The European Super League has raised questions about how football clubs are funded and why they end up swimming in debt. Here's what the experts say.

0
26

Soccer fans protest plans for a European Super League.

The ESL was set to be one of the most elite and wealthy breakaway football leagues ever. Despite the league’s collapse, it’s triggered a fan-led review into clubs’ financial situations. Two football finance experts told Insider how clubs earn money and why they get into so much debt. See more stories on Insider’s business page.

The new European Super League (ESL) came crashing down recently after nine football clubs pulled out of the plans following huge backlash from fans, politicians, and players.

The 12 teams that were about to join the elite breakaway league would have been handed between 100 million to 350 million euros ($120 million to $420 million), the Financial Times first reported.

The ESL was also planning to receive $4.2 billion in debt financing from JPMorgan over a 23-year period, before the US investment bank said it “misjudged” the deal after the majority of the teams withdrew from the league within 48 hours.

Now, a fan-led review into English football will take place to assess clubs’ finance, ownership, and supporter involvement in the game.

But it begs the question: where does all this money come from in the world of football? Overall, there are three main sources of revenue: broadcasting, commercial, and matchday revenue.

TV broadcasting revenue

TV deals are one of the most important sources of income for football clubs. which can be sold domestically and internationally. Leagues, such as the highly popular English Premier League, own the television distribution rights of all their games.

TV channels bid for the rights to air the matches and the football leagues sells them to the highest bidder. For the Premier League, this happens every third season and is typically Sky Sports, BT Sports, and most recently, Amazon Prime.

Robert Wilson, football finance expert and lecturer at Sheffield Hallam University, told Insider that broadcast revenue typically makes up around 70% of the income of most Premier League clubs.<!–