Special circumstances
The exceptional circumstance affecting the premier league
as a company is the
ownership of clubs. When the league was formed ownership
was limited to local
business people. International business people own these football
clubs nowadays. For
example, Manchester City is owned by the ruling family of
Abu Dhabi. The problem
with foreign ownership is that the businessmen’s
interests extend beyond
maintaining a sinecure within the Football Association.
The clubs have
to serve global ambitions, which limits the profit cycle of the business. Keeping the clubs happy with their international aspirations and pulling them in the same direction as to maintain profits and Tv right become an uphill task for the stakeholder of the EPL.
Team analysis
The English Premier League has been successful over these
years because of its developmental strategy. The EPL uses an approach known as
the elite player performance plan. The plan introduced in the year 2012 makes
it a step ahead of the rest of its competitors. EPPP is a long term strategy
that focuses on developing more and better homegrown players within England.
The Premier League consulted with its clubs and representatives of the FA and
introduced a mission approach where each local player would be empowered
through a player-led approach. The world-class youth development strategy has
led to the EPL always supplying the best of talent to the clubs. It is through
this strategy that the premier league has remained entertaining and become the
world’s most-watched league. This developmental strategy goes further to identify
very young players at the age of nine years and organize football tournaments
for them. These tournaments only act as boosters towards identifying talents
that keep the premier league better than the rest of the other leagues.
Marketing section
The English Premier League market targets billions of
football lovers across the world. In terms of demographics, football enthusiast,
especially men in the age group of 15-60, are the main target markets of the
premier league. The most successful marketing group and the target is the Asian
continent, which has a lot of population. By virtue of having a huge
population ,the Asian market, by default makes the EPL the most profitable
league in the world.
Marketing strategy
The marketing strategy used by the premier league is
successful because it is people based. The EPL managers are quick to responding
to the changing habits of their customers. Younger customers who like change
are observed so that a complete overhaul is requested each time the interest of
the market has changed. Compared to American professional sports marketing
becomes very hard for sports that take long. However, EPL focuses on promoting
a two hour game and the TV is still left with some space for advertising,
airing an episode or a movie.
A second marketing strategy is that the premier league
focuses on engaging the future of its audience. Instead of focusing on the
older fans the premier league focuses on younger fans that do a better job in
engaging the future. An Example is the West Ham club that runs a promotion
called Kids for Quid. Such a marketing strategy ensures that even in the future
the premier league will still be watched. Other clubs like Arsenal also engage
its junior supports through a club called Junior Gunners.
Operation section
The premier league is the biggest revenue generating
league. It operates 72% better than the nearest competitor the Bundesliga. In
terms of clubs, six football teams from the top English division were named the
world most valuable team financially. The ability to generate greater revenue
improves greater success on the pitch and also sustains efforts of club
licensing.
The revenues collected by the EPL come from the Premier
League market rights and distribution rights that are paid by different media
houses. The EPL has made various agreements on television rights with media
companies like Sky sport, Multi-choice which are based locally. Other
international media owners also pay for the television rights of displaying the
premier league. The television right are the highest point of revenue
collection for the premier league.
Of the television rights sold the EPL uses half of the
revenue to pay the club and spend almost quarter in organizing for the
competition. Revenue of organizing for the competition includes paying referees
and other essentials. In terms of tax the premier league spends approximately
3.3 billion in tax to the UK economy; this is according to the financial
analysis of 2016/2017 alone. Other expenses are not shared by the premier
leagues clubs they are individually catered for by the EPL Company. The EPL as
a company also generate revenue from other project. For example, The Premier
Kicks is an initiative that supports young people in serious violence hot
spots.
However, clubs within the premier league have different
ways of generating revenue. Apart from payment from the EPL Company, the clubs
sell their players; sell their merchandise and run label endorsements and
advertisements for other companies which pay them hugely.
The revenue share is done in the following manner:
UK broadcast revenues
50 per cent equally shared;
25 per cent shared based on how often a club’s
matches are broadcast in the UK (known as “Facility Fees”);
25 per cent shared based on where a club finish in
the league table (known as “Merit Payments”)
Central
Commercial revenues: Equally
shared by clubs
International
broadcasting revenues: Equally
shared by clubs
Management and Personnel section
The EPL is managed by one CEO. Each of the 20 clubs that
make it up operates independently. Executive members of the EPL are
representatives from the 20 clubs. Each team contributes one member to the
Club. Financial consultations are made through interacting with all the representatives.
Other members of the executive are the head of referees who oversee the
execution of matches with the level of fairness and standards as dictated by
the rules. For a decision to be made two thirds of the votes have to be in
favor of one side.
Capital section
The operating capital of EPL has risen steadily for the
past three years. The highest operating capital is the match day commercial
capital. Match day commercial capital grew from 8% in the past to 12% of the
total revenue. Even with the increment of revenue, operational capital derived
from profits fell by 16% from the previous years. The previous revenue was at
one billion, this year stand at 867 million, both figures in Dollars. These
capital results dropped due to the wages spend on clubs. The wage spend of
clubs continue going up thereby limiting operational capital.
Financial projection
Increases in wage spend by EPL clubs on players limit
significant increase in profits expected by the clubs. Such spending limits the
annual financial projection of the clubs and the EPL in general. If not for
commercial revenue the financial position of the EPL might drop. However, the
financial projection of the year 2018 is likely to go past the 5 billion income
revenue as long as the premier league remains the most popular football league
in Asia based on the Asian population.
Miscellaneous section
The league spends 140$ million to the EFL. The payment is
made to the EFL which is the second division tier. This payment is made to help
ring fence development grants of the youths playing in this second tier
division of football.