Performance, revenue, and cross subsidization in the Football League, 1927‐1994

Abstract

1 the distribution of revenues in elite professional football in England and Wales during the period 1927-94. It does so at a time of extraordinary financial dynamism, when the economic importance of professional football in England and Wales has never been greater. Annual rates of growth of turnover exceeding 20 per cent in several years during the 1990s have resulted in an aggregate turnover figure of 12387 million being achieved in 1993-4 (the final season covered by this study), and exceeded substantially thereafter. Several football clubs are already listed on the stock market or the alternative investments market, and at the time of writing a number of others are preparing to join them. Football has contributed to significant growth in the turnover of associated sectors including sports and leisurewear, and subscription television. With developments such as the introduction of pay-per-view television now imminent, the prospects for continued growth appear to be great, although difficult to quantify. It is against this highly buoyant financial background that we attempt a timely historical review of the evolution of certain key features of the economic structure of professional football. The total revenue generated by any professional sporting league competition depends upon the amounts of money being obtained through gate revenues and from other sources such as television fees, sponsorship, income from merchandising, plus the income obtained from sales of players to clubs outside the league (for example, overseas). Some of this revenue is generated directly by the clubs themselves and some is raised by the relevant sporting authorities operating on behalf of the individual clubs (for instance, by selling television rights or by negotiating sponsorship deals for the league as a whole). This revenue, together with any monies raised from other sources (perhaps through capital markets, or donations from wealthy benefactors) is available to spend on players' salaries, other costs (including stadium maintenance and development), and purchases of players from outside the league. The distribution of the total revenue among the clubs then depends on two factors: first, on the performance of individual clubs, which