One of the two most mainstream ways for a club to make money is via sports broadcasting and merit money. Among all of the ways for a club to make money, television is the most equitable. TV revenues in the premier league is the only source of income for a club that is partially normalized across all of the teams in the league. Broadcasting revenue can be broken down into four different categories: domestic broadcasting, overseas broadcasting, central commercialization, and facility fees (talkSPORT 2018).

Domestic and overseas broadcasting is simply the TV revenue received by the EPL when EPL games are broadcast within the UK and outside of the UK. Central commercialization is all of the revenues received from commercials during the broadcasts. These first three categories within TV revenues each pay out an equal share of money to the 20 Premier League clubs. (O’Brien 2019)

Finally, facility fees is the most complex of the categories and in itself needs to be broken down to be explained properly. Essentially, facility fees is the way the EPL inserts merit-based awards into TV revenues, and it is money paid to each club based on how many of that club’s games were selected to be aired on live TV. The way it works is that every team receives £12,312,666 in guaranteed money, and then every team who has aired more than 10 games gets an additional £1,129,879 for each game over 10. (talkSPORT 2018)

The second revenue stream is merit money. This is the simpler of the two and revenue is completely dependent on where a club finishes in the EPL by the end of the season. Money is handed out in increments of £1,931,268 with the bottom team receiving that exact amount and higher teams receiving multiples of that amount corresponding to how many places higher they finished  (talkSPORT 2018). For example, the 17th place team will receive £7,725,072 for being 3 spots above last, and the first place team will receive £38,625,360. For all of you math geeks out there the formula to calculate merit based earnings in pounds sterling is: (21 – Final Position) × 1,931,268.

In the table below I’ve outlined the breakdown of TV and merit-based revenues for the top 3 and bottom 3 EPL teams during the 2018-19 season, and as you can see, revenues in some categories vary fairly significantly. All figures are expressed in pounds sterling.

Graph illustrating the differences in income between 3 large and 3 small EPL clubs in terms of TV revenue and Merit Money

Sources: O’Brien, Sean. “How Much Every Club Earned during the 2018/19 Premier League Season Confirmed.” TalkSPORT, TalkSPORT, 24 May 2019, talksport.com/football/548092/premier-league-every-club-earnings-revealed/. talkSPORT. “The Money Each Premier League Club Earned from TV and Their Final Position.” TalkSPORT, TalkSPORT, 5 June 2018, talksport.com/football/376346/how-much-money-each-premier-league-club-earned-tv-and-their-final-position-180518283150/.

The revenues for domestic and overseas broadcasting and commercials are identical for each team and represent a large sum of the total that each team gets from broadcasting. Discrepancies occur in the facility fees, but when only looking at broadcasting revenue, the magnitude of these discrepancies is not that large compared to the total. The lowest revenue team still makes 82% of the revenue of the highest revenue team. With merit money, it’s a different story altogether, as the last place team makes only around 5% of the first place team’s earnings. Since merit money is capped at around £38 million the disparity between EPL teams is limited to a constant number and isn’t felt as drastically. However, the differences in income from TV and merit based money can pale in comparison to other revenue streams.

 

 

Works Cited:

O’Brien, Sean. “How Much Every Club Earned during the 2018/19 Premier League Season Confirmed.” TalkSPORT, TalkSPORT, 24 May 2019, talksport.com/football/548092/premier-league-every-club-earnings-revealed/.

talkSPORT. “The Money Each Premier League Club Earned from TV and Their Final Position.” TalkSPORT, TalkSPORT, 5 June 2018, talksport.com/football/376346/how-much-money-each-premier-league-club-earned-tv-and-their-final-position-180518283150/.