Loads-a-money related questions from the trading desk of Mr. S Hortseller
As with so much of the modern economic world, the financial future of the Premier League has been predicated on an ever-rising market. What if that market stalls or starts to contract, if only temporarily? How much of a buffer do the Premier League clubs have against a serious contraction in income? To some extent the Championship has been through this with the debacle in TV rights a few years back but in the happy-clappy world of the 39th game, we have only ever been looking up.
Reading the following wise words of Mr. Hansen, (yes, I know the two concepts are mutually exclusive but it’s ‘be nice to honorary Scousers week’) led me to wonder about when the financial situation might really start to hurt. Is there anyone out there sufficiently versed in football finance to give us an insight?
If I am correct in thinking that 2010 is the date for the new contract, then while on the one hand clubs are contractually entitled to their monies for the next couple of what could be difficult years (assuming TV companies don’t go belly up), on the other the Premier League will be negotiating in the teeth of a worldwide recession that is predicted to last until at least 2010. So while you could argue that TV and subsidiary rights income streams will be returning by then it is unlikely that the bidders will negotiate on that basis.
Do Sky still need the Premier League as much as they did when launching? I presume they do. And while other players have entered the market, surely without Sky’s money the price paid for rights would plummet. The Sky model (if I understand it) depends on subscribers to attract advertising to maximise income. How robust is it? Have the additional technologies that Sky now offer proofed it against a high churn rate?
I assume that as people cut back on personal spending and advertisers spend less (although you should spend more when times is hard we’re told), the income stream is threatened. So does Premier League football become more important so as to hang on to those precious subscriptions? Does everyone gamble and pay more for the rights? Can the bidders access that kind of cash if the world economy is as badly threatened as we are led to believe? Does pay-per-view become more or less attractive? If all you need is a Freeview box and no subscription is it easier to sell individual games?
Will the rapid pace of technology such as high speed access to and better viewing platforms for the Internet help football buck the trend?
A lot of people now experience football via television and rarely go to games. For those who do, how long can they continue to pay Premier League prices? Comments like that of a Wigan fan in the Observer that the crowd at Liverpool seemed to be full of Irish and Japanese tourists is one that might chime with those who visit Stamford Bridge regularly. How long can they continue to come?
Vast areas of modern stadiums are given over to corporate entertainment. That won’t last a deep recession. Post-Taylor Report stadia are all-seater. Can the rate at which they have been built, be safely adapted for standing? If the TV monies and the corporate cash start to dry up, how soon before the thought of getting large numbers of standing fans becomes attractive?
Would enough people return to watching football on that basis to make it economic or has the crowd demographic changed forever? In the past football has been an arena where societal tensions and changes in behaviour, particularly those affecting young white working class men have been played out. Will that be the case again?
Much of this depends on the economic situation over the next 5-10 years. The same people who predicted a soft landing in the property market and no recession 12 months ago are telling us that the recession will only last a couple of years before strong growth returns. They have no credibility so why believe them?
Football will survive but there is an air of unreality about the current season (no, not the silky attractive football being played by our beloved Blues). Serious structural economic changes are taking place. Those at the top have constantly trumpeted that football is now big business and old romantics who like their sport a little sepia tinged had better get used to it. Well the business world is rocking and football has to feel the tremors.
Any answers anyone? Apologies for the endless questions but these are troubled times and I’m a man with a troubled mind.
I’ve probably taken too dark a view and those clever people who are keenly implementing the US sports model on our game have it all under control.