The Premier League

Economic Impact Analysis

May 2015

Ernst & Young LLP

Contents

Contents
1. Introduction................................................................................................................. 3
1.1 Scope of this report ....................................................................................................................................... 3
1.2 EY approach .................................................................................................................................................. 4

2. The Premier League in context .................................................................................. 5

2.1 Introduction to the Premier League .............................................................................................................. 5
2.2 Emergence and growth ................................................................................................................................. 6

3. Economic impact of the Premier League................................................................. 14

3.1 Introduction .................................................................................................................................................. 14
3.2 Economic impact of the Premier League and Clubs .................................................................................. 16
3.3 Football solidarity ........................................................................................................................................ 21
3.4 Communities and good causes .................................................................................................................. 22
3.5 Wider economic benefits ............................................................................................................................. 24

4. Conclusion ................................................................................................................ 27
Appendix A: methodology ............................................................................................... 28
Disclaimer ......................................................................................................................... 32
 Introduction

1. Introduction
The game of football is of considerable economic, social and cultural significance to the UK.
During the football season, thousands of fans travel the country to follow their team while
millions more watch live games and highlights on television and, increasingly, online. As the
pinnacle of the English football pyramid, the performance of the Premier League affects all
aspects of the game; from encouraging participation in school and park football across the
country, to supporting the ability of English teams to compete with the best in Europe.

EY has been commissioned to assess the economic impact of the Premier League on the UK
economy. The estimates in this report consider the impact of both the Premier League (i.e.,
the organisation that runs the competition and represents the 20 Premier League Clubs,
henceforth referred to as the ‘Premier League’) and the clubs that compete in the competition
(henceforth referred to as the ‘Premier League Clubs’ or the ‘Clubs’).

The primary role of the Premier League is to organise the football competition between the 20
Clubs that make up the league. The competition consists of 380 matches played over a 9-
month season and sees each club playing every other home and away. It is run on a
commercial basis and generates a range of revenues – including ticketing, merchandising
and broadcast revenues – that flow to Clubs in the Premier League and beyond. These
revenues have allowed Clubs to invest in all aspects of the game – including their squads,
stadia and training facilities – which in turn has generated greater interest in the competition
from football fans in the UK and overseas (some indicators of the appeal of Premier League
football are set out in Figure 1).

Figure 1: Premier League attendances and worldwide TV audience

Source: Premier League Season Review 2013/14

The appeal of Premier League football to both domestic and global audiences has helped to
increase the inward economic impact of the competition through attracting international
tourism, broadcasting revenues and foreign investment. Moreover, the success of the
competition supports other industries (such as hospitality and broadcast) and has allowed the
Premier League to invest in youth development and distribute funds for a range of good
causes.

1.1 Scope of this report

This report assesses the economic impact of the Premier League and the Premier League
Clubs on the UK economy based upon the 2013/14 football season. These impacts, which
are quantified where possible, include the total output, the contribution to Gross Value Added
(GVA), employment supported and the tax revenues generated.

The Premier League and Clubs also impact on the lower leagues of English football, through
participation in competitions, such as the FA and League Cups, as well as through the
‘solidarity payments’ to lower leagues. In addition, the Premier League supports community

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 Introduction

programmes that are helping to realise a range of health, education and social benefits
through increasing participation in sports.

An overview of the impacts considered in this report is shown in Figure 2.

Figure 2: the economic and social impacts of the Premier League

Output

Gross Value Added (GVA)

Premier League
Clubs Employment

Tax receipts

Parachute payments

Solidarity payments to
Football solidarity
Championship/Football League

Non-league support

The Premier
League
Clubs as hubs of communities

Investing in facilities
Communities and
good causes
Sports participation & education

International development

Local and national tourism

Wider economic
benefits International exports and recognition

Supported industries

The report is structured as follows:

► Section 2 explores the history of the Premier League and puts its development in the
context of other major European football leagues;

► Section 3 provides a quantitative and qualitative assessment of the contribution the

Premier League and Clubs make to the economy, the rest of football and to wider
society; and

► Section 4 sets out conclusions.

1.2 EY approach
The economic impact of the Premier League as a whole results from the combined effect of
the central revenues (largely from broadcasting and League sponsorship) and Club revenues
(largely from ticket sales, Club sponsorship and merchandise). However, the two are
inextricably linked, with local revenues arising in part from each Club’s status as a member of
the Premier League. It is for this reason that this report sets out estimates of the economic
impact of both the Premier League and the 20 Premier League Clubs.

The approach taken seeks to estimate the ‘direct’ impact (i.e., the total impact generated
directly by the activities of the Premier League and the Clubs), the ‘indirect’ impact (i.e., the
total activity supported throughout relevant supply chains) and ‘induced’ effects (i.e., the total
demand generated through wages paid by the Premier League, Clubs and through the supply
chain).

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 The Premier League in context

2. The Premier League in context

2.1 Introduction to the Premier League

The Premier League was formed in 1992 with the agreement of the top 22 Clubs and the
Football Association (FA). From this point, the ownership, oversight and operation of the top
division of English football lay with the Premier League, while the Football League (founded
in 1888) continued to operate the other three professional leagues. Promotion and relegation
have meant that there has been movement of Clubs between the Premier League and other
leagues. With the exception of one transitional season when the Premier League moved from
22 to 20 Clubs, the Premier League has operated a ‘three up, three down’ regime.1 This has
resulted in a total of 46 clubs participating in the competition to date, rising to 47 in the
2015/16 season with the promotion of AFC Bournemouth.

To deliver the competition effectively, the Premier League works with a range of associations,
organisations and bodies that represent the players, managers, coaches and professional
match officials. The Premier League also organises a number of youth development
competitions including the U21 Premier League. A brief depiction of the main football
organisations that the Premier League works with is set out in Figure 3.

Figure 3: the Premier League and the role of other football organisations

FIFA
World governing body
and organiser of the
FIFA World Cup. Sets
international
regulations for player
The FA
UEFA transfers/agents, which
are administered by the Governing body with
Organises cross- FA. responsibility for the FA
border competitions in
Cup, the National
the confederation of
team, FA Women’s
Europe, inc. European
Super League, on-pitch
Championships,
disciplinary matters
Champions League
and amateur football.
and Europa League.

Football
The Football Conference
League Organises the

Organises the second,

Premier immediate tiers below
the Football League
third and fourth tier of League (Conference Premier,
English Football and Conference North,
the League Cup. Conference South).

League
Professional Game Managers
Match Officials Association
Represents current and
Responsible for the
development of match Professional former professional
officials in English football managers and
Footballers’ coaches in England.
professional football.
Association
Association which
represents current and
former professional
footballers in England.

