The Financial Side of Football

Football is the most watched sport globally and rakes in billions yearly. Our very own Premier League is loved all over the world, with the big teams boasting a global fan base in all continents. Like any business, these clubs need money to be flowing into their clubs in order to keep them going, but apart from the small handful that do enter administration the vast majority and consistently pulling in large revenues. According to football finance experts Deloitte, the total revenue of the all 20 Premier league clubs reached a record of £2.36 billion in 2011-12 and is expected to have grown to £2.5 billion in the 2012-13 season. But how do they get these colossal revenues?

One of the biggest earners for clubs is the controversially high ticket and merchandise prices. In 2011-12, 27% of the £2.36 billion revenue was from commercial and retail sales, such as shirts and other merchandise. The top 5 clubs (which includes Spurs) accumulated £384 million revenue from merchandise and commercial sales alone. The match day experience that fans pay for only contributes a small 23% which is lower than expected but this low percentage is actually a very large figure and is one that has come under a lot of scrutiny in recent weeks. In 2012, the match day sales (e.g. tickets, programmes, food and drink) totalled amount close to £495 million. The remaining 50% comes from broadcasting, which is huge all over the world and this year BT have signed a £5.5 billion television deal with the Premier League which will reportedly boost the 2013-14 season revenue up by £600 million (25%). However despite this massive investment into the Premier League clubs seem to be raising ticket prices, causing anger among supporters. The inflated prices have led to protests, as many believe clubs are using fans loyalty to exploit them and charge such high prices.

So, what benefit does the economy see from the large revenues generated by football? Football is still a service and so it contributes to the UK's GDP. Every ticket and shirt sold adds that little bit extra to our GDP and with these high prices that little extra is slightly bigger. Unfortunately this exploitation of fans, is good business by clubs and benefits the economy so why should they care. Footballs fans will remain loyal to their club and will buy the shirts and merchandise and attend games, so clubs use this high demand to raise prices as they know there will still be a high demand, no matter what the price is. Therefore they sell their goods and GDP goes up.