The monetisation of sport in the UK is hitting heights in 2016 that were scarcely conceivable just a few years ago.
Football has been revolutionised by the astronomical money that the Premier League TV deals have brought in. Cricket could be next, following a vote by English cricket counties that paves the way to the creation of an eight-team T20 Franchise competition that would be far more geared towards generating revenue.
The statistics are eye-watering. The summer transfer window outlay for Premier League clubs was an astounding £1.165 billion – breaking all previous records. The TV deal in place for the Premier League is worth an astonishing £10.4 billion. Manchester United recently recorded revenue of £515.3 million for 2016 – up from £395.2 million in 2015.
It seems that everyone is a winner in the world of football. Manchester United have the spending power to splash however much they want on whoever they want. Paul Pogba was signed for an incredible £89m – a world record. Pogba’s own £290,000-a-week wages make him the highest paid player in the Premier League. Even his agent, the erratic Mino Raiola, pocketed £20m from the Pogba deal alone.
The money set to change hands in cricket is dwarfed by the Premier League, with each country promised a measly £1.5 million a head in TV money – though it’s incredible to think that so much money seems a pittance. Yet consider the model that the English Cricket Board is looking to replicate – that of the Indian Premier League (IPL) and you realise the potential it has.
Cricket is the national sport of India, franchises are owned by celebrities, stadia fill out week-on-week and the biggest and best players are paid very handsomely for their participation. For this reason, it is nigh on impossible for the UK to emulate the IPL from a popularity perspective, or indeed for the money it generates.
The 2016 edition of the IPL was valued at over $4bn – a 19% jump from the previous year. Indeed, according to the Board of Control for Cricket in India, the 2015 edition of the IPL contributed $182m to the GDP of the Indian economy. This is all the more remarkable given that the IPL runs for just seven weeks.
The money available for players in endorsements is also spectacular – Indian legend MS Dhoni pulled in $23m from endorsements alone in 2016 – taking his overall yearly earnings to just shy of $30m.
If the English version of the Indian Premier League can generate anywhere near the level of interest that the IPL does (a tough task given that cricket is comparatively low down the pecking order in this country) the financial rewards for players are unprecedented. It’ll be tough, but if they get it right, sponsors will flock and with serious financial clout it could really take off.
What this all means is that there is now more riding on sport than ever before. Sport has been elevated from an entertainment and a past time to a full blown and very serious business enterprise.
Brands, marketers, influencers – everyone is going to continue to want a bigger slice of the Premier League pie and other sports are following suit.
Cricket will be particularly fascinating to observe, as the very format of the game is being changed to accommodate fans and create a more marketable brand. T20 is all about excitement and implementing a franchise system will also offer far more lucrative and enticing advertising, sponsorship and marketing opportunities. There is even talk of looking to use a major venue like the Olympic Stadium to host a match – imagine if it came off – making a success of such an event could have a seismic effect on the sport and catapult it back into the mainstream.
And yet the flip side of this is the risk that is now attached to sporting ventures. There is so much money being poured into sport that a wrong slip can lead to disaster, we have seen examples of football clubs (think Leeds and Portsmouth) succumb to mismanagement of their finances. With more money changing hands than ever before, it is worth wondering considering how long it may be until such a situation arises again.
Reputations also matter more than ever before. With so much money invested in clubs and players, brands and sponsors want to know that their investment is getting the respect and return they feel it deserves. The margin for error is miniscule and the potential ramifications of any mistake are substantial.
There is more at stake for sporting brands than ever before, but what this brings is opportunity. Manchester United are evidence of how a brand alone can now pull in extraordinary revenue, regardless of on-pitch achievements. Whether it is sustainable or not in the longer term, it shows no signs of slowing down any time soon.
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