Interesting article
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Interesting article
From Martin Samuels, about the finances of the Premier League, and collective bargaining:
Rich cannot get richer without help from friends
August 22, 2007
Martin Samuel
Before Liverpool’s new owners attempt to send English football to the poorhouse, it may be worth checking in with Phoebe Buffay, one of the gang in Friends, the American TV sitcom.
You remember Phoebe. She was the blonde, kooky one — a tad out there, a little bit dangerous.
“You want to hear something weird?” Ross asks her.
“Always,” Phoebe says. She was played by Lisa Kudrow, a biology graduate of Vassar, a liberal arts college in Poughkeepsie, New York, whose alumni include Vera Rubin, the astronomer who proved the existence of dark matter, and Crystal Eastman, co-author of the first equal rights amendment to the United States Constitution.
Kudrow is fluent in French and was going to follow her father, the neurologist Lee Kudrow, into the field of medical research until acting called. No fool, then. And it was Kudrow who came up with the idea that made the six twentysomething co-stars of a feel-good hit series set in the lofts of Greenwich Village, some of the highest-paid performers in the history of television.
When Warner Brothers, the makers of Friends, renegotiated contracts at the end of series two, it was Kudrow who suggested that the six lead players should negotiate as a collective. That way, she reasoned, the studio could not divide and rule. There would be no chance of one character being promoted as the star and paid more at the expense of others; no possibility of a character being written out if he or she was in dispute over money. Warner Brothers would either pay them all or get none.
At the time, Friends was an NBC staple, drawing 29.4 million viewers. That year, Kudrow’s tactic led to a pay rise of 150 per cent, to $100,000 per episode. As the ratings improved, so it continued. Before each round of negotiations, rumours circulated that the cast would quit unless its demands were met, which, with an audience that peaked at 52.9 million in 1996, would have been bad news for the executive that failed to close the deal. By 2000, group bargaining had led to an increase to $750,000 per show and in 2002, two years before a 66-minute finale brought down the curtain, the magic $1 million mark was breached.
Male leads had achieved that level of salary before, but with that deal, Kudrow and her female co-stars, Courteney Cox Arquette and Jennifer Aniston, became the highest-paid actresses in television history.
As Tom Hicks and George Gillett, Liverpool’s new American owners, made their first fortune in the media and communications industry — Hicks with radio stations, Gillett with three small television networks — they will no doubt be aware of the Friends story from the sharp end. Yet last week, confirming a fear that many have harboured since the new era of club ownership began, the pair dropped the first ominous hint that the biggest clubs might seek an end to collective negotiation in the Premier League.
“We don’t know if the Premier League plays collectively that well,” Gillett said. “The four top clubs definitely do. We are trying to sort that out.” The rest was left hanging. It may have been a harmless indication of a desire to exploit revenue streams that are already under individual control, such as websites and club television channels. The implication, though, was that Gillett was answering a direct question about the present television agreement and was suggesting that Liverpool would be open to a breakaway. This is entirely different.
There are 20 clubs in the Premier League dividing a domestic pot of £2.1 billion over three years. The first 50 per cent is shared equally, 20 ways; another 25 per cent is paid according to the number of times a club has a match shown live, with a minimum guarantee of ten payments; that leaves 25 per cent, which is paid as league table prize-money, divided into 210 equal shares, with the top club receiving 20, the second club 19 and so on down to the bottom club, which gets one. Even that is worth £833,333 each season. No other league rewards failure so highly.
Then there is the overseas contract, worth another £650 million over three years and split 20 ways. In the English system, a comfortable, yet unexceptional mid-table club can receive approximately £40 million from television rights alone, achieved by the Kudrow principle of all-for-one bargaining. Richard Scudamore, the Premier League chief executive, has attracted plenty of criticism of late, but his greatest achievement is successfully defending that right when it was under attack from a European Union commission.
Hicks and Gillett are not the first rich men to attempt to get richer at the expense of the last remnant of the level playing field left in modern football. When Peter Kenyon was chief executive of Manchester United, he proposed a similar individual arrangement and put it to the test at a meeting of Premier League shareholders. He lost 19-1. Unsurprisingly, now occupying the same job at Chelsea, he has not appeared as keen to switch to a procedure that would potentially send one rival into the stratosphere while keeping the remainder earthbound, perhaps for good.
What Hicks and Gillett have failed to factor in is that, Manchester United aside, there is no certainty that any English club would be substantially better off for going it alone, not even the other members of the big four. Chelsea are playing catchup, taking on gruelling preseason tours in an attempt to carve a slice of the overseas market, while Arsenal have made little attempt to cultivate their share since the arrival of Arsène Wenger, who does not believe that traversing the continents is any way to prepare for the new season. Under Wenger, Arsenal may one day be big in the Austrian Alps, but no more.
