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Rich man’s world

The Financial Times are reporting on documents they have seen from people directly involved in the Super League, in which the level financial playing field between the elite clubs is laid out.

They also say the Super League have declined to comment on what has been leaked but says it’s model is based on higher payments to those lower in the pyramid and will create a sustainable model for everyone.

The documents range from revenue-sharing arrangements to strict spending limits which resemble the structure of North American sports leagues in which franchises strike joint commercial agreements, salary caps and use collective bargaining agreements with players to lessen the financial advantage between teams who are guaranteed to be involved every season irrespective of performance.

This is of course a seismic shift from the way the European pyramid system works and where clubs can go up or down.

 

🚨NEW in @FT: Leaked Super League documents reveal radical plan to level financial playing field between elite clubs

🚨 Details of contracts show revenue sharing agreements and cost controls modelled on US sports leagues

Me w/ @ArashMassoudi https://t.co/X3OdmONoER

— Murad Ahmed (@muradahmed) April 20, 2021

 

As we all thought and are now discovering it is money which is powering this move and the breakaway clubs believe upwards of €4bn a season in broadcasting and sponsorship rights.

The agreement is set to see the clubs share 32.5% of the commercial revenues. The next 32.5% would be shared between the 20 clubs involved in any given season. Then 20% would be awarded on merit based on performance and the final 15% would be shared based on the size of the broadcast audience.

This would equate to the winner earning just 1.5 times the bottom side. Clubs will be allowed to keep all their gate money, own sponsorship revenue.

The US franchise system also has a strict limit on spending. The Super League clubs have committed to using only 55% of their revenues on things like player salaries and transfer/agent fees. The European clubs typically spend 70-80% of their income alone.

If ever there was a reason as to why some clubs find themselves in the mess they are, the weighting of money on wages is a beacon.

Level Playing Field

 

LONDON, ENGLAND – SEPTEMBER 01: The Chelsea corner flag with club badge lies on the pitch before the Premier League match between Chelsea FC and AFC Bournemouth at Stamford Bridge on September 1, 2018 in London, United Kingdom. (Photo by Catherine Ivill/Getty Images)

The clubs involved in the Super League have also signed up to a “tax equalisation” clause that would see income tax on salaries normalised and calculated at a rate of 45%. This essentially means the tax rate will be the same regardless of where the club is located, which is not currently the case where some countries pay higher rates than others.

The documents also suggest the days of a rich owner racking up huge losses in the pursuit of glory are over as the clubs must now have positive earnings.

This of course is very much the opposite of the way Chelsea and Manchester City have operated over the last decade and before FFP came in. So with this in mind, it is easy to see why those two clubs were reported as being the least inclined to join and may be the ones who are reportedly thinking of backing out.

There is an excellent thread on Twitter by Nick Harris of Sporting Intelligence on how the numbers don’t actually add up for the Premier League teams.

 

SO many things wrong with the ESL, it’s obvious. But sticking purely to numbers: it doesn’t even stack up & the 6 English clubs who embarrassed themselves so cringingly with statements on Sun should ask J Glazer to explain the back of his fag packet. 1/n

— Nick Harris (@sportingintel) April 20, 2021

 

The thread explains how the broadcast rights look they are needed to underpin this, but they need to be 12 billion euro over three years, far more than the current deals are worth.

So, ESL: where is the broadcaster or collective of broadcasters who will commit to perhaps €12bn for initial three-year contracts to show your product that might well be massively boycotted? That’s one hell of a gamble. Any answer?

5/n

— Nick Harris (@sportingintel) April 20, 2021

 

We will all have to wait and see how this plays out and will likely consume far more information over the coming days.

 

 

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SportJudges
SportJudges
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