The Premier League is also the central and unified corporate entity which represents the 20
member Clubs. As such, the Premier League undertakes a range of roles on behalf of the
Clubs including representing the Premier League’s interests within the world of football, the
selling of broadcasting rights and the distribution of the consequent revenues to the Clubs

1
Four teams were relegated to Division 1 and only two teams were promoted so that the 1995/96 season started
with 20 clubs.

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 The Premier League in context

and third parties. Further, Premier League activities include engagement with public sector
bodies and policy makers on issues relating to the league (naturally, the Clubs also engage
with policymakers on issues that affect them) as well as the Premier League’s commercial
partners.

While it represents the Clubs in these areas, the Premier League does not control the Clubs’
financial decisions. For example, Clubs individually set ticket prices and develop other
revenue streams such as commercial sponsorship, hospitality and merchandise.

2.2 Emergence and growth

In assessing the Premier League’s contribution to the UK economy, it is important to consider
how the structure and approach of the Premier League stimulates the overall performance of
the Premier League Clubs (in particular, the way in which the Premier League creates
incentives for Clubs to invest in improving both the standard of football and the match day
experience).

The formation of the Premier League, contributed to a renaissance in English club football
after the problems of the 1970s and 1980s. Prior to the Premier League’s formation (and
following a period where English football clubs had been banned from participating in
European competitions) the top tier of English football lagged behind its European
counterparts in terms of performance. The ‘UEFA Coefficient’, which is the statistic that is
used for seeding teams for international competitions, demonstrates the improvement that
has taken place in English club football since the early-1990s (see Figure 4).2 While there are
many factors that impact on the relative position of English teams, it is clear that since its
inception the Premier League has had success in securing improved footballing performance.

Figure 4: the UEFA coefficient for major European Leagues

1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
-
1
2
3
4
5
6
7 Italy
8
Germany
9
10 Spain
11
12 France
13 England
14
Source: UEFA
One of the factors that contributed to this improved performance was the ability of the
Premier League and the Clubs to realise the value of the football competition. Each of the
main revenue streams, including ticket sales, merchandise, sponsorship, advertising and
additional uses of the stadium, as well as the sale of broadcast rights, gain from a strong
league competition which reaches a wide audience.

Benefiting from the League’s growing popularity and reach, the sale of broadcast rights has
been one of the most significant revenue streams for the Premier League and Clubs.
Catalysed by the growing popularity of English club football and the emergence of the pay TV
market, the Premier League was able to achieve broadcast revenues that were significantly

2
The UEFA coefficient presented is calculated on a rolling five-year basis.

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The Premier League in context

greater than previous levels. By way of illustration, the broadcast rights for the first year of the
Premier League sold for over £40 million, which compares with the £11 million per year that
was secured by the Football League in 1988.3

The distribution of these revenues to Premier League Clubs (and to clubs outside of the
Premier League through the solidarity payments) has helped to create a ‘cycle of growth’ by
encouraging Clubs to invest in improvements in squads and facilities in order to further
improve the quality of the game and attract a larger and increasingly diverse fan base (the
‘cycle of growth’ is illustrated in Figure 5).

Figure 5: the cycle of growth

Over the last 20 years, this growth cycle has seen the Premier League develop football into a
sport that is more attractive and accessible to the general public. By 2013/14, the match
attending fan base had become increasingly diverse with female fans making up 23% of all
attendees and black or minority ethnic fans making up 18% (higher than the general public
proportion of 14%), while the highest proportion (39%) of all match attenders are aged 18-34.
In addition, the decline in anti-social behaviour means that the game has also become more
family-friendly. By 2013/14, 12% of season ticket holders were under-16.4

The increase in popularity is not confined to domestic football fans. Over the last two
decades, some of the world’s best footballers have come to England to play in the Premier
League and, over the years, many different nationalities have taken part. This has helped to
grow the popularity of the competition in other countries.

Worldwide, the Premier League is broadcast in 175 countries and watched in an estimated
645 million homes. International interest in the Premier League has grown rapidly and has
come from across the globe. For example, in 2013/14, 115 million Americans and 89 million
Nigerians watched live Premier League games, representing 114% and 39% growth from
2012/13 respectively.5 Indeed, the Premier League and Clubs are looking to build on their
popularity outside of the UK through a range of activities targeted specifically at overseas
markets (see Box 1 for further details).

3
http://www.theguardian.com/media/2003/feb/25/broadcasting3
4
Premier League Season Review 2013/14
5
Ibid

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The Premier League in context

Box 1: building the overseas fan base

Most Premier League Clubs now embark on pre-season tours overseas to ‘export’ the
Premier League experience directly to foreign fans. For example, throughout the 2000s the
pre-season tours by the largest Clubs focused on Asia and Oceania, where there are an
estimated 584 million Premier League fans.

The Premier League is also active in promoting the competition to fans in foreign markets.
For example, in December 2014, over 20,000 Premier League fans in Mumbai watched
Manchester United v Liverpool being broadcast live at a Premier-League-themed fan park as
part of ‘Barclays Premier League Live’. Furthermore, since 2003, the Premier League has
organised the biennial Barclays Asia Trophy, which is the only Premier League-affiliated
competition to take place outside England. The next Barclays Asia Trophy will take place in
summer 2015 in Singapore and will feature Arsenal, Everton and Stoke City and a Singapore
Select XI (mainly consisting of players from the Singapore national team) in a knock-out
competition.

Source: Premier League

The growth in the fan base for Premier League football in both domestic and international
markets has been coupled with significant growth in broadcast revenues. In 2013/14, the
domestic broadcast revenues were just over £1 billion while the international broadcast
revenues were £722 million. Both the international and domestic broadcast revenues have
increased significantly since the first year of the Premier League (see Figure 6), which has
created the conditions for Clubs to continue investing in improving the game.

Figure 6: Premier League broadcasting revenue over time

3,000

2,500

TBD*
2,000

1,500
£m

1,000

500

0
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14*
2014/15
2015/16
2016/17
2017/18
2018/19

Domestic Highlights Overseas

* Economic impact analysis in this report is based on the 2013/14 season.

**The international broadcast rights for the next cycle are yet to be determined
6
Source: Premier League, Sporting Intelligence

6
The yearly revenue figures have been calculated by dividing the total broadcasting revenue over a particular ‘cycle’
by the number of years in that cycle.

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The Premier League in context

2.2.1 Stadium investment

Since the beginning of the Premier League, many Clubs have made substantial investments
in new stadium facilities. Indeed, of the 20 Clubs that played in the Premier League in the
2013/14 season, all 20 have embarked upon stadium upgrades – including new stands or
refurbishments – whilst eight have moved to entirely new facilities (see Figure 7). Each of
these represents a substantial programme of private-sector capital investment, ranging from
the £390 million spent by Arsenal on the Emirates Stadium to the £14.7 million spent by
Stoke City on the Britannia Stadium.