As for Liverpool, the club has a large following overseas as reward for its triumphs in leading European tournaments and domination of the domestic competitions before the Premier League was formed, but even that cannot be relied upon once the great beast that is United is let loose in the marketplace. No club has the potential to be as big as United and whatever wealth Hicks and Gillett may believe can be generated by moving away from a 20-club deal, United’s reward would be greater. Imagine, as a Liverpool man, being responsible for the decision that made your most bitter rivals an unbeatable force. They might then allow you to buy the reserve left back, but it would have something of a hollow ring.
So why, as the club with most to gain, do United not seek divorce? In a document drawn up in July 2006 by Red Football Limited and JP Morgan as part of the Glazers’ most recent refinancing package, it was spelt out. “The central selling of the collective rights is essential to maintain the integrity of the competitions and to manage a fair and equitable distribution of those revenues to the participating clubs. The Club and the Glazer Family fully support this structure and believe it underpins the competitive spirit of the competitions in which they participate.” Indeed, the minimum ten payments for televised matches — whether the club has appearances in double figures or not — is a recent alteration, designed to spread extra revenue through the league.
The Glazers as good guys: are we sure about this? The explanation is twofold. Certainly, David Gill, the United chief executive, is a staunch believer in collective negotiation, and the owners do listen to him on football matters; but, secondly, Gill knows that at a shareholders’ vote, any proposal that would lead to greater financial disparity between top and bottom will be shot down in flames, as was Kenyon’s. The result: defeat and even greater unpopularity. This way, United can look like plain dealers around the table and keep their powder dry for winnable wars.
That is certainly not this one. Any changes to Premier League rules have to be passed by a majority of 14 and there is no chance individual television negotiations would attract such support. If, as the league believes, only three clubs might do better on their own, Hicks and Gillett then need 11 more owners recklessly to vote for a pay cut.
The smaller clubs have already been terrified by events in Italy, where the decision to end collective negotiation in 1999 precipitated slow decline to insolvency and corruption. The first crisis came in 2002 when the season failed to start, as a result of a mismanaged television deal. The bigger clubs having broken away, the smaller clubs grouped together and were offered a pitiful sum by RAI, half the expected figure. By 2004-05, the pay-TV deals struck by Juventus and Brescia differed by €63.1 million (about £43 million) annually and, while some will argue there is also a significant gulf between United and Watford, at least that is largely linked to achievement. It is ridiculous to remove all aspects of meritocracy from sport. If it pays as well to come first or last, there is no competition anyway.
The final aspect of the debate that Hicks and Gillett appear to have overlooked is the simplest one. Liverpool can negotiate its own television deal; but it still needs an opponent to play. That is what Kudrow understood about collective bargaining; without the actors, Warner Brothers had no show. And if nobody turns up at Anfield, what will Liverpool’s burgeoning television audience be forced to watch? Repeats of Friends, maybe?
Rich cannot get richer without help from friends
August 22, 2007
Martin Samuel
Before Liverpool’s new owners attempt to send English football to the poorhouse, it may be worth checking in with Phoebe Buffay, one of the gang in Friends, the American TV sitcom.
You remember Phoebe. She was the blonde, kooky one — a tad out there, a little bit dangerous.
“You want to hear something weird?” Ross asks her.
“Always,” Phoebe says. She was played by Lisa Kudrow, a biology graduate of Vassar, a liberal arts college in Poughkeepsie, New York, whose alumni include Vera Rubin, the astronomer who proved the existence of dark matter, and Crystal Eastman, co-author of the first equal rights amendment to the United States Constitution.
Kudrow is fluent in French and was going to follow her father, the neurologist Lee Kudrow, into the field of medical research until acting called. No fool, then. And it was Kudrow who came up with the idea that made the six twentysomething co-stars of a feel-good hit series set in the lofts of Greenwich Village, some of the highest-paid performers in the history of television.
When Warner Brothers, the makers of Friends, renegotiated contracts at the end of series two, it was Kudrow who suggested that the six lead players should negotiate as a collective. That way, she reasoned, the studio could not divide and rule. There would be no chance of one character being promoted as the star and paid more at the expense of others; no possibility of a character being written out if he or she was in dispute over money. Warner Brothers would either pay them all or get none.
At the time, Friends was an NBC staple, drawing 29.4 million viewers. That year, Kudrow’s tactic led to a pay rise of 150 per cent, to $100,000 per episode. As the ratings improved, so it continued. Before each round of negotiations, rumours circulated that the cast would quit unless its demands were met, which, with an audience that peaked at 52.9 million in 1996, would have been bad news for the executive that failed to close the deal. By 2000, group bargaining had led to an increase to $750,000 per show and in 2002, two years before a 66-minute finale brought down the curtain, the magic $1 million mark was breached.
