Football must wait for the financial final act

703

Interesting financial news from Deloitte that FA Premier League clubs turned a profit in season 2013-14, the first time the combined results of the top 20 clubs in England have been in the black for 15 years.  The reason for the £190m surplus was a 29% increase in revenue, largely as a result of the-then new TV deal, which runs until summer 2016.  Wages rose only 20% that year.

Clubs will be happy to have stemmed the losses, although the first year of a new TV deal is always their high water mark, but the underlying bubble remains a problem.  Income cannot continue to rise at heady double-digit rates, shareholders of BskyB and BT will eventually see to that, despite the fact that next big boost from TV is already confirmed for season 2016-17.

The play to watch is not if or when a dysfunctional football sector gets its act in order, it’s when an almost-as dysfunctional broadcasting industry reaches equilibrium.  We’ve discussed before Sky’s absolute need for Premier League rights to secure their place as a prime broadcaster.  BT, Virgin, Netflix and others are busy eating into their movie, news and entertainment broadcast market.  It’s this need which is driving revenue towards the English Premier League.  Without English Premier League football, Sky are vulnerable.

Sky took the first step towards passing the financial pain of their new deal down the line to consumers this month in the form of a price increase.  The company have successfully done this before, many low income families are now paying £70 per month for satellite TV, and subscriber losses after previous increases have been almost non-existent.

Millions of people have high stakes skin in this game: subscribers, Sky and BT executives, their respective shareholders, Premier League clubs and the dependent ecosystem below them.  All the spinning plates have remained in the air, despite price increases through a recession, but one fundamental remains:

This is a bubble.

Speculators are confused when they only see a market inflate over a long period that it’s not a bubble.  The moment these TV deals become unaffordable to subscribers, or more likely, to the broadcasters, the bubble will burst.

Debts are high, profitability is here, but the underlying commercial pressures to stay in the league remain, so wage pressure will continue to eat away at available funds.  Those outside of the bonanza have to figure out how to compete for audience and players, while waiting on the final act.

Click Here for Comments >
Share.

About Author

703 Comments

  1. West End of East End on

    Was in FF for Friday pick me up, the fat one is on course for a court date with Sports Direct and is asking for and receiving donations for a lawyer to help fight his case. Talk about picking your battles, this one could be fun…

  2. Can anyone one tell me what has happened to the “forgotten man” Tom Rogic? Is he still on the books at Celtic?

     

    Cheers

  3. Leftclicktic,

     

     

    Thanks for that but I am still unsure where he is now. Is he still injured?

  4. West End of East End

     

    12:00 on

     

    27 March, 2015

     

     

    Was in FF for Friday pick me up, the fat one is on course for a court date with Sports Direct and is asking for and receiving donations for a lawyer to help fight his case. Talk about picking your battles, this one could be fun…

     

    ———————————

     

    Not being pedantic mate – but WHICH fat one you referring to?! :-)))

  5. Just read that 2 monkeys escaped from Belfast zoo. One had been recaptured but Zoid is still out there. Officials could not confirm if Zoid was wearing a football top……..

  6. sipsini

     

    12:36 on

     

    27 March, 2015

     

    Natknow.

     

     

    Mark Dingwall.

     

    —————————

     

    Ah! The Dark Mingwall in court? Good enough fur ’em.

     

     

    Excellent.

  7. West End of East End on

    NatKnow – Dingwall, he was trying to be smart in buying a single share in Sports Direct then asking for a raft of information from them, SD have called him out and they go to court on April 8th I think, he’s now asking the huns to help fund a brief….

  8. ASTAIRE 2.35 Doncaster NAP

     

     

    Best of luck everyone but if Barcamole tips Bronze Angel to win the Lincoln and it does, concessions all round required.

     

     

    EC67

  9. Eurochamps67 10:06 on 28 March, 2015…………..

     

    Just logged in and hey, you got it in one, and right on all counts, although Bronze Angel has been laid out for the race with the stated proviso ‘it will need a group race type performance to carry top weight’……… I believe it has still got a wee bit in its locker, and that is, perhaps, why they never sent it to Dubai for the summer as was the original plan, apparently!

     

     

    So…………

     

     

    BRONZE ANGEL 3:45 Doncaster……….

     

     

    Regards & Hail Hail

     

    TBM

  10. summer = their summer, which it is all year round..Ach you what I meant/mean……..

     

     

    TBM

  11. Best of luck to Thebarcamole.

     

    Just logging into Bet365 to have a wee saver on it as I took Mange All a few weeks back @10s.

     

     

    EC67

  12. Lucky beggar in the 2.35 at Donny please!

     

     

    Do any of you bhoys know if I can use my mobile to bet with my uk based bookies when in Florida? I’m away during the grand national among other things… Good luck all

  13. EC67………

     

    Mange All clear fav now at 13/2 with Bet365 but Bronze Angel out to 25s…………

     

    TBM