Figure 7: stadium investment by 2013/14 Premier League Clubs

Source: Premier League Clubs

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The Premier League in context

New and improved stadia – which have resulted in increased capacities, removal of terraces,
upgrading of the concourses, improved hospitality provision and major improvements in
media facilities and broadcasting – have helped to improve the quality of the match day
experience for football fans, both in the stadium and via a range of media. In doing so, the
investment has provided Clubs with the opportunity to increase their revenues streams, most
notably through higher ticket sales. Furthermore, the capital investment by Clubs has not
been limited to stadia; many Clubs have also invested in state-of-the-art facilities for training,
which is helping to drive improvements in footballing talent (see Box 2).

Box 2: investing in the future

The Premier League’s Elite Player Performance Plan (EPPP) aims to develop more and
better home grown players, with a £340 million commitment over a four year period for youth
development across the top four divisions. A requirement of EPPP funding is a commitment
by clubs to support all aspects of a player’s development. In order to achieve this, many
Premier League Clubs are investing in their academy facilities.

In 2012/13, Stoke City opened their new £7 million Clayton Road training facility. This
investment has transformed Clayton Road from ‘four Portakabins and some grass pitches’
into a state-of-the-art facility that includes three full-size pitches, a floodlit show pitch, a full-
size 3G artificial grass pitch, two specific goalkeeping areas, changing rooms, medical/gym
facilities, multimedia classrooms and a hydrotherapy pool.

Source: Premier League Season Review

The benefit of these investments is not confined to Premier League Clubs. The development
of new stadia and training facilities will also help to stimulate the local economy through
providing a boost to the construction industry and helping to regenerate the surrounding
areas. For example, Manchester City FC estimated that their £200 million investment in new
training facilities resulted in 883 contracts awarded to local companies and 95 new
apprenticeships created during the construction phase.7 In addition, many Clubs have looked
to capitalise on their improved facilities through exploring broader revenue generating
activities (e.g., many Clubs have hosted pop or rock concerts and some stadia are hosting
games at the 2015 Rugby World Cup), all of which provides a boost to the local hospitality
and transport industries and also increases tourist spending.

Of course, these types of large capital investments do create risks for Premier League Clubs.
In particular, there is the risk that Clubs will not be able to recover the full costs of the new
facilities. The Premier League helps to mitigate some of this risk in a number of ways and in
doing so helps to create the conditions where Clubs are more confident in making these
types of investments. Firstly, the commitment of the Premier League to drive improvements in
the quality of the game (and the commercial success that stems from this commitment) helps
to ensure that there is stability in future revenue streams. Secondly, the Premier League
provides short term financial help in the form of parachute payments for Clubs that are
relegated, which gives those relegated Clubs some time to be able to restructure their
finances accordingly.

Alongside these physical investments, the Premier League and Clubs have also been
working to improve the service provided to fans. For example, all Premier League Clubs must
employ a Supporter Liaison Officer (SLO), whose job it is listen to the fans and bring them
closer to their Club. The Premier League facilitates this effort through organising events for
the network of SLOs so they can learn from each other and share ideas.

7
Manchester City FC

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 The Premier League in context

2.2.2 Match day attendances

The focus of the Premier League on improving the quality of the match day experience –
including protecting the 3pm kick-offs, increased efforts to make the stadia more ‘family
friendly’ and reducing anti-social behaviour – has contributed to a significant increase in
attendances at Premier League matches and throughout professional football in England and
Wales. Attendances at Premier League matches have grown from an average of 21,125 in
the 1992/93 season to 36,691 for the 2013/14 season, an increase of 74%8. Furthermore,
stadium ‘utilisation’ has increased dramatically over this period. The stadium utilisation rate in
the Premier League increased from 69.6% in the 1992/93 season to 95.9% in the 2013/14
season, which means that games are increasingly played in front of capacity or near capacity
crowds. 9

This increase in attendances compares well with the trends in other major European football
leagues, including La Liga (Spain), Bundesliga (Germany), Serie A (Italy) and Ligue 1
(France). It is clear that the persistent growth in attendances experienced by the Premier
League has not been experienced by all of the other ‘big five’ leagues (see Figure 8). For
example, Serie A, which in 1992/93 had the highest average attendance, experienced a
decline of 27% by 2012/13.

Figure 8: average attendances for the ‘big five’ European leagues over time
50,000

45,000
Average Attendees

40,000

35,000

30,000

25,000

20,000

15,000

10,000
1992

1993
1994

1995
1996

1997

1998
1999

2000

2001
2002

2003
2004

2005

2006
2007

2008

2009
2010

2011
2012

2013
Premier League Bundesliga La Liga Serie A Ligue 1

Source: Statistica and EY Analysis

The Bundesliga is the only other major league to meet or exceed Premier League
performance in terms of attendances. It has seen growth in average attendance of 66% since
1992/93 and has the highest average attendances of any of the ‘big five’ leagues. The higher
average attendance is, in part, due to the size of stadia in Germany, which underwent a
significant programme of state-subsidised expansion as a result of the 2006 World Cup.

The high average attendance in the Bundesliga is also supported by a range of other factors,
including a large population, fewer top-flight clubs (18 in the Bundesliga versus 20 in the
Premier League) as well as the availability of travel subsidies for fans in Germany.
However, the average utilisation in the Bundesliga was 91.4% in in 2012/13 compared to
95.3% for the Premier League in the same year (see Figure 9).

8
Premier League 2013/14 Season Review
9
Source: House of Lords Library note: Contributions of English Premier League Football to the United Kingdom.

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 The Premier League in context

Figure 9: average utilisation in the ‘big five’ leagues in 2012/13

100.0%
90.0%
80.0%
70.0%
60.0%
Utilisation

50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Premier Bundesliga La Liga Serie A Ligue 1
League

Source: Statistica

2.2.3 Revenues
The comparison of the Premier League with other major European leagues is also instructive
in respect of revenues generated. The Premier League is the largest of the ‘big five’ in terms
of revenues (see Table 1) and has revenues that are over twice the size of the Bundesliga.

