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English PremiershipIn the 2013-14 season, English Premiership football teams will receive a massive hike in their TV revenues. The top teams in the division are expected to earn at least 60 million (UK pounds) each during the 2013-14 season, as part of a £3 billion (UK pounds) TV rights deal. This represents a massive boon especially for the English football clubs who, barring any ‘disasters’, usually manage to stay around the higher regions of the division as well as maintain their national and global brand and popularity.

 

But spare a thought for those clubs who are relegated from the Premiership at the end of the 2012-13 football season. Such clubs will receive a ‘parachute’ payment of £23 million (UK pounds) during the 2013-14 season (to help them cushion against the overall loss resulting from relegation out of the Premiership); but the difference is a staggering £37 million (UK) pounds! Furthermore, this ‘parachute’ income declines quite steeply the longer any club fails to return to the Premiership league, until it eventually stops after four years post-relegation.

 

A relegated club is also likely to be affected in the next season by lower home attendances, aligned to less income from match-day hospitality and sales, probably fewer sponsorship deals, poorer merchandising sales, and more. This scenario paints for a very changeable turnover, and the accountants of clubs who are staring relegation in the face, as the end of the season approaches, are bound to be re-visiting their short- and medium-term budgets. They will be frantically assessing the level of risk(s) in their plans too.

 

If a club ‘is’ relegated, and their budgeted turnover clearly will take a massive decline, what options are open to the accountants to advise on a sustainable way forward? For example, how might costs be brought proportionately in line with the inevitable fall in revenues?

 

Source: “this is Staffordshire” website, 17.4.13, see:     http://www.thisisstaffordshire.co.uk/Stoke-City-Premier-League-relegation-pound-40m/story-18728576-detail/story.html#axzz2QjehIKPo