Male leads had achieved that level of salary before, but with that deal, Kudrow and her female co-stars, Courteney Cox Arquette and Jennifer Aniston, became the highest-paid actresses in television history.
As Tom Hicks and George Gillett, Liverpool’s new American owners, made their first fortune in the media and communications industry — Hicks with radio stations, Gillett with three small television networks — they will no doubt be aware of the Friends story from the sharp end. Yet last week, confirming a fear that many have harboured since the new era of club ownership began, the pair dropped the first ominous hint that the biggest clubs might seek an end to collective negotiation in the Premier League.
“We don’t know if the Premier League plays collectively that well,” Gillett said. “The four top clubs definitely do. We are trying to sort that out.” The rest was left hanging. It may have been a harmless indication of a desire to exploit revenue streams that are already under individual control, such as websites and club television channels. The implication, though, was that Gillett was answering a direct question about the present television agreement and was suggesting that Liverpool would be open to a breakaway. This is entirely different.
There are 20 clubs in the Premier League dividing a domestic pot of £2.1 billion over three years. The first 50 per cent is shared equally, 20 ways; another 25 per cent is paid according to the number of times a club has a match shown live, with a minimum guarantee of ten payments; that leaves 25 per cent, which is paid as league table prize-money, divided into 210 equal shares, with the top club receiving 20, the second club 19 and so on down to the bottom club, which gets one. Even that is worth £833,333 each season. No other league rewards failure so highly.
Then there is the overseas contract, worth another £650 million over three years and split 20 ways. In the English system, a comfortable, yet unexceptional mid-table club can receive approximately £40 million from television rights alone, achieved by the Kudrow principle of all-for-one bargaining. Richard Scudamore, the Premier League chief executive, has attracted plenty of criticism of late, but his greatest achievement is successfully defending that right when it was under attack from a European Union commission.
Hicks and Gillett are not the first rich men to attempt to get richer at the expense of the last remnant of the level playing field left in modern football. When Peter Kenyon was chief executive of Manchester United, he proposed a similar individual arrangement and put it to the test at a meeting of Premier League shareholders. He lost 19-1. Unsurprisingly, now occupying the same job at Chelsea, he has not appeared as keen to switch to a procedure that would potentially send one rival into the stratosphere while keeping the remainder earthbound, perhaps for good.
What Hicks and Gillett have failed to factor in is that, Manchester United aside, there is no certainty that any English club would be substantially better off for going it alone, not even the other members of the big four. Chelsea are playing catchup, taking on gruelling preseason tours in an attempt to carve a slice of the overseas market, while Arsenal have made little attempt to cultivate their share since the arrival of Arsène Wenger, who does not believe that traversing the continents is any way to prepare for the new season. Under Wenger, Arsenal may one day be big in the Austrian Alps, but no more.
As for Liverpool, the club has a large following overseas as reward for its triumphs in leading European tournaments and domination of the domestic competitions before the Premier League was formed, but even that cannot be relied upon once the great beast that is United is let loose in the marketplace. No club has the potential to be as big as United and whatever wealth Hicks and Gillett may believe can be generated by moving away from a 20-club deal, United’s reward would be greater. Imagine, as a Liverpool man, being responsible for the decision that made your most bitter rivals an unbeatable force. They might then allow you to buy the reserve left back, but it would have something of a hollow ring.
So why, as the club with most to gain, do United not seek divorce? In a document drawn up in July 2006 by Red Football Limited and JP Morgan as part of the Glazers’ most recent refinancing package, it was spelt out. “The central selling of the collective rights is essential to maintain the integrity of the competitions and to manage a fair and equitable distribution of those revenues to the participating clubs. The Club and the Glazer Family fully support this structure and believe it underpins the competitive spirit of the competitions in which they participate.” Indeed, the minimum ten payments for televised matches — whether the club has appearances in double figures or not — is a recent alteration, designed to spread extra revenue through the league.
The Glazers as good guys: are we sure about this? The explanation is twofold. Certainly, David Gill, the United chief executive, is a staunch believer in collective negotiation, and the owners do listen to him on football matters; but, secondly, Gill knows that at a shareholders’ vote, any proposal that would lead to greater financial disparity between top and bottom will be shot down in flames, as was Kenyon’s. The result: defeat and even greater unpopularity. This way, United can look like plain dealers around the table and keep their powder dry for winnable wars.
That is certainly not this one. Any changes to Premier League rules have to be passed by a majority of 14 and there is no chance individual television negotiations would attract such support. If, as the league believes, only three clubs might do better on their own, Hicks and Gillett then need 11 more owners recklessly to vote for a pay cut.