Table 1: comparison of club revenue in the ‘big five’ European leagues10

League Premier League Bundesliga Serie A La Liga Ligue 1

Total Revenues* £3,260m £1,553m £1,237m £1,374m £985m

Broadcast sales structure Collective Collective Collective Individual Collective

Club broadcasting revenue** £1,733m £356m £608m £543m £350m

Average Attendances*** 36,691 43,500 23,385 26,843 20,965
* The data relating to total revenue is for the 2013/14 season for all leagues.
** The data relating to broadcast revenues is for the 2013/14 season for all leagues
*** The data relating to the Premier League attendances is for the 2013/14 season. Attendance figures for the other
European leagues are based on 2012/13, which is the most recently available data.
Source: Deloitte Annual Review of Football Finance, worldfootbal.netl, Bloomberg and EY Analysis
A large part of the performance of the Premier League can be explained by the amount
received in broadcast revenues. The Premier League Clubs earned £1.7 billion from all
broadcasting rights in 2013/14, which is more than the amount received by the next three
largest leagues combined.11 Of particular note is the proportion of the Premier League’s
broadcasting revenue which is from international providers. At around £722 million, the
international broadcast revenues received by the Premier League in 2013/14 were greater
than the total (domestic and international) broadcast revenue individually generated by Ligue
1, Serie A, the Bundesliga and La Liga in 2013/14.12

After central costs and distribution beyond the Premier League are deducted, UK
broadcasting rights are divided so that 50% is equally split across the 20 Clubs, 25% is
performance based (i.e., dependent upon final league position) and 25% is based on the
number of matches broadcast live in the UK. Overseas broadcasting revenue, after deducting
the central costs of running the league, is split equally amongst the Clubs. The way that
revenues are distributed is important in that it allows for all Premier League Clubs to receive
substantial revenues that allow them to reinvest.

10
Currency conversions based on May 2015 exchange rate - assumed rate of £1:€1.39
11
http://www.sportingintelligence.com/wp-content/uploads/2012/06/PL-TV-income-1992-2016.jpg
12
Ibid

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The Premier League in context

Broadcast rights are sold collectively by the Premier League, a model that has now become
the standard across the major European leagues. Broadcasting rights are being negotiated
centrally for the Bundesliga, Ligue 1 and Serie A, while La Liga is now moving to collective
selling (a requirement of the Spanish Government) to reduce the inequality in earnings
between clubs.

Figure 10 presents the distribution of broadcasting revenues from the top-earning to the
bottom-earning club in each of the big five leagues. This shows that, of all the major leagues,
the Premier League has the most equitable ratio in terms of the amount received by the top
and bottom revenue earners.

Figure 10: broadcast revenue allocation for the ‘big five’ European leagues in 2013/1413

Source: Premier League, La Liga, Diario AS and EY Analysis

The figures show that La Liga has the most unequal distribution of broadcast revenues, with
Barcelona and Real Madrid receiving 37% of broadcasting revenues in 2013/14. Meanwhile
the third-highest revenue earning club, Valencia, received just £34.5 million in broadcasting
revenues (7% of total broadcasting revenues) and the lowest revenue earner, Almeria,
received just £14.0 million (3% of total broadcasting revenues).

In comparison, Cardiff City, the team that finished in 20th place in the Premier League in
2013/14, received £57.8 million in broadcasting revenues. Arguably, this more equal
distribution of broadcasting revenue helps to drive more a competitive environment between
Premier League Clubs.

13
Currency conversions based on May 2015 exchange rate - assumed rate of £1:€1.39

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 Economic impact of the Premier League

3. Economic impact of the Premier League

3.1 Introduction
This section presents the results of the economic impact assessment for the 2013/14 Premier
League season.

The approach to estimation, which is discussed in more detail in Appendix A, includes not
only the direct economic impact resulting from the Premier League and Clubs, but also the
additional economic activity that occurs through their supply chains (i.e., the indirect impact)
and additional activity which occurs from employee spending (i.e., the induced impact).
Figure 11 illustrates the different components of these impacts. Capturing the induced impact
is perhaps of particularly importance in estimating the economic impact of the Premier
League Clubs given that a large proportion of Club spending is on wages and salaries.

Figure 11: economic impacts estimated for the Premier League and Clubs

Direct impact Indirect impact Induced impact

Revenue/Output from
Broadcasters and sponsors
The
Profit/GVA
Premier League
Employees
Tax contributions
Increased demand Spending across
through supply the economy
Match day revenue chains of the stimulated by
Merchandise and Premier League additional
sponsorship revenue and Football Clubs employment
Profit/GVA arising from their
Premier League Clubs Employees/players spending.
Tax contributions
Investment and
Infrastructure

As discussed in the previous section, one of the roles of the Premier League is to distribute
revenues to Premier League Clubs, across the wider football pyramid and to a number of
good causes. These revenues help drive a range of economic impacts. Figure 12 illustrates
the four broad categories of impact that are explored in this report.

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Economic impact of the Premier League

Figure 12: the economic and social impacts of the Premier League

Output

Gross Value Added (GVA)

Premier League
Clubs Employment

Tax receipts

Parachute payments

Solidarity payments to
Football solidarity
Championship/Football League

Non-league support

The Premier
League
Clubs as hubs of communities

Investing in facilities
Communities and
good causes
Sports participation & education

International development

Local and national tourism

Wider economic
benefits International exports and recognition

Supported industries

The following sections explore each of these categories in turn. Where possible, impacts
have been quantified to enable comparisons to be made across sports and other industries.
The quantitative impacts largely focus on the impact of the Premier League and Clubs. For
certain other categories (e.g., good causes and wider economic benefits) a qualitative
assessment is made.

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 Economic impact of the Premier League

3.2 Economic impact of the Premier League and Clubs

Output

Gross Value Added (GVA)

Premier League
Clubs Employment

Tax receipts

The Premier
League

This section sets out the economic impact of the Premier League and Premier League Clubs
based on four key measures:

► Output: the total output calculated reflects the value of all goods and services sold by the
Premier League and Premier League Clubs (the ‘direct’ effect), the relevant supply
chains (the ‘indirect’ effect) and the additional spending in the economy resulting from all
associated employees spending their wages (the ‘induced’ effect).

► Gross Value Added (GVA): the total GVA (or contribution to GDP), reflects the proportion
of the total direct, indirect and induced output which represents additional value to the
economy. In practice, this equates to the company profit and employee salaries
generated at each stage of the supply chain.

► Employment: the total number of jobs created or supported by the Premier League and
Premier League Clubs (the ‘direct’ effect), the relevant supply chains (the ‘indirect’ effect)
and as a result of the additional spending in the economy resulting from all associated
employees spending their wages (the ‘induced’ effect).

► Tax receipts: the revenue generated for the Exchequer by the Premier League and the
Clubs through payments of employee PAYE and National Insurance, corporation tax and
business rates, as well as the additional tax revenue generated through the supply chain
and via induced effects.

3.2.1 Output
The total economic impact in terms of output of the Premier League and Clubs in 2013/14 is
estimated to be £6.24 billion. Figure 13 shows how this total breaks down across the Premier
League and Clubs and also the respective contributions of direct, indirect and induced
impacts.
The results show clearly how the Premier League, which contributed around £0.52 billion in
terms of output, creates the platform for the much larger impact of the Clubs. In 2013/14, the
Clubs contributed around £5.73 billion in terms of output. Of that total, around £3.26 billion
was due to the direct activities of the Clubs, around £1.49 billion was generated through
indirect impacts in the supply chain and around £0.98 billion was due to the induced impacts.

