The premier league is widely recognized as the best domestic league for England
Executive summary
The premier league is widely recognized as the best domestic league for England in the world for its entertainment. The football league division of England’s top 20 clubs is appreciated for its competitive, quality, and entertaining nature. The interest of the project is to find out how this football competition has become successful in terms of financial management and marketing. The project analyzes marketing strategy that has worked for the EPL as a company and the clubs that operate under it. Additionally, the project analyzes financial decisions made by the company that has made it successful since its inception more than a decade ago. The English Premier League is one of the hugest sporting events suspected to be contributing a lot of revenue for the British economy. As an entity, there are leadership personalities that have ensured that league stays financially stable and competitive enough. Through analyzing the figures that relate to the competition, it becomes easier for the project to integrate measures that the EPL Company and its stakeholders have implemented to maintain its successes. In terms of development, the EPL has been acknowledged for focusing on youth programs which generate a lot of revenue. Apart from using the youth programs as developmental strategy, it has also been highlighted as a marketing strategy that caters for the future of the EPL. Below is a complete analysis of the EPL as a sporting event.
Team section
The premier league is a competition founded by the football association of England. It was founded in the year 1992. The football clubs broke away from the first division football to take advantage of a lucrative television rights deal. The competition has begun to transform the league into a business venture in the year 1994. The target of the applicants was to maximize revenue so that the clubs and players participants of the competition could be paid exceptionally well. In terms of ownership, the premier league operates as private labeled company owned by the 20 member clubs who make up the league before the start of the season at a particular time. The legislation of the English premier league follows the legislations of English FA, UEFA, FIFA and are subject to English and European law.
Industry section
The league receives a lot of competition from the industry. In terms of revenue other leagues also market of television rights, thereby making the premier league receive a lot of financial competitions. However, the most competitive leagues that share spoils with the premier league are Laliga. Laliga is the Spanish football top’s division which operates at estimated revenue of $4.3B. Another competitor within the industry is UEFA. UEFA is a competition that involves all the top clubs. The UEFA poses a lot of economic competition. In terms of economical impact the EPL is a major contributor to the English economy not only through employment, but also through provision of man power employment. Having been an economy contributor the EPL is affected by economical swerves like BREXIT. BREXIT being an economic decision limits the number of foreign employees that can work in the premier league as a private limited company. Most of these workers are players who play for different teams. As explained EPL receives competition from the industry and from economic decision made in the country.
Special circumstances
The main special circumstance affecting the premier league as a company is the ownership of clubs. When the league was formed ownership was limited to local businessmen. These days’ clubs are owned by international businessmen. For example Manchester City is owned by the ruling family of Abu Dhabi. The problem with international ownership is that the businessmen 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 ambitions 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 a strategy known as the elite player performance plan. The plan introduced in the year 2012 makes it a step ahead than the rest of its competitors. EPPP is a long term strategy that focuses on developing more and better home grown 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 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 keeps 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 target is the Asian continent which has a lot of population. By the 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.