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Feb 11, 2009

Premier League windfall brings relief

Sales managers at Aston Martin, Lamborghini and Ferrari dealerships the length and breadth of England can all breathe a sigh of relief; the next domestic Premier League TV rights deal has proved that football is recession proof and as a happy by-product young men with more money than sense will continue walk into luxury car showrooms, at least until 2013.

Last Friday saw the Premier League complete a deal which would have impressed an alchemist.

Out of the jaws of a global economic meltdown that has seen countries buckle and financial institutions collapse Richard Scudamore and his team at Gloucester Place were able to announce that the sale of live TV rights to the league in the UK for the three seasons from 2010-2013 had not only matched the £1.706bn achieved for the current deal but has improved on it, rewriting the record books with a £1.78bn deal.

Add to the abacus the £173m the BBC parted with to secure highlights and in three deals the Premier League has pocketed an extraordinary £1.995m.

And Scudamore and friends are not finished yet. The continued growth of international interest in the Premier League means that when the league announces how much it has earned by selling its TV rights to broadcasters across the globe the current figure of £625m is expected to be smashed to smithereens.

Once deals for internet and mobile coverage are finalised the 20 Premier League clubs will be looking at a £3bn media rights bonanza at a time when the rest of the planet is contemplating a recession.

Sky, the UK's largest pay-television platform won five of six live packages available at a cost of £1.623bn which will see it broadcast 115 games per season from 2010-11 until 2012-13. The sixth package was won by Setanta, a channel carried on the Sky platform, who pipped Soccernet's glass-officed colleagues at ESPN with a bid of £159m to acquire the rights to 23 games for the same three seasons.

(For those of you interested in such things this means that Sky are paying £4.7m per game, while Setanta are paying £2.3m per game. But appearance can be deceptive; Setanta might be paying less but they are doing so for less attractive games.)

While it is all very impressive it also more than a little surprising, not least because the current economic climate appears to have had little or no effect on the broadcasters' ability to justify extraordinary expenditure.

Regardless of the business model of the broadcasters concerned there is no doubt that this is good for the Premier League and particularly its 20 clubs.

The deal means that provided they can avoid relegation, clubs they can plan for the future safe in the knowledge that their income will be guaranteed at levels better than at present at least until 2013, and in an era of such financial uncertainty the ability to look four years hence in confidence is a rare blessing.

The knock-on effect for those currently looking for a buyer, clubs likes Everton and Portsmouth, the new TV deals mean that investors who may have been keeping their powder dry could now be tempted to step forward.

It's all a far cry from the very first deal done between the Premier League and Sky for live coverage from 1992-97; by comparison a paltry £191m was spent to see the satellite broadcaster show 60 games a season.


For a club intent on breaking even by 2010 Chelsea seem determined to accomplish their goal in the most counter-productive fashion.

Success on the pitch breeds success off the pitch and one of the key components in achieving this end is to ensure stability for the improbably fragile psyche of cosseted players.

The best way to discombobulate and render ineffective a finely-tuned athlete is to introduce change and variables into his routine. In the case of Chelsea this means unsettling the dressing room by removing three managers in 18 months.

The consequence of dismissing Jose Mourinho, Avram Grant and now Luis Felipe Scolari has been to rob a harmonious, balanced side of its confidence and verve.

In the power vacuum that followed Moruinho's departure fissures appeared and an ageing, stagnating squad has become wracked by division and disaffection. As a result trophies and success - and the sponsorship millions they inevitably bring - are, at present, a forlorn hope.

But not content with creating instability and thereby creating a barrier to success and in turn financial success, the removal of Mourinho, Grant and Scolari - three of the highest paid managers in the game - has resulted in immediate and high costs.

The conservative estimate is that sacking the three has cost Chelsea £25m in compensation payouts, the less conservative puts the cost at £40m.

Later this week the club had hoped to reveal progress in their efforts to reach profitability by next year; interestingly Chelsea have now delayed plans to report their latest set of accounts.

While Chelsea's losses have been steadily decreasing over the last few years, the impact of paying-off their highly remunerated managers cannot help but have had a significant negative impact, and one that could even hamper player purchases.

Losses have been reigned-in impressively at Chelsea: from £140m in 2005, to £80m in 2006 down to £75.8m last year, but with Roman Abramovich having been hit by the global financial crisis the need to become self-sustaining is more important than ever.

Chelsea are in danger of getting trapped in vicious circle of managerial change and associated costs that can only ever lead to disharmony in the squad and defeat on the pitch which can only be addressed by further change and further costs.

While his credentials and CV are beyond reproach one can't help but question the logic of Chelsea's decision to appoint Guus Hiddink as temporary Chelsea manger until the end of the season.

Firstly he won't come cheap, and secondly it goes no further to addressing long-term stability and while that remains there is a very real risk that Chelsea may not qualify for the Champions League next season, a consequence as unpalatable and unacceptable to fans as it is to Abramovich.

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