EY ÷ 16
 Economic impact of the Premier League

Figure 13: total output of the Premier League and Clubs*

7.00

£0.52b £0.01b

6.00

£0.91b
5.00
Clubs revenue
£1.73b
breakdown
£3.26b
4.00 £0.60b Broadcasting
Match Day
£b

£6.24b
Commercial / Retail
3.00 Other

2.00
£1.49b

1.00

£0.98b

0.00
Premier League Direct Indirect Induced
Total
impact (inc. direct, indirect
& induced impacts) Premier League Clubs

* Components do not sum to totals due to rounding

Source: EY analysis
Figure 13 also shows the breakdown of revenue of the Premier League Clubs. Broadcasting
revenues make up the single largest revenue source to Premier League Clubs, while match
day and commercial revenues are also significant.

3.2.2 Gross Value Added

The Premier League and Clubs together generated £3.36 billion in GVA in 2013/14, with the
majority generated by the Clubs. Figure 14 sets out how the GVA impact is split across direct,
indirect and induced impacts as well as a breakdown of how indirect impacts across different
sectors.

Figure 14: total GVA of the Premier League and Clubs*

£0.002b

£0.16b
3.5 £0.09b
£0.30b

£0.11b
3.0

2.5

£2.22b
Club indirect GVA
2.0 breakdown
£b

£3.36b Broadcasting
Match Day
1.5
Commercial / Retail
Other
1.0

£0.57b

0.5

£0.47b

0.0
Direct Indirect Induced
Total GVA Premier League
(inc. direct, indirect
& induced impacts)
Economic impact of the
Premier League Clubs

* Components do not sum to totals due to rounding

Source: EY analysis

EY ÷ 17
 Economic impact of the Premier League

3.2.3 Employment
The Premier League and Clubs supported over 100,000 full time equivalent (FTE) jobs in the
UK in 2013/14 (see Table 2). As with output and GVA, the majority of jobs are stimulated by
Premier League Club activity. A total of 95,483 jobs are supported across direct (6,140),
indirect (60,145) and induced (29,198) impacts. The Premier League itself employed only 99
people directly in 2013/14, but further supported 5,478 jobs through the supply chain (which
includes those supported as a result of parachute payments and solidarity contributions) and
2,294 through induced effects.

Table 2: employment impact of the Premier League and Clubs

Direct Indirect Induced Total

Total Employment 6,239 65,623 31,492 103,354

Premier League 6,140 60,145 29,198 95,483
Club Employment

Premier League 99 5,478 2,294 7,871

Employment

Source: Premier League annual accounts, Club annual accounts and EY analysis
The direct employment estimates for the Premier League Clubs include all playing and non-
playing permanent staff as well as ‘match day staff’. In order to produce a single employment
figure, these match day staff have been converted into a number of FTE employees.14

The estimates show the significance of the Premier League and Club supply chains in
supporting a large number of jobs. This is in part because a large part of the supply chain is
made up of labour-intensive sectors such as those supporting match day services (e.g.
catering) and retail.
3.2.4 Tax
The Premier League and Clubs contributed £2.4 billion to the public finances in 2013/14 (with
£2.3 billion of this resulting from the activities of the Clubs). These results are summarised in
Table 3.

Table 3: tax contribution of the Premier League and Clubs

Direct Indirect Induced Total
Total Tax Contribution £1,342m £691m £374m £2,407m

Premier League Club Tax £1,337m £633m £349m £2,319m

Contribution

Premier League Tax Contribution £5m £58m £25m £88m

Source: Premier League annual accounts, Club annual accounts and EY analysis
The Premier League contributed an estimated £88 million in taxation in 2013/14. This
included direct contributions for national insurance and employee PAYE of £5 million and
indirect and induced effects totalling £58 million and £25 million respectively.

Meanwhile the Clubs contributed an estimated £2.32 billion in 2013/14 through business
rates on all facilities and stadia, corporation tax, national insurance contribution, player and
staff PAYE as well as directly attributable VAT. This includes a direct contribution of £1.34
billion and £0.63 billion and £0.35 billion of indirect and induced contributions. Figure 15
breaks down the total tax contributions by type.

14
To convert to FTEs it is assumed that each ‘match day’ counts as a normal seven hour working day and that a
standard working week is 35 hours. Only home matches are counted as a ‘match day’ to avoid double counting.

EY ÷ 18
Economic impact of the Premier League

Figure 15: total tax contribution by tax type*

* Components do not sum to total due to rounding

Source: Premier League annual accounts, Clubs annual accounts and EY analysis
Our estimates highlight the significant amount of tax that is generated through Employee
PAYE. This is driven in part by the relatively high wages commanded by the Clubs’ players
but is also due to the fact that, unlike some other high-value individuals, players tend to be
classified as ‘UK residents for tax purposes’ (as the length of the Premier League season and
frequency of games restrict their ability to spend time outside of the UK). The total tax paid in
2013/14 directly by playing staff at Premier League Clubs is estimated at £891 million. The
breakdown of this contribution across tax types is shown in Figure 16.

Figure 16: playing staff tax contribution by tax type

£20m

£32m

£87m
Employees PAYE
Employers NIC
£174m Employees NIC

£578m Other taxes

VAT

Source: EY analysis
These estimates show that the Premier League and Clubs make a substantial contribution to
the UK Exchequer, which in turn helps to fund a whole range of public services. To give some
context, the £2.4 billion that is directly and indirectly generated by the Premier League and
Clubs could pay the salaries for around 93,000 police constables, which represents over 90%
15
of the constables working in England and Wales.

15
Based on an assumed average salary of £25,900 per year for an experienced police constable, see:
http://www.prospects.ac.uk/police_officer_salary.htm. Figures for police workforce from the Home Office see
https://www.gov.uk/government/publications/police-workforce-england-and-wales-31-march-2013/police-workforce-
england-and-wales-31-march-2013.

EY ÷ 19
 Economic impact of the Premier League

3.2.5 The impact of the Premier League and Clubs in context

It is also instructive to consider the economic impacts of the Premier League and Clubs in the
context of the contribution made by comparable sectors and organisations. This section
compares the estimates with the economic impact of some other sporting competitions as
well as with the ‘screen sector’, which is another sector where top performers command high
salaries.

