EPL's Free-Spending Habits Now Catching Up To Teams, Owners
The EPL since its formation in '92 has emerged as "one of the world's most prominent and opulently rich sports associations," but the "tool it used to get there ... is starting to look like a weakness," according to Patrick & Cimilluca of the WALL STREET JOURNAL. As the EPL "vaulted to prominence with a frothy mix of TV money, rising ticket prices and a devoted -- and increasingly international -- fan base, it became a status symbol for billionaires across the world." However, due in part to the global recession, the league "must spend its off-season grappling with falling ticket prices, ailing corporate sponsors and financially distressed owners." The EPL has no salary cap and teams are "almost entirely unregulated" in their spending, but analysts suggest that the "owners who spent big will now be whipsawed by the downturn and forced to make deep cuts." London-based sports economist Stefan Szymanski estimated that total revenue generated by the EPL's 20 clubs is "likely to fall" by 5-10% next season, the "first decrease since the league was established." All but three EPL teams either plan to freeze or cut ticket prices for the '09-10 season, a "sign of concern that many cash-strapped fans won't sign up for another year." However, because the clubs get "most of their revenue from TV rights, which are negotiated years in advance, and season tickets, which sell pre-season, it is taking a while for the economic downturn to bite." Regardless, a "handful of clubs are looking for new ownership as a result of the financial crisis," and decreased revenues next year "would put more pressure on already stretched owners." It is "not clear that the economy will affect the quality of play," as other leagues around the world are "hurting financially, too, and aren't likely to be able to poach top talent" (WALL STREET JOURNAL, 5/28).
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