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Premier League TV cash will rewrite rich list

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21st Mar 2013
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New TV deal will propel elite English clubs up the Deloitte Rich List - but could put more pressure on lower ranked Premier League clubs and those at the top of the Championship 

As the business end of the 2012-13 season draws ever closer, the nail biting increases and nerves continue to be shredded for fans of Premier League teams on the cusp of Champions league qualification or relegation. The title race on the other hand appears to be a foregone conclusion.

But off the field too, thoughts are turning to finance and the likely transfer budgets available, which will be greatly influenced by the new Premier League TV deal .

The Premier League sold its UK live TV rights for 2013-16 to Sky and BT for £3.02bn. This represented a staggering increase of more than £1.2bn on the amount paid by Sky and ESPN for 2010-13. With worldwide rights added, the total revenue will be closer to £5.5bn.

With all this new money coming in next season Deloitte’s football experts believe more English clubs will break into their Football Rich List top 20 over the coming seasons.

The latest top 20 on already includes seven Premier League clubs: Manchester Utd, Chelsea, Manchester City, Arsenal, Liverpool, Tottenham and Newcastle. But the likes of West Ham, Everton and Sunderland may be propelled into the upper echelons of the Rich List, as their revenues will surge by approximately 30% to 40% in just one season.

Even Real Madrid (who have topped the Rich List for the last eight years) and Barcelona will be looking over their shoulders to see how the additional revenues generated will affect the likes of Man Utd and Chelsea.

"Real have led the way in the phenomenal level of revenue growth enjoyed by the sport's top clubs over the past two decades," Deloitte said.

"The Spanish club's revenue growth has been remarkable. In 1996-97, the first season for which we published our Money League analysis, Real generated revenues of €85m, one sixth of the revenues they generated in 2011-12 (€512.6m)."

But Premier League big hitters now have a massive opportunity to close the gap on the two Spanish giants - and coupled with improved sponsorship deals at Man Utd and Arsenal to name but two - that gap could close sooner rather than later.

The last Money League showed Man Utd had generated £331m in revenue, significantly lower than Real Madrid (£433m) and Barcelona (£407m), but this shortfall will be almost entirely eradicated by the extra TV money.

The two Spanish giants negotiate their TV deals independently and earn in the region of £120m a year. Until now the biggest clubs in England have pocketed in the region of £60m from a collective Premier League TV rights pot - but as of next season that figure will be closer to £100m.

As a result of the new TV deal, expect Utd to leapfrog Barcelona and Arsenal and Chelsea to be more or less at the same revenue levels as Bayern Munich.

However while there is much to admire in the new TV deal, the increased revenue streams are causing a great deal of consternation further down the rankings, where many club chairmen face nervous times over the next few weeks.

There is a belief among Championship clubs that the new TV deal could entrench the disparity between natural second-tier clubs and those relegated from the Premier League.

Clubs in the Championship recently warned the Premier League that it risks permanently damaging the integrity of the Football League following Premier League proposals for a big hike in the parachute money clubs receive after being relegated from the top tier.

Coupled with only a modest rise in solidarity payments for all the other clubs, there are serious concerns whether smaller clubs will be able to compete on anything resembling a fair playing field.

There are also concerns over the ramifications for the Football League’s recently launchedfinancial fair play rules, which some club chairmen fear will become unworkable if the payment rises go ahead as planned.

Clubs currently receiving parachute payments will also be asked to support a plan to recalibrate the payments so that the revenues are shared out more equally - despite the limited chance of the Premier League making any about turn.

As it stands, relegated clubs will receive £23m in the first year after relegation (a £7m rise), £18m in the second (up £5m) and £9m in years three and four.

Clubs in the Championship that do not get parachute payments currently receive £2.3m a season; League One sides £325,000 and League Two sides £250,000. It is proposed that those payments are increased by around 5% under the new offer.

The dangers for clubs in England’s second flight are obvious as the urge to spend beyond their means might become unsustainable, given that the size of the prize following promotion is even larger than before.

The pressure is already affecting teams at the foot of the Premier League too, as QPR demonstrated by gambling on big signings in the January transfer window.

QPR chief executive Phil Beard admited: "[The new TV dea]) makes it even more important not to be one of the three teams that don’t stay in the Premier League.”

So while fans will continue to chew their nails over the coming games and weeks, you can be sure that the nerves of many club directors will be severely tested too.

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