A report published by Sport England in 2013 helps to illustrate the impact that is made by the
Premier League and Clubs.16 The Sport England study calculated the total direct GVA impact
of the sports industry to the UK economy, which included all economic activity relating to the
consumption or participation of sport, including equipment sales, ticket sales and education,
as £20.3 billion. This compares to the estimate of £2.22 billion direct GVA in this report, which
suggests that, the Premier League and Clubs are responsible for just over £1 of every £10 of
value that is generated through sports in the UK.

The economic impact of the Premier League and Clubs is also significant from an
international perspective. With total Club revenues of £3.3 billion in the 2013/14 season, the
Premier League is the third largest professional sports league in the world by revenue,
behind only Major League Baseball (MLB), which had revenues of £4.6 billion in 2013, and
the National Football League (NFL), which had revenues of £6.2 billion in 2013.17 It is
important to note, however, that both the NFL (32 Clubs) and MLB (30 Clubs) are
considerably larger than the Premier League in terms of the number of Clubs that participate
and operate in a country with a population and a GDP significantly larger than the UK.

Although the Premier League is primarily a football competition, the matches that are played
between Clubs is also a form of entertainment. It is interesting therefore to also consider how
the economic impact generated by the Premier League and Clubs compares with other
entertainment industries. One of the UK’s most significant entertainment industries is the
‘screen sector’ which encompasses film, TV, video games and animation. This sector has
some similarities to the Premier League in that it has a large international appeal, high
salaries for top talent and a broad consumer base.

A study published by the British Film Institute (BFI) set out estimates of the economic impact
of the UK screen sector in 2013/14.18 The results of the study are summarised in Table 4.

Table 4: economic impacts of the screen sector

GVA Employment Tax revenue
Direct impact £2.6n 61,500 £0.8b

Indirect and induced £2.6b 59,300 £0.8b

impacts

Total £5.2b 120,800 £1.6b

Source: Economic Contribution of the UK screen sector, BFI, February 2015

These results show that, despite being smaller than the screen sector in terms of the level of
GVA generated and similar in terms of the level of employment generated, the Premier
League contributes significantly more than the screen sector in terms of taxation. In part, this
is driven by the fact that (unlike the Premier League) the screen sector receives a range of
tax incentives from the UK Government. In 2013/14, this meant that the Premier League and
Clubs contributed £0.72 in tax revenue for every £1 of GVA that it generated, while the screen
sector contributed £0.31 per £1 of GVA.

16
Economic value of sport in England, Sports England, July 2013
17
Source: http://www.statista.com/statistics/193466/total-league-revenue-of-the-mlb-since-2005 and
http://www.statista.com/statistics/193457/total-league-revenue-of-the-nfl-since-2005. Currency conversions based on
May 2015 exchange rate - assumed rate of £1:$1.54
18
http://www.bfi.org.uk/news-opinion/news-bfi/announcements/uk-screen-content-generates-over-6m-uk-economy

EY ÷ 20
 Economic impact of the Premier League

3.3 Football solidarity

Parachute payments

Solidarity payments to
Football solidarity
Championship/Football League

Non-league support

The Premier
League

In addition to the economic impacts set out in the previous section, the Premier League
makes significant contributions to non-Premier League clubs right across the football
pyramid. As part of its commitment to developing English football outside of the top tier, the
Premier League distributes a portion of revenue to Football League clubs through a system of
parachute and solidarity payments. For example, in 2013/14 season the Premier League
contributed over £225 million broken down as follows:

► £171.5 million through parachute payments, which help both to soften the blow for clubs
that are relegated from the Premier League and to empower newly promoted Clubs to
bolster their squads to help them compete. During the 2013/14 season, there were 10
clubs in receipt of parachute payments;

► £38.1 million to Championship clubs in the form of solidarity payments;

► £13.8 million to League 1 and 2 clubs; and

► £1.9 million to non-league clubs through community and solidarity payments.

These contributions help to support the long term health of the game, with improved
investment in youth development, training and facilities helping to ensure that football clubs
continue to develop, irrespective of their place in English football (also, in terms of youth
development see Box 2, page 10). Furthermore, the benefits of the football solidarity
payments are set to continue into the future with the Premier League having pledged that at
least £1 billion of UK live rights income will be shared outside of the Premier League Clubs,
19
for solidarity and other purposes from 2016/17 to 2018/19.

Beyond these payments, the Premier League also generates benefits for clubs across the
football pyramid through the participation of the Premier League clubs in the FA Cup, League
Cup and Community Shield. The system of choosing matches for the FA Cup (i.e., the
random drawing of opponents) often results in Premier League Clubs playing clubs from the
lower divisions. This eventuality can result in higher match day revenues via increased
attendance and tends to increase the possibility of the game being televised. By way of
illustration, Cambridge United’s replay against Manchester United in the 2015 FA Cup fourth
round saw Cambridge earn nearly £1.7 million for that one match, which was equal to their
20
typical annual revenue. Furthermore, the Premier League has estimated that the total value
of the FA and League Cups in the 2013/14 seasons would each fall by around £60 million if
the Premier League Clubs had not taken part.

19
http://news.sky.com/story/1453391/premier-league-commits-1bn-to-good-causes
20
http://www.bbc.com/sport/0/football/30965338

EY ÷ 21
 Economic impact of the Premier League

3.4 Communities and good causes

The Premier
League
Clubs as hubs of communities

Investing in facilities
Communities and
good causes
Sports participation & education

International development

The Premier League contributes to a range of community and charitable activities, including
providing support to 161 clubs across the Premier League, Football League and Football
Conference to deliver community programmes. This is part of the Premier League strategy to
deliver and position ‘Clubs as hubs of their communities’. The Premier League is also active
in funding sports facilities and in leading a wide range of local and national programmes that
have reached significant scale.

3.4.1 Investing in facilities

The development of football in communities across the country relies on players of all abilities
being able to access facilities. To respond to this need, the Premier League, with the FA and
the Department of Media Culture and Sport, set up the Football Foundation with the aim of
helping the growth of the sport and retention of players through improved facilities. To date,
the Premier League has invested £208 million in facilities via the Football Foundation, which
has assisted in the delivery of a total of over £1 billion worth of projects.21 By 2014, this has
resulted in:

► The completion of 469 artificial grass pitches;

► The development of 2,500 real grass pitches; and

► Over 1,500 grants for stadia improvement funds.22

By the end of the current broadcasting period in 2016, a further 100 artificial pitches are
expected to be completed. Furthermore, the Premier League strategy has a particular focus
on community work in ‘high need’ areas, which means that many facilities and projects are
delivered in areas that rank highly on the indices of multiple deprivation (IMD).

