An introduction to the challenges of distributive equity in the English Premier League

Abstract

PurposeThis article provides a plain language commentary on the distributive equity structure of the English Premier League (EPL) with the aim of introducing sport business practitioners to a foundational challenge facing professional leagues as they grow financially with market opportunities, namely financial inequality between clubs.Design/methodology/approachIntroducing and discussing data from seasons 2009/10–2018/19, the article reveals that despite maintaining a consistent distribution of the EPL prize fund over time, the financial imbalance within the league has grown throughout the period.FindingsThe EPL's financial distributive equity is exacerbated by growing imparity in the acquisition of sponsorship revenues, the distribution of broadcasting revenues and the implications of policies concerning financial fair play and parachute payments, leading to a problematic differential in the talent distribution and win–wage relationship experienced by the top six teams and the remainder.Practical implicationsThe EPL's market-driven continuation of its revenue allocation policies has led to a broadening financial imbalance, in favour of the top clubs, which could paradoxically undermine the financial security of the teams and league. Sport business practitioners should be familiar with this fundamental challenge for sport leagues that accompanies financial growth.Originality/valueWhilst the percentage difference in prize fund allocation between top and bottom clubs appears minor, there is a significant financial variation across the league, primarily due to the large increase in broadcasting income. This is compounded by positive feedback via the relative dominance of the top six clubs receiving the larger share allocated to higher finishing teams.

A qualitative exploration of the franchise establishment process: a case study analysis of “Moana Pasifika” and “Fijian Drua”

“…Additionally, Redmond's model suggests expansion should only occur if a proposed franchise possesses adequate resources, meaning they have the capacity to support themselves as off-field financial performance cannot be separated from on-field performance (Bishop et al, 2021). Resource distribution is critical in the case of Super Rugby as it does not operate a player draft system.…”

“…By pooling individual broadcasting rights together for sale domestically, leagues can increase the asking price from broadcasters and new franchises in large local markets add further value to television demand (Tainsky and McEvoy, 2012). Broadcasting rights and sponsorship income then enable clubs to offer higher wages to attract better players and invest in high-performance programmes (Bishop et al. , 2022).…”

“…Redmond (2020) found that to optimise franchise expansion, adequate technical and financial resources should be allocated to a new franchise by the league, however, resource distribution should not undermine the governance or sustainability of existing franchises. Additionally, Redmond's model suggests expansion should only occur if a proposed franchise possesses adequate resources, meaning they have the capacity to support themselves, as off-field financial performance cannot be separated from on-field performance (Bishop et al, 2022). Resource distribution is critical in the case of Super Rugby as it does not operate a player draft system.…”

“…By pooling individual broadcasting rights together for sale domestically, leagues can increase the asking price from broadcasters and new franchises in large local markets add further value to television demand (Tainsky and McEvoy, 2012). Broadcasting rights and sponsorship income then enable clubs to offer higher wages to attract better players and invest in high-performance programmes (Bishop et al, 2022). The sale of international broadcasting rights provides an additional income stream that can exceed domestic sales (Solberg, 2016) and has the potential to elevate fan bases far beyond the restrictions of geographic proximity, offering the opportunity for both leagues and sports franchises to acquire fans globally (Nicholson et al, 2015).…”