Soccer Stadium

Scoring Rewards in Football

Joost Melchers
Joost Melchers is currently studying for his E.B.E. bachelor degree. Meanwhile he participates in several extracurricular activities of which the Blog Committee is one. His interests concern a.o. macroeconomic developments, science and technology, and sports.

A lot of football leagues and competitions have reached their end of the season and the champions were honoured. Their fans have celebrated immensely and gazed upon those shiny trophies. Besides honour and gratitude, a championship brings financial rewards on multiple levels. Do you know for example how much the UEFA spends annually on prize money in both the Europa and the Champions League? Or how much the revenue streams are in the Eredivisie and the Premier League? Let’s find out!

Eredivisie revenues explained

The revenues from a regular club can be divided in: sales of tickets, sponsorships, broadcast revenues, UEFA prize money, transfer gains, merchandise and others. It is interesting to see how the KNVB allocates the broadcast revenues. Since the year 2013-14 the Eredivisie has seen a change in the system. The old system which was the Club Position Matrix (CPM) system was very complicated and it required a circumstantial formula. Therefore a change was inevitable.

The new system is easier to understand and it encompasses the rankings of the past 10 years, so in a way it can be seen as prize money. It works as follows. For every season, champions earn 18 points, the runner-up 17 until the last club with 1 point. Furthermore, the most recent season counts 10 times, the one before that 9 times until the 10th season counting just once. For example, PSV and Ajax have earned respectively 920 and 958 points. Meaning Ajax gets the biggest share (12.95%) of the pie. In 2014-15 this was around €8 million.

Looking at further revenues of both the Eredivisie and the Jupiler League you will see that most of the income comes from sponsoring. Though broadcasting revenues are significant also. And that the total revenues of both leagues combined are more than €500 million. This is for the year 2014-15:

Infografic BVO

Big money in the U.K.

A nice comparison can be made with the English Premier League, both in system and in the amount of money allocated. In the English Premier League, a three year deal for the TV-money in the period 2013-16 totals a mere €6.73 billion, that’s €2.24 billion annually for the prize money fund. This is then divided into three parts: 50% is split equally between all the clubs, €72 million each. 25% is based on your performance a.k.a. merit payments: €1,603,904 for the 20th place and €1,603,904 will be added to each position higher up the rank. And another 25% is paid as facility fees depending on how many times a club’s matches is broadcast in the U.K.. This system results in a ratio of 1.53:1 between the club finishing top and that finishing last, €84 to €128 million. I think this is a very fair allocation. Especially when compared to the Eredivisie where there is no equally distributed portion.

But this is just the income from broadcasting. Looking at total revenues, the best earner in the Premier League is Manchester United with €513 million in 2015, without success and considerate financial returns from UEFA leagues. Not bad, since it is just €10 million more than all the revenues from the Eredivisie and the Jupiler League combined! What a contrast.

UEFA’s billions

So missing out on UEFA prize money didn’t seem to harm the Mancunians, but how much would it have differed? Well, the UEFA’s prize money fund is €1.257 billion per season for the Champions League and €381 million for the Europa League (for the cycle 2015-18). Which are then distributed on a ratio of 60:40 to fixed amount and market pool. For the market pool it depends on the country the club is from, a proportionally larger TV market grants more market pool money. The fixed amounts are presented here:

UEFA Prize Money

So reaching the 16th rounds with immediate participation in the group stage granted PSV €17.5 million last year, excluding the income from matches won (€1.5m each) or matches played a draw (€500k each) in the group stage. This is definitely one of the financial benefits of being champion, which Ajax missed by a hair this time.

Football success is rewarded

You can see that a successful football season both domestically and European pays off. But whether money is the key success factor for trophy gazing is a causality that is yet to be supported! Just have a look at Leicester!

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