The Premier League is the sole funder of the Football Foundation’s Football Stadia
Improvement Fund (FSIF). £4 million in funding is provided to the FSIF each year in order to
improve the standard and safety of lower-league football grounds in the professional and
amateur game. These improvements range from new football stands and turnstiles to
floodlighting and improved provision for disabled supporters. Over the past 14 years, the
FSIF has supported clubs at all levels of the game, from the Football League down to Step 7
of the National League System. A further £1.2m each year is allocated to the FSIF for
improving the experience of attending fans. In 2014 alone, the FSIF awarded grants to 146
projects worth £6.1million.23

21
Premier League, Football Foundation
22
Football Foundation
23
Football Stadia Improvement Fund Annual Review

EY ÷ 22
 Economic impact of the Premier League

3.4.2 Clubs as community hubs and increasing sports participation

The scale of community provision and support undertaken by the Premier League and Clubs
has grown significantly in recent years. For instance, the number of community staff
employed by Premier League Clubs grew from 440 in 2007 to 2,131 in 2014. Outside of the
Premier League, a further 141 Football League and Football Conference clubs are now
supported by Premier League funding to grow and deliver Community programmes.

The Premier League supports a range of programmes which encourage young people to get
active and develop a sporting habit for life, including:

► Premier League Kicks: Premier League Kicks engages young people from
disadvantaged areas in regular football, sport and personal development activities. In
2013, a £16.8 million partnership was announced with Sport England to expand the
programme along with Premier League 4Sport (see below). By 2014, 47 clubs were
delivering the programme and almost 100,000 young people had engaged.

► Premier League 4Sport: saw nearly 70,000 young people engage in 12 different sports
in the first five years. In 2014 the programme was delivered by 34 football clubs (up from
22 in 2013) with over 600 ‘satellite’ sessions in operation in communities across the
country.

► Premier League Girls Football: the Premier League also supports female sports
participation in an attempt to keep young women interested in sport after they leave
school. In its first year of delivery, the programme engaged with over 7,800 girls at nearly
400 locations.

3.4.3 School Sport, Education & Skills

Sport can also be a powerful force for social change and this is an area where the Premier
League is engaging with communities across the country to improve educational attainment,
reduced youth crime and anti-social behaviour. For example:

► In August 2014, the Premier League announced a three-year programme of support for
primary school sport to be delivered across the country. This included £10.5 million to
provide opportunities for tens of thousands more PE and sport lessons to be delivered
via coaches from 67 Premier League and Football League clubs, in and out of
curriculum time. In the preceding year, over 20,000 primary and secondary school pupils
took part in competitive football through the annual Premier League organised schools’
tournaments.

► Working in partnership with Sport Relief and the Department for Business Innovation
and Skills, the Premier League Enterprise programme uses professional Football clubs
to deliver enterprise education.

The Premier League has a range of partnerships with the likes of the Prince’s Trust, Barclays,
the London Mayor’s Office for Policing and Crime (MOPAC), as well West Midlands Police
(WMP), to deliver more targeted delivery to individuals in particularly challenging urban
areas, with the aim of rehabilitation, reducing offending and encouraging employment.

The Premier League is also active outside of the UK. For example, a partnership between the
Premier League and the British Council sees the ‘Premier Skills’ international development
programme delivered in 25 countries across Africa, the Middle-East, Asia, North and South
America. This programme is creating thousands of new community coaches and referees to
work in deprived areas with those deemed most vulnerable.

EY ÷ 23
 Economic impact of the Premier League

The Premier League also provides the FSIF with £1.2 million each year to deliver the Premier
League Fans Fund. The Fund provides financial support to football supporters’ organisations,
with a view to improving the relationship between fans and their clubs, the way football
supporters engage with one another and the fans’ experience of the game. This includes
providing significant core funding to groups such as Kick it Out (Anti-Discrimination), Level
Playing Field (Disabled Supporters) as well as the Football Supporters’ Federation and
Supporters Direct.24

3.5 Wider economic benefits

The Premier
League

Local and national tourism

Wider economic
benefits International exports and recognition

Supported industries

In addition to the industries which are supported through the Premier League and Clubs, their
supply chains and employee spending, there are also other parts of the economy which
indirectly benefit from the Premier League’s success.
3.5.1 Tourism
The UK has always been a major tourist destination for foreign visitors and the rise in
popularity of the Premier League amongst foreign fans has been a major contributor to the
UK’s enduring popularity. Thousands of international visitors come to the UK every year
specifically to attend a Premier League game. A Visit Britain study found that 900,000 tourists
attended a football match while in the UK in 2012, which represented a 20% increase on the
750,000 who came in 2010. Moreover, 40% of those surveyed said attending a football match
was the main reason for their visit.25

These visitors, many of whom will stay for multiple nights, also drive significant expenditures
in the UK economy. The Visit Britain study found that tourists who attend football matches
tend to spend more than the average tourist, £785 per visit compared to £583.

Perhaps one of the key benefits the Premier League brings to the tourism sector is the timing
and destination of trips made by overseas visitors. Premier League Clubs are located right
across England and Wales, which means that the benefits associated with tourist
expenditures are shared across many regions. For example, nearly 20% of visitors who came
to football games went to Manchester or Liverpool, providing a boost to the north west of
England. In addition, tourists attend football matches throughout the football season, which

24
Source: The Football Stadia Improvement Fund Annual Review 2014
25
http://www.theguardian.com/football/2012/oct/21/football-tourism-premier-league

EY ÷ 24
 Economic impact of the Premier League

helps attract visitors to the UK during the quieter winter months, rather than during peak
summer months.

3.5.2 Broadcast and non-broadcast media

It is clear that the Premier League has contributed to the growth in the pay TV market over
recent decades. The Premier League also contributes to a range of non-broadcast media,
such as printed, online and social media. Stories about the Premier League tend to dominate
the sporting pages of all major national and regional newspapers. This is even the case
during the summer months when speculation about player transfers often feature.

Coverage and commentary of football in general, and the Premier League in particular, are
also widespread online. There are a variety of online applications which enable fans to
monitor live scores and news about their team. In addition, recent years have seen growth in
amateur sports blogs and online fan forums.

This growth has also spread to social media, where football matches or events are often
found ‘trending’ on Twitter. As of March 2015, among the top 100 twitter accounts in the UK
there were two Premier League Football Clubs and six Premier League players, with football
being the most represented sport.

3.5.3 The hospitality sector

Businesses in the hospitality sector have benefited significantly from the growth of the
Premier League. Live Premier League matches are available in public houses, bars, and
hotels throughout the UK, which attracts fans without a TV subscription, and those who
simply prefer to watch key games at a public venue. This creates additional demand within
these venues and can attract customers during less busy periods (e.g. weeknights and during
the daytime at weekends).

Further, the geographic spread of Premier League football teams across the UK (for example
the journey from Newcastle to Southampton is around 330 miles by car), results in a large
number of matches where the travelling fans may choose to spend a night in a hotel rather
than attempting often long journeys in a single day.

