As the 2019/20 Premier League season finally comes to a close, I thought that it might be interesting to look at the impact of climbing or dropping places in the league table. There might be more for teams to play for than people might think.
As a reminder, in 2018/19 each club received equal shares for 50% of domestic TV £34m, overseas TV £43m and commercial income £5m. Each match broadcast live was worth £1.1m (on top of £12.2m for a minimum of 10 games), while each league position was worth £1.9m (merit payment).
However, the story has changed with the new 3-year deal for the 2019-22 cycle, as the numbers are different and there is a twist in the distribution methodology used for the overseas TV rights. This is important, as overseas is the area driving the growth in TV money.
Total 2019-22 Premier League TV rights rose 8% (£0.7 bln) from £8.5 bln to £9.2 bln. UK domestic rights actually fell 7% (£0.4 bln) from £5.4 bln to £5.0 bln, but this decrease was more than offset by overseas rights increasing by 34% (£1.1 bln) from £3.1 bln to £4.2 bln.
As can be seen, the increase in PL overseas TV rights is particularly striking. These now average around £1.4 bln a year, up from £1.1 bln in the 2016-19 cycle, accounting for 45% of the total. As recently as 2007-10, these were only worth £200m a year.
Overseas TV rights were previously distributed as equal shares by the Premier League, but this was changed in the 2019-22 deal. Clubs will continue to share current levels of overseas revenue equally, but any increase will be distributed based on where they finish in the league
Based on the 7% fall in domestic rights and 34% increase in overseas rights, domestic revenue will drop by £110m, but overseas revenue will rise by £295m, resulting in a net increase of £185m a year to be shared among the 20 clubs in the Premier League.
This means that the amount of money distributed based on league position has significantly increased to £668m, comprising domestic rights £373m plus overseas rights £295m. In this way, each league position in 2019/20 is worth £3.2m (up from £1.9m in 2018/19).
The change in distribution for overseas money means that final league position is more important. As Richard Scudamore put it, this is “a subtle change that further incentivises on-pitch achievement.” That’s true, though it is also likely to further grow the gap to the Big Six.
However, there is also the impact of the £330m COVID-19 rebate agreed with TV companies (domestic broadcasters £223m, overseas £107m). That works out to 12% of £2.6 bln total anticipated payments. It seems reasonable to allocate the rebate to each club in the same proportion.
If we further assume that the rebate is based on league position, i.e. the more money a club receives, the higher the rebate, then each place would mean an additional £0.5m towards the rebate. Therefore, the net rebate in 2019/20 would be £2.7m (£3.2m less £0.5m).
In summary, the amount of money each league position is worth was £1.9m in 2018/19, increased to £3.2m with the new TV deal in 2019/20, but has been reduced to a net £2.7m, due to the rebate owed to broadcast companies for the delayed matches caused by the pandemic.
This can mean some chunky moves in each club’s TV distribution. For example, looking at the Premier League table after match day 37, #BurnleyFC would receive £16m more (rising from 15th last season to 9th), while #WatfordFC would get £19m less (dropping from 11th to 18th).
Or take #AFC who are currently down £13m, having dropped from 5th to 10th. If they win their last match against Watford, they could move up to 8th (depending on results elsewhere), which would be worth an additional £5.4m to Arsenal.
Of course, the final league positions may yet change on the final day of the season, but the amounts now available for each league position suggest that there could still be something to play for, even for those clubs sitting comfortably in mid-table.
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