastructure improvements or the like instead of increasing player salaries.  I'm not holding my breath for either one.

Meanwhile, in Spain, teams are realizing the current distribution system is  out of hopedate.   The worst-perfoming team in the EPL, Cardiff (relegated!!), earned €30m more than Atleti, who won the league!  And that number will only grow with the new TV deal.

The current plan is for the Spanish TV broadcast rights to be awarded centrally rather than negotiated by team, as has been the case.  AS reports the assumption is the rights will bring in €800m euros (I'd think that might be a bit low, but we can use it as a starting point).  10% (80m) would be for Liga Adelante.  The other 720m would be divided according to sporting results, "social implementation or resource generation" (I think is so the big teams won't lose significantly under the deal), and there would be a guarantee that the difference between the top and bottom team would no bigger than ~4 to 1.

If we assume Real Madrid and Barcelona will get what they have now, that would imply the bottom club would get about €30-35m, which is comparable to what Sevilla, Athletic Club, and Villarreal received last season, and is better than everyone except Valencia (48m) and Atleti (42m).

My guess is that clubs like Villarreal should see an increase of €10-12m in their TV take, though the exact amount isn't clear.  Will this actually happen?  Well, at a meeting last week, all clubs (except for Athletic Club, for some reason) urged the Spanish government to pass a bill requiring the TV distribution to be more fair.  Remember too that the European Union is looking at La Liga, focusing on state aid and the like, but also fair competition.

This morning, the Espanyol president waded into the fray, suggesting the league might be willing to strike unless this 'shameful situation' is resolved.  We shall see.

It doesn't appear any of the continental leagues are going to be able to challenge the EPL deal overall, but reducing the disparity between the top and bottom team--which is far greater in Spain than anywhere else--is a good focus.  But the problem is making the sums work out.  If in fact centrally-negotiated rights only bring in about as much money to be split among the clubs as there is now, and Barcelona and Real Madrid are not willing to receive less under a new deal, then it's hard to see where the money comes from to make everyone else's take higher and fairer.

Even apart from the general arrogance of the top two when it comes to other league clubs, realize that since the Deloitte publication, exchange range movements have only benefited English clubs, as the Euro has declined by a bit more than 10% against the pound sterling since the report was prepared.  Using today's exchange rates, Manchester United would have already overtaken Real Madrid as the 'richest club' in Europe.

Of course, at some level money doesn't translate directly into success: whether Barca makes more or less money than a Manchester City or Chelsea isn't that critical, but it does seem the 'big two' are overly concerned with such things.  And another €50m for Chelsea, Man City and Arsenal beginning in 2016, on top of exchange rate movements, probably drops Barcelona to 6th or even 7th in the 'money league' behind those teams.  So their willingness to sacrifice money they're getting in TV rights for the benefit of all of La Liga may be fairly small.


Expect to hear much more on this topic in the next weeks, I'd say.