The Most Entertaining Leagues And The TV market

The Premier League is widely regarded as the most entertaining league. UEFA’s coefficient, however, values Spain’s La Liga as the top league in Europe ahead of England, Germany, Italy, and France.

Yet, despite Spain’s continental success, it is England’s Premier League that is the most popular league in the world, illustrated by consistent dominance in the domestic and international TV market and the number of viewers it continues to attract.

When the Premier League was formed, the more established clubs leading the breakaway knew that they couldn’t form an attractive competition without the smaller sides. As an incentive, they offered an aggressive redistribution of broadcasting income. This was a relatively new idea to European football, where clubs would typically sell their television rights individually rather than as a collective unit. The nascent Premier League’s redistribution was split into two sections: domestic and international rights. The domestic broadcasting revenue was split on a 50:25:25 basis: 50% was divided equally between the clubs, 25% was awarded on a merit basis determined by finishing position, and 25% was distributed as a ‘facility fee’ – on the basis of how often the club was shown on TV. The international rights (until recently) were split equally between all competing Premier League clubs. Such an aggressive method of redistribution would mean that the top team rarely received more than 2.5 times that of the bottom team.

It is no secret that the Premier League would not be the economic monster it is today without Sky. Sky’s global outreach and flashy marketing techniques gave English football the platform it needed. The first deal from 1992-93 to 1996-7 was worth £304 million. Sky’s last sole ownership deal from 04/05 to 06/07 – which was only three seasons’ long – was worth £1.024 billion. Sky shared later domestic deals with media outlets Setanta and most recently BT Sport and Amazon Prime. The deals reached their peak for the 2016-19 contract with a valuation of £5.1 billion but have levelled off in the most recent negotiations (2019-2022) at approximately £4.7 billion.

This aggressive method of redistribution, coupled with the huge growth of television income – broadcasting made up 53% of all revenue obtained by Premier League clubs in 2017 – allows the Premier League to achieve ‘match-day uncertainty of outcome’ and successfully brand itself as the league where ‘anyone can beat anyone’. This, ultimately, is its USP – and what makes it such a potent entity to market.

By contrast, La Liga historically sold its broadcasting rights individually, leading – inevitably – to vast inequalities. For instance, in 2014-15 both Real Madrid and Barcelona took home €140 million in individually sold rights compared to Almeria’s measly €18m. The competitive balance was subsequently affected, and Barcelona, Real Madrid, and Atletico Madrid cantered to the Champions League spots each year.

The tide, however, is changing. In April 2016, La Liga president Javier Tebas acknowledged the need to avoid being left behind: “We hope to grow so that the Premier League does not become the biggest competition in the world and we can be at the same level economically…” Tebas managed to entice all the clubs in La Liga to collectively sell their television rights and revenue share in a similar way to the Premier League from 2016 onwards. This reorganisation saw valuation of the league’s rights jump from €851 million in 2014-15 to €1.247 billion in 2016-17. The new revenue sharing system largely mimics the Premier League model – although 10% of the overall valuation is given to the second-tier Segunda B to avoid ‘parachute payments’ – with 50% of the La Liga pot equally shared between the 20 teams, 25% awarded on the merit basis accounting the previous five seasons and 25% distributed on metrics such as viewers per match. This has halved the TV income disparity between to top and bottom teams from 8:1 to 4:1.

While this is a step in the right direction for promoting match-day uncertainty, the implementation is definitely on the softer side. For instance, basing meritocratic payments on placings from the past five years significantly benefits the more established La Liga clubs, disadvantaging the recently promoted clubs who are likely to face the threat of relegation. Further, the 25% distribution via viewer metrics will also hugely favour the established clubs who have much larger fan bases.

The Premier League are also changing their model, moving ever so slightly away from their aggressive redistribution of broadcasting rights. In June 2018, a majority vote among its member clubs agreed a new formula for sharing international television revenue. Whereas previously the whole 100% was split evenly, from the 2019/20 season onwards the current level of revenue from international TV rights sales (£3.3 billion) will be shared equally between all 20 clubs, with any increase on that level will be distributed according to where the teams finish.

While this will further increase the financial firepower of the ‘big six’ clubs, the differential of revenue sharing will be capped at a ratio of 1.8:1, meaning that any disparity over the threshold will be redistributed to maintain the Premier League’s all-important match-day uncertainty. It’s the magic formula which the league dares not discard.