Wednesday, 29 August 2012

Two different worlds: The Premier League and the Football League

 In his debut article for The Football Front, Olly Howells takes a look at the difference in finance between the Football League and the Premier League.

 So, how much is the difference between the clubs who play their trade in the top flight of the footballing pyramid and those who endeavour to join them? What’s the difference between earning success in the Premier League and in the basement leagues of English football? How do football league clubs spend whatever money they have on progressing as a club compared to the footballing elite? I look into how different the running of clubs is between clubs from every division of league football.

Income:

Prize money is probably the most understandable way that Premier League clubs earn more money than lower league sides. With an estimated £800,000 given for each place, the winner of the Barclays Premier League scoops an impressive £16,000,000 to go with their title as champions of England. This is compared to the winner of the Championship, just one tier below, where the winner only takes £50,000 in prize money. This is then dropped to just £25,000 in League 1, and an estimated £26,000 in League 2. Then there’s qualification to continental competitions such as the Champions League to add to the equation, a competition where clubs receive roughly £15.7m television rights for competing, with prize money of £7.8m on offer to the winner. 

Television rights bring in millions of pounds to the top clubs in English football, everyone knows that, but how much so? Premier League winners Manchester City received a staggering £60,602,289 for television rights in the 2011/12 season, and this was only for the Premier League, not including the UEFA Champions League, FA Cup or Carling Cup (now Capital One Cup). The lowest earners in terms of TV revenue in the premier league were Wolverhampton Wanderers, but don’t despair for them too much, as they still received an incredible £39,084,461. There is no sign of these figures shrinking either, with Sky Sports and BT recently paying £3.018 billion for the right to televise top flight English football for the next 3 years, over £1 billion a season. Compare this with the bottom of the football league ladder, where teams are not paid the cursory £32.5m to each club such as with the premier league, but on a game-to-game basis, and with a far smaller sum of money, rarely breaking the £100,000 barrier. 

Sponsorships obviously vary from club to club, as well as league to league, but in the 2009/10 season, Manchester United were receiving over £14m a year from their shirt sponsors AIG, a figure which will have only risen when United signed a deal with current shirt sponsors, insurance company Aon. My club Oxford United are sponsored by another insurance company, Bridle Insurance, and are extremely unlikely to be receiving a penny over £100k a year for this deal, although as details are kept much more under wraps than in the higher levels of the game this figure cannot be confirmed. This is also likely to be one of the most lucrative shirt sponsorship deals in League 2, due to Oxford having one of the largest fanbases in the league.  
These are the three main sources of income to football clubs in the English football league, but the most important part of running a club successfully is how this money is reinvested into the club, whether that be behind the scenes or in the playing staff, a decision usually varied by what division the clubs are in due to financial similarities. 

Premier League clubs have a clear tendency to spend the majority of their income on new personnel on the pitch, with a staggering £508m spent on players in the 2011/12 season, an average of £25.4m per team. This appears to be a recipe for success in the top flight, with the highest spenders of the season Manchester City, who splashed out over £76m on players, coming out victorious, and the three relegated sides were all in the bottom half of the table in terms of spending. This spending extends into the wages of these players, with City players receiving an average of £4,486,580 each a year. Players for one of last seasons relegated sides, Bolton Wanderers, averaged a salary of over £1.4m a year, a figure that would be larger than the entire playing budget for a majority of League 2 sides, and even a few League 1 sides. 

Championship sides have a different dilemma, due to the dramatically different financial situations of the clubs in the second tier. With a much smaller amount of money brought into these clubs through television rights and sponsorships, finances are a much more pressing issue to these clubs; especially while clubs outside of the top division seem to be punished more severely for financial frailty. Premier League giants Manchester United are said to be in over £423m worth of debt without punishment, while clubs such as Chester City (formerly of the Football Conference, now Blue Square Bet Premier), were forced into liquidation due to a debt of just £26,125. The obvious example of repercussions of poor financial control is Portsmouth FC, who currently have just 17 players on their books after the club narrowly avoided liquidation themselves, after poor running of the club caused the club to enter administration for the second time in three years, with the club in around £58m of debt. This may seem like an outrageously high figure of debt, but compared to the £423m of debt that Manchester United find themselves in, while still being allowed to remain active in the transfer market, it seems ludicrous that Pompey should suffer so heavily while United remain unpunished. 

