Tonight, Manchester United will face Manchester City in a derby match that will either help keep faint hopes for Champions League qualification alive for one team, or provide a much-needed boost in the title race for another. The result will determine 1/38th of either side’s final points total, which in turn will determine where each team finishes in the league table. And that result will carry with it an intrinsic dollar value.
This is of course the least sexy way to think about football. The game, as the well-worn Danny Blanchflower quote goes, is about glory. And that’s as it should be—football is a sport and the fun part of sport is watching your team hoist trophies, not publish positive financial statements.
But all the same, it would allow some Premier League clubs to set a more intelligent cap on player spending based on their exposure to financial risk, which could have a long term effect on the team’s financial health, which could in turn lead to more trophies, maybe.
But for those who run the clubs, having a specific idea ahead of time of what that dollar value might be could be incredibly helpful in making off-field decisions in the player recruitment department.
So, how would we go about figuring that out?
To begin with, the main areas of turnover for most clubs include TV and broadcasting fees, gate/matchday income, and commercial income.
TV and Broadcasting Fees
The first and most obvious thing to do would be to calculate the percentage your team would earn as part of the TV rights deal. The details for the Premier League are as follows:
Domestic broadcast revenue is divided on a 50:25:25 basis; 50% is divided equally between the clubs; 25% is awarded on a merit basis determined by a club’s final league position and the final 25% is distributed as a facilities fee for the number of matches shown on television involving the club.
International broadcast revenue is distributed equally between all 20 clubs.
The current domestic media rights packages were sold for a total of £1.78bn.
So that’s explicit enough (here are the payouts for 2012/13). For the bottom three places, you would calculate parachute payments as well.
The wildcard would be facilities payments, so the thing to do here would be to run a regression to see if there’s any consistent correlation with average table position and television appearances (my hunch is that you wouldn’t see much movement based on table position alone). But the differences in payouts aren’t exactly earth-shattering. Still, this would be by far the easiest area for a club to calculate.
Finally you just add in base cash for qualifying for either the Champions and Europa League, if you are so lucky.
How does table position affect attendance? My guess is that the size of the year-over-year change in table position would have an exponentially greater effect on match day income. For example, if Aston Villa finish 15th one year and 14th the next, you may see a drop in attendance from the continued crappiness of the team, but not a particularly big one.
But if Villa jump from 15th to 6th, the positive effect on attendance would be greater. This would be very difficult to calculate as every club is in a different cultural and geographical place, but it shouldn’t be too difficult to look at historical data to make an educated guess. If you know of a study on this topic, let me know.
A theory: it would take several seasons at an average table position to gauge the effect of table position on commercial sponsorships. You would also need to isolate for a club’s pre-existing popularity. My guess is that table position wouldn’t move the needle on sponsorships and other commercial income very much, if at all. Table position likely has little to do with this unless you qualify for the Champions League for ten times in a row, or if you’re a Big Four club and you get relegated twice. I dunno though.
Other areas to look at
Some other areas to consider is whether table position might have an effect on player transfer market valuations. I suspect not, and that the market can see past a crappy team to a good individual player on a crappy team.
For wages however, that’s a different prospect. Deloitte noted in its 2011-12 Premier League report that “there were six Premier League clubs with total wages above the average of £83m [in annual wages], all of which finished in the top eight positions in the table.” While it’s generally known there is a close correlation between wages and table position, which is the chicken and which is the egg? Meaning, does the club pay its players more money the higher up it finishes in the table, or does it need to pay better players more money to finish higher up the table? Don’t think it’s a open and shut case either way.
So could it be done?
There are a lot of variables to consider, some stronger than others. Moreover, in some cases the effect on income would only be felt after a certain average table finish over a number of years. Moreover the results would almost certainly depend on your individual team. This likely wouldn’t be a one size fits all model to use here, but a range of averages.
Once you’ve figured out the dollar value for each possible table position, you’d need to figure out the average number of points to achieve that spot (Statsbomb already did it).
The idea here is risk management. What is the worse case scenario during a season? How will it affect our budget? Based on that, which players can we afford? With some help, I’ll be looking at developing something along these lines in the coming weeks.