Monday, 14 November 2011

The Championship & West Ham Football Finances Explained



Back in 2007 the BBC & Sky completed a deal to buy the domestic TV rights for the football league for £264 million over 3 years.

Under the deal BBC gets first choice of 10 Championship games but cannot pick one team more than twice.  Sky get 65 matches in the football league 45 of which come from the Championship.

This deal will expire at the end of this season to be replaced by a new Sky only deal worth just £195M over the next three seasons.


In response to a twitter question I recently wrote to the Football league to ask them how TV rights, overseas rights,  prize money, facility payments and premiership solidarity rights are distributed throughout the league and in particular the Championship.


Hopefully many of you will know that a new parachute payment deal which came in this season means a team like West Ham will receive £16 Million per year parachute payment from the Premiership for the first two seasons followed by two further seasons at £8 million pound per season. This new £48 million package per relegated team was ratified last season and is most generous of all parachute deals to date.


The Premiership  also pay a solidarity payment to other teams in the league outside the premiership but this excludes those receiving parachute payments like West Ham. Each Championship club receives £2.2 Million per season up from £830,000 in the previous deal.
As for the Sky/BBC money, the £88 Million per year is split according to rules in the League articles of association section 7.1. 

The first £33 million of revenue is allocated 59.6% to the Championship, 23.9% to League 1 and 16.5% to League 2

Between £33 million and £67 Million the revenue is spilt 80% to the Championship, 12% to  League 1 and 8% to League 2
Above £67 million the revenue is spilt 90% to the Championship, 6% to league 1 and 4% to league 2.

If you do the calculations as I have then each Championship team get £2,740,000 per season from the BBC/Sky deal of £88 Million. This means the 24 Championship teams share £65,760,000 of the £88,000,000 revenue.

If your match is chosen by BBC or Sky then you receive an extra facility fee worth £100,000 for the home team and £10,000 for the away team.

Overseas broadcast rights add another £7 million per season which using the 90% to the championship rule as extra income means that  each championship club picks up another £260,000 of income per season.

This means each championship club receives £3M per season in TV rights plus facility fees for each match shown on BBC or Sky.


Unlike the Premiership, Championship merit payments for league position are extremely limited. The winners of the league receive just £50,000 and the runners up £25,000. I guessing promotion to the premiership is prize enough and so the prize money is slightly irrelevant.


There is a reduction in  TV rights revenue for the football league from £264 million to £195 million from next season after Sky was the only bidder for the rights. The £69 million short fall will mean domestic TV rights falling to £1.88 Million per season for each Championship team with £250K of Overseas rights. This adds up to just over £2 Million nearly a £1 Million drop per club on previous seasons.

As for West Ham finances looking at their 2010 accounts

The West Ham accounts filled in 2010 while we were still in the Premiership showed a turnover of £71.7 Million pounds with a Wage bill of £50.3 million. Compensation payments for loss of senior management were £4.4 Million and admin/running costs were £20.4 Million. This left us with a £3 Million loss for the year.

Our wages accounted for 70% of turnover which was a lot closer to the average 67% of the premiership than previous seasons under the biscuit baron.

Income in our last year of the premiership from season tickets and match day tickets raised £16.9 Million.

Broadcast rights and sponsorship added £38 Million.

Commercial activities contributed £12.7 Million

Season tickets sales fell from 23,100 to 22,475 in that year and average attendances were 91.7% of capacity of the Boleyn ground.


Premiership documents show West Ham received the 3rd least revenue last year after coming 20th but earning above average £7.7 million of facility fees. The total was worth £40.7 Million pounds while Manchester United received the most at £60.4 Million for that season.

The full figures can be found on the Premier league website below.


The massive gulf between the two leagues is easy to see, dropping £40.7 Million by coming last in Premiership to £19 Million at the top of the Championship. The drop means a massive short fall of £21.7 Million which is why David Gold and David Sullivan needed to inject £25 million into the club this season and will need to be the same again next season if we are not promoted.


If we remain in the championship for a third season an extra £33 million will need to be found and after 4 years that rises to £41 million per season gap. You can see how important it is to get promoted at first attempt or very worst second attempt!


We can and have cut the wage bill but if you want get promoted you have to compete with everyone else in championship often at premiership level wages.


I think the two Davids should be congratulated for putting their hands in their pockets!


Sources:

Football League Finances Source: Email from Football League dated 1st Nov 2011 & Articles of Association Section 7 http://www.football-league.co.uk/regulations/20110629/section-7-broadcasting-sponsorship_2293633_2125733

West Ham Finances Source: 2010 Accounts  from WHUFC.com
http://www.whufc.com/page/FinancialReports/0,,12562,00.html


Premiership Finances Source: Premier League Press Release for 2009-2010 accounts
http://www.premierleague.com/staticFiles/fe/72/0,,12306~160510,00.pdf



No comments:

Post a comment