Why has the notion taken hold among many that there will be some sort of inevitable collapse in television revenue?
It would be completely unprecedented for the next television deal, which will negotiated in the coming season, to be less than the last deal (which is guaranteed through 2019).
The simple fact of the matter is that sporting events represent the last type of content that people will watch live. Irrespective of a one-season domestic ratings drop, the Premier League is experiencing unprecedented international growth and is a prime commodity that has seen television revenue increase at every turn the last three decades.
Already, there are projections that international television revenue will massively expand through 2022 (see this: http://www.dailymail.co.uk/sport/fo…ue-earn-billions-thanks-foreign-TV-deals.html). Furthermore, if you look at television deals for comparable billion pound professional sports leagues worldwide (MLB, NFL, NBA), NONE of them have seen any kind of serious retraction in recent decades, but have seen robust growth.
The NFL is the only other league that has had a period of explosive growth like the Premier League and despite a major ratings slide last season, remains a golden brand among advertisers (https://www.forbes.com/sites/kurtba…billion-despite-drop-in-ratings/#5feca4d3525b).
By the way, if you want evidence from this week that there will be yet another bidding war for the domestic 2019-2022 television rights, please note that the Football League just doubled their television deal revenue and there are talks that Amazon, with their unlimited funds, could compete with BT and Sky in an upcoming auction for EPL television rights: https://www.theguardian.com/footbal…ve-football-league-rights-in-180m-a-year-deal
With all that said, one thing that is missing from this thread and this general debate among Spurs fans is raw numbers. I wonder how many people know how little our staff costs have moved since the beginning of the decade. Let’s look.
YEAR/TURNOVER/WAGE BILL/WAGE BILL TO TURNOVER RATIO (FIGURES THROUGH 2016 VIA OFFICIAL CLUB RELEASED FINANCIAL REPORTS)
2011/2012–144.2/90.2= 62.55% (television income 59.2 million)
2012/2013–147.3/96= 65.1% (television income 57.3 million)
2013/2014–180.5/100.4= 55.6% (television income 89.5 million–new television deal begins this season)
2014/2015–196.3/100.8= 51.3% (television income 90.5 million)
2015/2016–209.8/100.4= 47.85%% (television income 94.8 million)
2016/2017–There has been no financial report released for this past season, but let’s make some rough projections. To begin with, television income rose substantially to 145.5 million pounds per http://www.bbc.com/sport/football/40125394, as a new television deal through 2018-2019 went into effect.
The club also earned Champions League football for the first time since 2010/2011. In 2015/2016, the club earned a little over £15million via Europa League payouts per the official financial report, so let’s be conservative and say that we only earned a total of 30 million pounds from our CL exploits, which would mean a 15 million pound increase on that front from the previous season, on top of the £50million pound television revenue increase.
Setting aside any new commercial deals, our revenue likely grew by roughly £65million pounds last season (note that the Nike kit deal, by numerous reports, represents a dramatic rise in annual payout over the previous Under Armour deal, but let’s ignore that for now).
That rise in television and CL income would see our total turnover around an estimated £275million pounds for 2016/2017.
Now, on the wage bill front, it’s harder to project what costs the new contracts handed out to a near dozen players placed on staff expenses for last season. Let’s say we’ve been ultra aggressive in providing pay rises since the summer of 2016 and have handed 12 players an average pay rise of 35K a week, each (I can’t recall the exact number of players who got fresh contracts from the first team).
That would mean a wage bill rise of 21.8 million pounds and put Spurs at roughly £275million in turnover to 122 million in wages (44.3% wage to turnover ratio).
If someone wants to challenge that and thinks 35K a week average increase for say, 12 players, is too little, go ahead and make your own projections for last season. But I think I’m being pretty aggressive in that projection.
The bottom line is this: our revenue has massively increased the past 5 years and our wage bill has almost surely not kept pace.
I believe we need to substantially up our wage bill to at least meet the previous threshold of 55% wage to turnover ratio. Given our new commercial deals and CL football the coming season, our revenue may very well break £300million.
Our wage bill should be at least half that. If it was, you could potentially give the 10 most important players in the squad something like a 50K a week bump in salary, which I think would be pretty fair and put the players pay in line with the market and many of our competitors.
Right now, it seems clear to me we are operating well below our capabilities on the wage front, unless Levy MASSIVELY increased the wage bill in the last year, which doesn’t seem the case given the Rose outcry.
Now, I understand stadium expenditures, but that is debt that will be paid off incrementally over time and covered partially by yet to be finalized naming rights fees. The owners of the club have also seen their initial 25 million pound purchase of the club turn into a near billion pound windfall, as Forbes placed Spurs recent value at well over 800 million pounds (this number almost certainly will increase with a new stadium and increasing revenues).
In conclusion, we know we have one of the best squads in the history of the club RIGHT NOW. Why should we risk many of the players leaving due to an ultra lean wage bill, only to hypothetically spend vigorously in 5 years time on wages when the stadium debt is paid down on players who are gambles to ever reach the current squad’s level?
Why not invest NOW in the squad we know can take the club to the top (at a most crucial moment when on the pitch results are vital to ensuring a filled new stadium), instead of spending later on players who could far more easily flop? Furthermore, there is NO ironclad guarantee that once the stadium is built and paid for, that Levy will massively increase spending.
He has no binding obligation to do so. I think the pressure in the next year is going to be too great for him not to make a decisive choice on whether to break our current structure to keep our squad and manager in tact. If he doesn’t do it, and we have a mass exodus (which is likely, in my opinion), it could set the club back a decade. If he does do it, I think he’ll be rewarded with regular Champions League football and trophies. Watch in 6-8 months when the next television deal is negotiated.
If, as I believe, the television money keeps pouring in, the excuses of an imminent collapse will fade really quickly and player/fan pressure to up the wage bill substantially will increase massively by next summer.
by THFC 1239 on Spurs Community.