A few years ago, I came across a CNN documentary that compared the National Football League and the English Premier League. Two football leagues but two totally different sports. The critical issues they were comparing are the differences that teams in these top flight leagues have when it comes to financial troubles.
In light of the recent discussions surrounding Richard Sherman and the possibilities and potential of added sponsorships due to his newly discovered popularity and how best to manage and play this game in the media world, I decided to expatiate on this documentary and see how indeed players and clubs earn sustainable money in sports.
According to this documentary, NFL teams have several factors that save them from ever going into liquidation, and those two factors are a Salary Cap and a Salary Floor. This means that there is a minimum and maximum amount of money that any player can ever make in terms of wages on an annual basis, regardless of the talent of that athlete or what team that athlete plays for. For example, when you look at some of the annual salaries of NFL players (Richard Sherman for example), you might be somewhat surprised that as of 2012, it was $456,000.00. You would think it’s more considering the lifestyle that some of these individuals have and just overall perception of their earnings, but for a 3rd player coming out of the 5th round draft, that salary is quite consistent. Secondly, all the teams in the National Football League (NFL) receive equitable distribution of television revenue. This is partly because there is not a monopoly to every single game by one media conglomerate. Where you begin to see the difference in terms of franchise earnings is when it comes to game day and season ticket revenues, merchandising sales, and sponsorships. The structure of the NFL is so corporate that each player is graded like any employee you would find in the banking industry, and it cuts across all teams. These factors allow the league to properly regulate and structure their finances in such a way that they can never go into debt.
Now, on the other side of “The Pond” in the English Premier League, there is no salary cap or salary floor, meaning that any team depending on their financial buoyancy can pay as much or as little to any player as they please. According to Forbes Magazine, the top 5 earners in the English Premier League and their club salaries are:
1) Robin Van Persie (Manchester United) – $19m
2) Yaya Toure (Manchester City)- $18.2
3) Wayne Rooney (Manchester United) – $18.1m
4) Sergio Aguero (Manchester City) – $17.4m
5) Fernando Torres (Chelsea) – $17m
Ironically, in these same teams, you have players that earn $1M and less a year. Such disparities are quite ridiculous. So, what does this translate to? It basically means that players will naturally gravitate towards teams that can pay them the exorbitant amounts that they seek. This is why you have the same teams winning season in and season out, because they are the only teams with the cash flows backed by wealthy owners to pay these wages, hence attracting the best and the brightest from the world to the EPL and stripping off other leagues locally, continentally, and globally of adequately developing their own football teams.
Sky Sports, which is part of the media conglomerate BSB (British Sky Broadcasting, backed by 21st Century Fox), had exclusive live UK rights to the Premier League until the 2007/08 season when an EU Competition ruling forced the Premier League to share live TV matches among more than one broadcaster. That brought down their exclusivity dominance from 100 percent to 75%. They however, due to lack of proper regulation, do not equitably distribute the revenues generated from the advertisements during the games to all the teams in the Premiership. What they have been doing since the inception of their relationship with English football is allocating 60 percent of TV revenues to the likes of Manchester United (who have consistently raked in between 7-15% over the last 20 years), Arsenal, Chelsea, Liverpool, and recently Manchester City. The effect this has is that it has caused other minnow teams like Sunderland, Portsmouth, Hull, Blackburn, and Stoke to struggle significantly when it comes to these revenues, especially when players leave for bigger teams, for bigger wages.
The lack of an organized somewhat “socialist” structure in the Premier League ensures that we continually see a monopoly amongst those who retain the title (After all since 1996, only 4 different teams; Manchester United, Manchester City, Chelsea, and Arsenal have been crowned champions of England), whereas in the NFL in that same span of time, 10 different teams (New Orleans Saints, New York Giants, Denver Broncos, New England Patriots, Tampa Bay Buccaneers, Baltimore Ravens, Dallas Cowboys, St. Louis Rams, Green Bay Packers, and the Pittsburgh Steelers) have won the Super Bowl.
One may argue that the capitalist nature of America allows players to receive endorsements that are absolutely astronomical from different corporations, so they are not necessarily motivated by one particular club. Perfect example, Michael Jordan in his prime (The 1995-96 season) was one of the lowest paid first team salary earners in the NBA, but grossed $60 million annually in endorsements from Coca Cola, Nike, Hanes, Ball Park Hot Dogs, McDonald’s, Wheaties, Chevy Blazer, and Gatorade. Such endorsements can easily make any professional athlete forget their wages and simply focus on their love for the game. This can never be the case in the UK, because the salary wages to endorsement ratio is the complete opposite of the Michael Jordan example.
The question being asked is… “do you think the English Premier League needs to reconstitute the way they do business to avoid disasters that happened with the likes of certain clubs such as Leeds United, Newcastle United, and Portsmouth F.C, that had to file for bankruptcy?” Can the EPL learn from the NFL and avoid being at the whim of wealthy mercenary type owners who don’t understand football (I can’t bring myself to call it soccer, I just can’t) and who burden big teams with insurmountable debts? Can corporations in Europe begin to focus more on splurging out on more players in endorsement deals so that way the players can focus on their ability to market themselves to make that big money while having a team focus at the center of what they do when it comes to “the beautiful game”? After all, for a cup competition that boasts to be the biggest in the world, comprised of 25 leagues, with an average representation of 3 teams from each league, with a 22-man squad per team, bringing that total to 1,650 players, there are literally only 5 names that are recognized from a brand perspective when it comes to sponsorship and marketing on a global scale.
The fear with the soon to be passed “Financial Fair Play” policy which stipulates that all teams in Europe spend only what they earn will show that the English Premier League is the most expensive and lucrative sports league in the world, but at the same time, the most irresponsible when it comes to good corporate governance.
The National Football League (NFL), Major League Baseball (MLB), and the National Basketball Association (NBA) all learned the hard way in the late 80’s and early 90’s, where several teams went into administration simultaneously, that some entire seasons were suspended in order to rectify an impending problem. We have even seen recently some leagues having lock down seasons due to the inability to arrive at a consensus when it comes to equitable salaries.
Should the EPL wait for such to happen before they introduce Salary Caps, Salary Floors, and Equitable distribution of television revenue? Can’t teams focus on ticket, jersey, and merchandise revenues for significant incomes? At what point will leagues in Europe learn from the NFL to avoid their teams slipping into administration.
What better way can we educate young athletes on the intricacies of these payment structures before allowing super-agents to take advantage of them?
For those of us who love sports, spreading the word on these details with enough objectivity and accuracy is one of several ways.
Nwaji Jibunoh, International Correspondent for War Room Sports
Located in Lagos, Nigeria, Nwaji Jibunoh is War Room Sports’ International Soccer Contributor. Nwaji also contributes commentary on U.S. sports from an international perspective. He’s an Atlanta Falcons fan, Howard University alum, and former tight end for the North Atlanta High School Warriors.
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