Blind Hammer looks at how OS and TV Money makes an economic case for West Ham to resist a transfer for Payet.
When I wrote my recent Mind the Gap article some people commented that expanded TV monies were largely making stadium capacity irrelevant. This article is about why I think stadium capacity matters if we want to keep Payet.
If we look at how the TV money is divided amongst the clubs then some interesting features emerge. TV money does not follow league position. Last season, for example Arsenal was clear winners in Premier League TV money, even though they did not finish top. Despite winning the League Leicester finished not just behind Arsenal but also Manchester City, Manchester United and even Tottenham. Arsenal earned £100,952,257, whilst Leicester earnt £93,219,598. Why did Leicester earn less? The answer lies in the way TV money is distributed. TV money is made up of three payments. A core payment which is paid to all clubs, a merit payment which is based on league position, and finally and probably most crucially a facility payment based on the number of times that a club is shown live on TV.
The way the system works is that the Broadcasters get the rights to show 10 matches from each club without incurring any extra payment. For every match over 10 shown the Broadcaster had to pay an extra £747,922.
A good way then to judge the marketing success of your clubs is to count the number of live games in excess of this standard 10.
A not surprising cohort is in the group appearing only 10 times or less. Norwich with 9 games and Watford and Bournemouth with 8 games failed to reach even the 10 game marks. This is a little damning for these clubs as the Broadcasters could have shown 1 of Norwich’s and 2 of Bournemouth’s and Watford’s games, in effect for at least half price, or even free if against each other. A second group of clubs are stuck on the 10 game marks. Crystal Palace, West Brom Stoke and Swansea complete the list of 6 clubs who received no extra TV monies last year. Despite the economic disadvantage this places these clubs in they probably still do better than the European counterparts where clubs negotiate individual TV deals.
Hovering just above this group was Aston Villa with 11 games, probably in less disastrous seasons they would have shown more, and Southampton with 12 games, surely disappointing given the quality of football they played.
Then there is a middle league in which West Ham currently sit. At the bottom of this middle league is Sunderland where the Broadcasters invested in 3 extra games, then come Leicester and West Ham, both showing 15 games, then this middle league is topped by Newcastle with 16 games and Everton who enjoyed TV monies from 8 extra games having 18 matches shown.
Then we have a top 6 where there was serious TV monies paid. The Broadcasters paid Spurs for 11 extra games, showing 21 matches, Chelsea came next with 22 matches, Liverpool with 23, Manchester City with 25 , Manchester United with 26 and finally Arsenal who proved to be the Broadcasters’ favourites, having and extra 17 matches shown with 27 live appearances in all.
All this shows that the TV Monies league does not necessarily match performance, not only were Leicester trailing down this league, relegated Newcastle were also mid table. There is however, a closer correlation between TV Monies and a stadium capacity league table. This is not an exact match as the two main North East clubs; Newcastle and Sunderland were exceptions with larger capacities of 48,000 and 52,000 respectively, although each club rarely filled their stadiums.
Despite the North East anomaly the pattern of TV money following stadium capacity generally persists. The top 3 TV earners all have stadium capacities over 50,000. The top 5 clubs all have capacities over 40,000. All 6 of the bottom TV earners have capacities under 30,000. Outside of the top 5 only Newcastle Sunderland and Aston Villa have capacities over 40,000. Generally TV revenues are attracted to larger capacity stadiums across the league.
Why should bigger stadiums attract more interest from Broadcasters? Well part of this obviously reflects historic greater levels of support for these clubs. Equally important though is the fact that football is a glamour entertainment industry. The vast cathedrals of a modern football ground are the exciting backdrop to showcase the cream of the world’s talent. Despite its famous lack of atmosphere the library at Arsenal’s Emirates is the stage to which the Broadcasters are consistently attracted.
However even marginal advantages in revenue caused by extra TV money and attendance matter. Bill Kenwright commented on why Everton could not match the economic power of Liverpool. He explained that although Anfield exceeded Goodison by only 6,000 this meant that 19 times a season Liverpool achieved this extra revenue. 114,000 supporters more a season watched Liverpool. Over 5 years the gap inexorably grows with over half a million more paying customers. Also this extra support is unlikely to be confined to the same 6,000 extra people every game. It is more likely that many more supporters attend only a few games. In other words Even if a person attends only one game, they may become hooked into supporting a club in the longer term thus further generating TV interest. .
Consequently not only week in and week out, but over the longer term year in and year out, Everton are unremittingly pressured by Liverpool’s competitive edge. Over time, Liverpool can generate more resources. Their marginal capacity advantage over Everton is further amplified when the TV monies deal is struck.
Yet stadium capacity alone, as Newcastle and Aston Villa have proven, does not necessarily translate into football success. Whilst the Olympic Stadium provides the infrastructure for growth we must have accompanying football excellence to realise this project. West Ham must grab the horns of the OS Opportunity to grow their TV appeal by providing the football to match.
This is why it would be economically insane to entertain any offers for Payet on the basis of transfer monies. Over four years Payet could probably garner the amount we would receive in any transfer monies simply from marketing of merchandise allied to the extra matches that the broadcasters will want to show. Apparently Broadcast money per game next year will grow even more. If West Ham achieve the same number of TV games as Spurs this is likely to generate £21 million a year in basic TV Match fees alone, before we even start to talk about merit payments and the increased core components of TV Monies. Of course each extra live match also provides the opportunity for an unparalleled free two hour merchandising advert for West Ham across the Globe.
Payet is now a global talking point. He can help West Ham expand not just for the here and now, but help provide the structural Launchpad to establish years of growth persisting long after his career has ended. He could be the figure for West Ham that Zola was in the period of Chelsea’s transformation. This is probably a once in a life time opportunity for West ham to shake up the structure of the league. The Olympic Stadium must exhibit the football which makes the TV companies buzz around it like bees in a honey pot.
Currently Payet is the hottest property in world football. If he can be signed up for the West Ham ambition it is time to make Payet pay for West Ham.
Notes for information.
Below I reproduce the table I created to help me research and compose this piece. It shows the league table according to live matches shown and also shows the attendance of each club.
TV appearance League compared to Stadium Capacity.
Pos. Team. Matches shown. Capacity.
1. Arsenal. 27. – 60,260
2. Manchester United. 26. – 75,653
3. Manchester City. 25. – 55,097
4. Liverpool. 23. – 45,522
5. Chelsea. 22. – 41,798
6. Tottenham. 21. – 36,284
7. Everton. 18. – 39,571
8. Newcastle. 16. – 52,338
9. West Ham. 15. – 34,950
9. Leicester. 15. – 32,312
10. Sunderland. 13. – 48,707
11. Southampton. 12. – 32,505
12. Aston Villa. 11. – 42,660
13. Crystal Palace. 10. – 25,073
13. West Brom. 10. – 26,850
13. Stoke. 10. – 27,740
13. Swansea. 10. – 20,909
14. Norwich. 9. – 27,224
15. Bournemouth. 8. – 11,464
14. Watford. 8. – 21,500