These are all reasons why Championship sides have to find a successful balance between investing money into playing and backroom staff, upgrading facilities and keeping their club running smoothly; more so than Premier League clubs. 

League 1 & League 2 clubs have to run even more carefully, with even smaller financial losses leading to equally severe consequences. In the ‘basement divisions’, money often isn’t enough to guarantee promotion or titles, where as we all know how far money will get you at the top level. Swindon Town’s recent success in League 2 does appear to completely disprove my point, with their playing budget for their promotion season rumoured to be an extortionate £3.4m, more than three times the average playing budget in League 2 of roughly £1.1m. This has not often been a recipe for success in the lower divisions though, and is an extremely risky tactic: with wage caps kicking in in a clubs second season in the division, failure to earn promotion will lead to serious consequences, with a majority of clubs best players forced to leave clubs in order to keep wages below wage caps. Rotherham United are looking to emulate Swindon this season, with their playing budget rumoured to be £2.6m, but will find it hard going against the likes of Gillingham and Port Vale, even with far less money being pumped into their playing squads.

Sides in League 1 & 2 often decide to invest more in behind the scenes details than blow their budgets on players’ wages, none more so than Crewe Alexandra, who use the youth academy at the club to keep the club running smoothly through the sales of bright prospects to bigger clubs, and bringing players into their first team from the academy, run by Dario Gradi. When Crewe won promotion to League 1 at Wembley in May, an incredible 9 of the starting 11 Crewe players were products of this fantastically run set-up. Players that have come through the Crewe academy include former England international Dean Ashton, Fulham legend Danny Murphy, current Celtic manager and former Leicester City and Celtic star Neil Lennon, former Wales international Robbie Savage and current Manchester City assistant manager David Platt, who went on to make 62 appearances for England after coming through the youth set-up at Gresty Road. The most recent player to come from this set-up is current Manchester United player Nick Powell, who Crewe sold for £4,000,000 at the age of just 18, after he had an impressive first season and a half with Crewe, including scoring an incredible goal in the play-off final in his last appearance for Alexandra. In recent years they have also sold current West Ham forward Nicky Maynard for £2.25m when he was just 21 and Leeds forward Luke Varney to Charlton Athletic for £2m after he came through this outstanding system. 

Another thing that lower league clubs do to spend money wisely is work on players that the clubs already have, with many clubs boasting strength and conditioning coaches, whose job is purely to get the current squad into the best condition possible. Again returning to my team, Oxford United have made a huge indent into their cash flow in this area, with new chairman Ian Lenagan spending £150,000 on fitness and conditioning. This may seem like a relatively low figure to a top flight club, but in the basement divisions this is an incredible amount of money to be pumping money into one aspect of a club. 

The route to success in English football really does differentiate from division to division, severely so when you compare any league to the Premier League. To summarise, League 1 & 2 have to be run more like businesses, trying to improve while still desperately trying to break even with a minimal income, where as Premier League clubs have to look to reinvest their outrageously high income into their club in a way that allows them to improve as a team, but breaking even is not such a high priority for many clubs, with external investment a regular occurrence for the majority of these sides. The Championship is probably the most difficult division for clubs to operate in, with boardroom staff having to try their hardest to find a successful balance between the two, or end up risking their clubs long-term future if they are unsuccessful. 

I’ve barely scratched the surface of this topic, largely due to clubs outside of the top flight keeping the large majority of their financial details under wraps, making it extremely difficult to compare clubs throughout all of the divisions in depth, but I hope I’ve been able to open your eyes to how clubs strive for success differently throughout the English footballing ladder. 

You can follow and talk to Olly about his article on his twitter: @ollyhowells

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