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Thursday, 30 June 2016

Big chance for clubs next season

The 2016/17 season will be the biggest in Premier League history. Kicking in is the £8bn broadcasting deal and added to that is the global broadcasting money which added together are forcing a rise in rates for sponsorship deals.

The club finishing bottom next season will receive around £65m in broadcasting revenue and around £95m overall. That is more than the winners of the Championship will receive and why clubs who come up often overspend in a desperate attempt to stay in the division. If they can then they have money to build and cement a place with, but the other side of the coin is that it can overstretch a club and cripple them for years to come.

The parachute payments over the next 2 or 3 years could amount to £80m but generally these get cost of paying Premier League wages while playing in the Championship with its vastly lower income. The theory is fine, but unless a club is well run it still causes problems. 

A few years ago the Bolton chairman Phil Gartside spoke about these payments and said they all went on paying players wages, Bolton Wanderers were in a relegation battle in the Championship at the time. By December 2015 they were facing a winding up order being £172.9 in debt. They have been relegated to League One, a return to 1993.

The smaller clubs in the Premier League, this season that would have been someone like Norwich City, are thought to earn around £2m-5m from shirt sponsorship and £1m-£4m for kit deals. 

To relate that to Spurs, AIA are our shirt sponsors and Under Armour our kit sponsor. Nike are expected to be our new kit sponsor, a deal worth £25m-£30m-per-year, Chelsea are reported to be getting a £60m deal with the same company and Manchester United get £53m-a-year from Chevrolet.

The average match day revenue for the top half clubs was £6.3m in 2013/14. In 2014/14 WBA earned £7m from match day revenue, Sunderland earned £16m, Tottenham earned £42.4m. That gives you an idea of the difference in income for top to bottom clubs. With the building of a new stadium we will be increasing that revenue considerably.

Should any of the three promoted clubs be immediately relegated, they are likely to have £180m income which they can budget with this season. How much of that do you use for transfers and wages, plus interest payments. If you sign a player on a 4-year contract, you either have to have a clause lowering his wages if the side is relegated otherwise they are stuck with a player on Premier League wages for the next three years unless you can sell them.

Clubs wanting to buy want the player for less given they are now a Championship player so it isn't easy to make a profit on purchases and a club needs to do that to maintain a healthy bank balance.

In Italy clubs often have an average wage that the squad players are on with one or two given big wages, obviously one being the goalscorer. This is one option. If the players understand playing and staying in the Premier League is important then it shouldn't be too difficult to assemble a squad to accept a star receiving far larger wages. Without a goalscorer it is virtually impossible to stay up. It would be my strategy certainly.

With the income next season it will give the three promoted clubs, Middlesbrough, Hull City and Burnley an opportunity to build a financial gap between themselves and the Championship clubs this season. It is imperative for Newcastle United that they come back at the first time of asking, it is a club with history and the type of club the Premier League needs. If they don't then alarm bells will start to ring and climbing back becomes more difficult as you lose your Premier League standard players.


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