Traded off
One of the joys of writing Sport inc. is the flow of suggestions from readers of subjects to cover. In the past week alone: the highly leveraged balance sheets of Premiership rugby clubs ahead of the new season, the continuing scandal of the lack of financial support for Britain’s international basketball teams, the prohibitive cost of upgrading floodlights at grassroots tennis facilities and, unsurprisingly, the £1.9 billion in headline transfer fees in the latest Premier League window. So here goes: one stone, many birds.
So much in sport - not just football - is measured against Premier League yardsticks. But England’s top flight competition is the outlier, so far ahead of any other in global appeal that it is arguably beyond the reach of aspiration - at least for any sport domiciled in Britain. And while its financial numbers make for great headlines, there is a logic underlying them. Club owners may appear crazily ambitious, but it doesn’t follow that they are bonkers.
The £1.9 billion outlay on transfers this summer equates to a net £1.1 billion once the effect of player sales is deducted (source: Deloitte). Some money flowed down the English pyramid to clubs beneath the top tier, but most went overseas. Big spenders included clubs under new ownership (most notably Chelsea - now likely also to stump up a transfer fee for their new manager) and two of those promoted from the Championship (not Bournemouth). Manchester United rolled the dice yet again.
“I think we have certainly found there is no one there ready to do us a favour. It’s the narrative regarding us that has changed. I think if there is anything domestically, teams will put their price up if it is Newcastle.” The club’s manager Eddie Howe on the effect of Newcastle’s Saudi ownership
All of which should be set against the £3.5 billion or so that the Premier League generates in media rights fees every year, roughly half from international broadcasters. These receipts are critically dependent on the PL being regarded as the undisputed #1 club competition in the world. And so owners recycle TV monies into playing talent grown abroad in order to ensure the sustained attractiveness - and hence value - of their product worldwide. Deloitte calculates that 62% of this summer’s transfer fees were paid to overseas clubs. You can see its summary here.
Relegation jeopardy is a key component of that value, as is the competitiveness of the league. Of course individual owners spend to win, or at least not to drop out of the collective, rather than with an eye on the PL’s overall appeal. But all are aware that if they don’t play by the unwritten requirement for quality and glamour then results on the pitch will in time find them out and their place disappear when the season ends.
You can argue all you like about whether high transfer spending is damaging football more widely, but so long as TV audience subscriptions around the world continue to support broadcast income, there will be no change to the system. An enforced adjustment at the margin maybe to the share of that income that is channelled to the lower reaches of the game, but government is unlikely to jeopardise a product that rests so squarely on its superiority to the rest of the world.
Kicked off
None of which will be comforting to the owners of Premiership rugby clubs, who the Mail on Sunday claim to be sitting on £509 million of debt with another £36 million due to the taxman. A shaky basis on which to start the new season tomorrow (9th September). Worcester Warriors are known to be in severe financial difficulty and the Mail speculates that other clubs are not far behind. Read the article here.
“Mobile phones have stopped working and cars have been taken away from players. As the largest of the club’s debts is owed to the Government via Sport England, the MPs are calling for the DCMS to trigger an administration as swiftly as possible.” Local MPs’ statement this week on Worcester Warriors
Watch a Six Nations fixture and you’d be forgiven for thinking that rugby is on a par with football. The reality is that internationals are the sport’s clear premium commercial product with club rugby a distant second. Quite the opposite of football.
It is difficult to conceive of the Premiership having sufficient global broadcast revenues to reset the clubs’ finances. Lockdown was far more painful here than in the Premier League because matchday receipts constitute a much higher percentage of overall revenues. Hence government loans to clubs that may well in time have to be quietly written off.
Contrast: the challenge for the FA is to persuade the Premier League to provide greater financial support for the wider game; the RFU’s task is to find ways to strengthen its entire pyramid, from Premiership downwards.
The good news is that the RFU does have that true premium product which gives it real optionality in addressing the challenges facing the sport - challenges which are far from unique to rugby. It will help too that the Premiership is led by the impressive Simon Massie-Taylor.
Tipped off
GB’s basketball teams, and their fans, can only dream of being able to deploy a fraction of such riches. I spent a few months back in 2018 trying to bang heads together among the English, Scottish and Welsh governing bodies to find a way to ensure British teams had at least a minimum of necessary practical support. To no avail. And nothing has changed since, leaving GB languishing in a sport with strong appeal to young Britons, partly because of its global (ok, NBA) starriness.
This is a sport in Britain with neither a premium international nor domestic product and so little media or commercial value. Which is not to say the country is without talent, but mostly it’s playing overseas and expected to pull on a GB vest with insufficient prep time and poor logistics. You can learn about it on the authoritative Hoopsfix website here. Basketball deserves much better from those with the power to craft its future.
“Let’s call it as it is: the national teams programme is an abject failure…. logistical and operational horror stories; from kids having to wash kits in their sinks, to travel plans that are more akin to backpacking across Europe than an elite sport environment.” Hoopsfix’s Sam Neter
All owners of sporting assets will be fretting about the cost of living, the coming jump in electricity prices (caveat a Liz Truss policy reveal) increasing the squeeze on already tight finances. GB ballers couldn’t sit any further back in the plane than they already are. Football clubs are contemplating early kick off times to save floodlighting costs. On which subject…
Switched off
A reader heavily involved in grassroots tennis sends me an email titled ‘the lights are going out all over England’. He writes that a 2021 regulation regarding the discontinuance of halogen lighting means that, once existing stocks of bulbs run out, older floodlights will need to be replaced at a typical cost of £10,000+VAT for a pair of courts. An understandable green government policy with unexpected financial consequences for many local operators.
And turning this column full circle, my quote of the week comes from Port Vale FC chair Carol Shanahan when asked on R4 about electricity prices:
Q: “Have you actually costed what Port Vale will spend on its energy bill next year?”
Shanahan: “I daren’t, because I need a striker as well.”
The fix
Next week’s Sport inc. will have the definitive answer to cricket’s problem that is The Hundred. See you after the final test of this elongated summer.