Premier League Teams Are Hemorrhaging Money, And TV Revenue Sharing Could Be To Blame

Here's some not-so-great news on the heels of a thrilling end to the Premier League—no one's making any money. Actually, that's not true—five teams turned a profit in 2010-2011, the last season for which financials are available. But despite a record $3.6 billion income, the 20 Premier League clubs operated at a combined $566 million loss.

The biggest loser? Manchester City, thanks in large part to comical player spending, somehow lost $309 million—easily the worst financial year for any sports franchise ever. (Remember, these are the numbers from last season, not the one that just concluded, but it's not like City reined in the spending.) Chelsea, a year before their Champions League victory, lost $107 million, and required a massive loan from owner Roman Abramovich. Liverpool lost $77 million. Manchester United—Manchester United!— only turned a profit of $19 million.

It's not necessarily surprising that the league as a whole showed a loss—the economy's crap everywhere—though it is shocking that some of the biggest and most successful clubs couldn't come close to breaking even. Part of the answer lies in the Premier League's TV deal, which is set up so the top teams have trouble benefiting from their marquee status.

For the domestic TV rights, 50 percent is shared equally among all the clubs, with 25 percent distributed based on final standings and another 25 percent based on how often a team's matches were actually broadcast. For the international TV rights, every last pound is shared equally. Wolverhampton and Man U make just as much for every match shown in United-crazy Indonesia, no matter how few Wolves matches are broadcast.

This is big money we're talking about: nearly $5.5 billion over a three-year period, beginning with that 2010-2011 season in which so many teams lost out. The rights auction for the next three seasons worth of broadcasts will be held next month, and it's expected to shatter the previous figure.

It's not surprising that the first club to mount a challenge to the current system was Liverpool, owed by Fenway Sports Group and John Henry, who wipes his ass with thousand-dollar bills made from NESN. If the Red Sox make a ton of money by owning their own TV rights, why can't Liverpool? More to the point, why shouldn't the club in demand be able to profit from that demand? This is not just a Western, capitalist way of thinking. The NFL shares its TV money among the teams, while in Spain, Barcelona and Real Madrid sell their own TV rights, both foreign and domestic. As it happens, those two clubs earn as much as the other La Liga clubs combined.

The argument comes down to parity vs. meritocracy. Letting teams sell their own TV deals, critics warn, would turn the Premier League into La Liga, with just a few teams having a sizable cash advantage over the rest of the league. It would be those same teams competing year in, year out, with little chance for "promotion" to the top tier of the top tier. (Critics of those critics would point out that this is pretty much how things stand already.)

There's not an easy answer. If you're a team like Liverpool or Chelsea or City, you spend a lot of money and that in turn brings in a lot of money and you'd like to keep more of that money for yourself. And if you're not one of those teams, you need the revenue sharing to keep coming, even as you're struggling to turn a profit already.

The likely solution? Higher ticket prices. Always higher ticket prices. The rich may not be getting richer, but you'll still be getting poorer.

Premier League clubs lost £361m last year despite record £2.3bn income [Guardian]