The most lucrative game in football

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Before you read on ask yourself the following two questions. Would you rather be an unused substitute in the Champions League Final or score the winner in the Championship Playoff final? then ask yourself this which club would you rather own – the runner up in the Champions League Final or the Championship Playoff final winners?

This Saturday 2 football finals will be played, both having monumental levels of importance for different reasons. Firstly and in the eyes of the majority more importantly, the Champions League Final will be played between the two Madrid rivals – Real and Athletico. Who will be crowned the best team in Europe? Secondly we have the Championship playoff final between Derby and QPR to see who will be the third promoted club to the Premier League alongside Burnley and Leicster. Congratulations to all 4 clubs and the best of luck in their respective games…

But lets get into this post. You must think I’m crazy for even mentioning the latter two clubs in the same sentence as the madrid heavyweights, but this saturday in my eyes they will be just as if not more important for financial reasons. The Championship play-off final is the most lucrative one-off fixture in football and sport more broadly, and this year its more expensive than its ever been. It is an astounding 90 million more than second place – Floyd Mayweather’s earnings of £48m which he obtained fighting Canelo Alvarez last year, and 13 times the £10m you obtain for winning the Champions League! This figure could even get better as this accounts for the worst case scenario of relegation straight after promotion. There is a lot at stake literally and the pressure will be on both teams to secure their place with the big boys next season.

Let me break down this figure to see how it all adds up.

•£62m of Premier League prize money even if finishing bottom of the Premier League next season

•£72m over four years which is expected to be made up of parachute payments of roughly £26m in 2015-16, £22m the following year, and £12m in each of the two years after that. This almost certainly will rise if the club doesn’t get relegated due to the continual evolution of the Premier League brand as it looks to rubber stamp its position as the best league in the world which will translate into increased earnings via TV income, Sponsorship contracts and match ticket prices

it is true that the step up requires heavy investment into the squad through transfer fees and wages (but in Derby/QPR case FFP regulations will prevent them from going overboard: see here and here) however that is not always the case for all promoted clubs. Let me use Southampton to make my point….

Key financial highlights for Southampton:
•Total revenue increased 213% to £71.8m (2012: £22.9m) with average league attendances up from 26,427 to 30,807
•Broadcasting income grew from £5.6m in 2011/12 to £46.9m in 2012/13
•Matchday income of £11.8m in 2011/12 has risen to £16.9m in 2012/13
•Commercial income increased from £4.8m in 2011/12 to £6.7m in 2012/13
•The loss before interest and tax has reduced to £6.6m (2012: £11.9m loss)
•Total group wages, including player wages, increased to £47.1m in 2013 from £28.7m in 2012
•Expenditure on the total training ground project now anticipated to exceed £30m. The first phase of the build is expected to open this summer

From the highlights above we can see how much of a positive impact being in the premier league has has on finances, but also on the long term strategy to the club by actively investing in improving the training facilities – something they probably wouldn’t have been in the position to do a few years back when they were in the 3rd tier of English football.

However you look at it, winning the play-off brings a massive windfall, a windfall that next season will be £134m…. Now ask yourself the same two questions I wrote at the beginning of the article and see whether your answer changes. Mine did!

@CapitalMoments

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