The smaller clubs have already been terrified by events in Italy, where the decision to end collective negotiation in 1999 precipitated slow decline to insolvency and corruption. The first crisis came in 2002 when the season failed to start, as a result of a mismanaged television deal. The bigger clubs having broken away, the smaller clubs grouped together and were offered a pitiful sum by RAI, half the expected figure. By 2004-05, the pay-TV deals struck by Juventus and Brescia differed by €63.1 million (about £43 million) annually and, while some will argue there is also a significant gulf between United and Watford, at least that is largely linked to achievement. It is ridiculous to remove all aspects of meritocracy from sport. If it pays as well to come first or last, there is no competition anyway.
The final aspect of the debate that Hicks and Gillett appear to have overlooked is the simplest one. Liverpool can negotiate its own television deal; but it still needs an opponent to play. That is what Kudrow understood about collective bargaining; without the actors, Warner Brothers had no show. And if nobody turns up at Anfield, what will Liverpool’s burgeoning television audience be forced to watch? Repeats of Friends, maybe?
That's what Rangers and Celtic thought, it lead to the loss of the Sky contract completely, and still not the slightest hint that they are any nearer to joing the English league than they were in the 19th Century.CAPSLOCK wrote:that opponent needn't be in the same country
ffs, liverpool can be in madrid as quick as they can be in london
Good article mind, surprised Americans of all people would look to upset the apple cart, the NFL is a shining light in how to run a sport that rewards the best but still attempts to give everyone a chance.
That's because of the franchise system in American sport, though, so not really a comparable model to the Premier League.fatshaft wrote:Good article mind, surprised Americans of all people would look to upset the apple cart, the NFL is a shining light in how to run a sport that rewards the best but still attempts to give everyone a chance.
For what it's worth I think that Samuels has taken a lot of things out of context here - where the Americans are unhappy, I believe, is with the overseas revenue. I can't see them wanting an end to collective bargaining for TV deals, as that makes most sense, but to give Derby County an equal share of overseas revenues compared to the likes of Liverpool and Man United is strange, and where they are looking for improvements.
Of course blurred, and I'm not suggesting there are many similarities, but the fact is the NFL try to spread revenue around, it's the only reason Green Bay have been able to compete over the years. I can't imagine having seen that and been brought up in it, that the only similarity that the EPL possesses (the TV money distribution) would be one they would want to take away?blurred wrote:That's because of the franchise system in American sport, though, so not really a comparable model to the Premier League.fatshaft wrote:Good article mind, surprised Americans of all people would look to upset the apple cart, the NFL is a shining light in how to run a sport that rewards the best but still attempts to give everyone a chance.
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Montreal Wanderer
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It is more than revenue sharing, it also involves a draft aimed at the possibility of parity on the field, a salary cap and, since there is no relegation, the stake holders are the same people. This approach cannot be mirrored in EPL football for many reasons as blurred correctly suggests.fatshaft wrote:Of course blurred, and I'm not suggesting there are many similarities, but the fact is the NFL try to spread revenue around, it's the only reason Green Bay have been able to compete over the years. I can't imagine having seen that and been brought up in it, that the only similarity that the EPL possesses (the TV money distribution) would be one they would want to take away?blurred wrote:That's because of the franchise system in American sport, though, so not really a comparable model to the Premier League.fatshaft wrote:Good article mind, surprised Americans of all people would look to upset the apple cart, the NFL is a shining light in how to run a sport that rewards the best but still attempts to give everyone a chance.
"If you cannot answer a man's argument, all it not lost; you can still call him vile names. " Elbert Hubbard.
Just to clarify again, I'm only talking about the revenue sharing part here, which is also the only part that the Liverpool guys are talking about as far as TV money goes too.Montreal Wanderer wrote:It is more than revenue sharing, it also involves a draft aimed at the possibility of parity on the field, a salary cap and, since there is no relegation, the stake holders are the same people. This approach cannot be mirrored in EPL football for many reasons as blurred correctly suggests.fatshaft wrote:Of course blurred, and I'm not suggesting there are many similarities, but the fact is the NFL try to spread revenue around, it's the only reason Green Bay have been able to compete over the years. I can't imagine having seen that and been brought up in it, that the only similarity that the EPL possesses (the TV money distribution) would be one they would want to take away?blurred wrote:That's because of the franchise system in American sport, though, so not really a comparable model to the Premier League.fatshaft wrote:Good article mind, surprised Americans of all people would look to upset the apple cart, the NFL is a shining light in how to run a sport that rewards the best but still attempts to give everyone a chance.
I phrased it badly, as obviouly the draft system also helps teams like Green Bay maitain relative parity, but they need the shared funding for this to still work out.
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