The example of Swansea City provides an interesting case study into the sort of stimulus that
the Premier League can provide to the hospitality industry. Swansea’s promotion to the
Premier League for the 2011/12 season resulted in a surge of interest in the city from tourists,
the media and international students. The Welsh Economy Research Unit published a study
which calculated that the total local employment resulting from Swansea FC was 420 jobs,
26
with 120 (29%) of these jobs found in the hospitality sector. At the end of Swansea’s first
season in the Premier League, Swansea council reported that activity on its Visit Swansea
Bay website was up 44% on the previous year. Furthermore, the hotel consultancy service
PFK reported that growth in hotel occupancy had increased 9% compared to the previous
27
year (outperforming Wales and the rest of the UK).
3.5.4 Gambling
Football has always been a key revenue driver for the gambling industry. For example, the
‘Pools’ in which customers predict a weekend’s football results, has been running for over 90
years. Since 2001, the Premier League has been working with the Football League to
facilitate the recording and distribution of the type of football statistics and data that is
increasingly required by bookmakers in order to facilitate new offerings to consumers (e.g.
‘in-play’ betting). By way of illustration, based on figures published in a study commissioned
by Betfair, it is estimated that £285 million is waged monthly on Premier League matches
28
during the football season, representing 68% of all betting on UK football.

26
http://business.cardiff.ac.uk/research/groups/welsh-economy-research-
unit/projects%20?field_event_date_value2%5Bvalue%5D%5Byear%5D=&page=1
27
http://www.southwales-eveningpost.co.uk/Swans-effect-putting-hotels-league/story-15634576-detail/story.html
28
EY analysis based on The Odds of Match Fixing, Asser Institute, January 2015.

EY ÷ 25
 Economic impact of the Premier League

3.5.5 Video gaming

The Premier League and Clubs also support the video games industry. Fuelled by the growth
in broadband internet, video gaming has seen rapid growth over recent years with latest
generations of games consoles becoming more mainstream. The FIFA franchise, which is
licenced and developed by Electronic Arts (EA), is one of the most popular video game
brands and is one of an elite list of games that has sold over 100 million units worldwide.29
The Premier League works with EA in the development of the FIFA video game, primarily to
provide player and Club information and to agree the terms on the use of image rights.
3.5.6 Wider impacts
This section has given a flavour of some of the industries and sectors that are directly and
indirectly supported by the Premier League and Clubs. What this shows is that the economic
impact of the competition is far reaching and goes beyond the impacts that have been
estimated in this report. In addition to the examples presented above, the Premier League
also contributes to the economy though the development of cities as well as through its
impact on international trade flows, inward investment and in helping to develop the
international perception of the UK. This implies that the estimates of output, GVA, jobs and
tax set out in this report represent a conservative assessment of the impact of the Premier
League and Clubs on the UK economy.

29
http://www.businesswire.com/news/home/20101104006782/en#.VVRl9E10wdl

EY ÷ 26
 Conclusion

4. Conclusion
The primary role of the Premier League is to organise the football competition between the
Clubs that make up the league, which involves 380 football matches over the course of the
season. Each of these matches is watched by thousands of fans, who travel the country to
follow their team, and millions more on television. This interest helps to generate a range of
revenues; including from ticketing, merchandise and broadcast revenues. In particular, the
sale of broadcast rights has been one of the most significant revenue streams for the Premier
League and Clubs.

The distribution of these revenues to Premier League Clubs (and to clubs outside of the
Premier League through the solidarity payments) has helped clubs across the football
pyramid to invest in making improvements in all aspects of the game.

The previous sections explored how the focus of the Premier League on improving the quality
of the match day experience has driven an increase in the popularity of the competition both
at home and abroad. In turn, this has led to significant positive impacts on the economy and
society. In the 2013/14 season alone, the Premier League and Clubs contributed:

► £3.4 billion in terms of Gross Value Added

► Over 100,000 jobs in the UK

► £2.4 billion in taxes to the Exchequer

These estimates represent just a part of the economic impact of the Premier League and
Clubs. There are a range of other industries (e.g. tourism, broadcasting, gambling) that are
directly and indirectly supported by the competition. These impacts have not been quantified
in this report.

Furthermore, the impact of the Premier League and Clubs goes beyond the economic impact
set out in the previous sections. For example, facility investment and the community
programmes supported by the Premier League in schools and deprived areas have reached
significant scale. Building on the appeal of the UK’s most popular sporting competition, these
programmes are helping to realise a range of health, education and social benefits through
increased participation in sports and development of skills.

It is clear that success of the Premier League, which is grounded in the quality of the football
competition, has created the conditions for continuing growth. The role of the Premier League
in facilitating the ‘cycle of growth’ should help to ensure that the significant contribution of the
Premier League and Clubs to the UK economy and society will continue to increase in the
years ahead.

EY ÷ 27
Appendix A: methodology

Appendix A: methodology
Economic activities are related to one another within the wider economy through a network of
supplier-customer relationships. This means that a change in the economic activity of a
particular firm or sector will tend to produce additional impacts elsewhere in the economy.

Each unit of output produced in a specific sector of the economy relies on inputs from other
sectors. This means that any increase in the demand for any good or service will trigger yet
more demand for goods and services (and the associated labour requirement) along the
supply chain. The amount of inputs (goods, services and labour) that are required to produce
an additional unit of output varies across products and sectors and will depend on the
technology used in the production process.

The Input-Output model30 developed by Wassily Leontiev31 describes the relationships

between different sectors of the economy. Using the Input-Output model as its main building
block, the Economic Impact Assessment (EIA) methodology allows us to quantify the total
contribution to the economy of a particular firm or sector (and/or to quantify the impact of a
change in the size of that firm or sector). Consider, by way of illustration, an increase in the
demand for the goods produced by a particular sector. Within the EIA framework, three
distinct effects can be identified and measured:

1. A direct effect arising from the initial increase in demand economic activity (e.g., the
additional GVA generated, the additional employment created and the taxes that are
contributed to public finances).

2. An indirect effect arising from the additional demand of goods and services along the
sector’s supply chain.

3. An induced effect arising as a result of households spending a share of the additional

income generated on the consumption of goods and services.

The EIA methodology estimates the size of these different impacts through the computation
of industry-specific multipliers. Output multipliers are obtained from the Input-Output tables
(through a mathematical process known as Leontiev Inverse)32, that are readily available for
the UK via the Office of National Statistics (ONS)33. By applying industry GVA/Output ratios
and apparent labour productivity measures (which are obtainable from the statistical data
published by the ONS34) to the Output multipliers thus obtained, industry level GVA multipliers
and employment multipliers will be produced.

Estimating the economic impact of the Premier League

EY has used this (EIA) methodology to produce a comprehensive assessment of the

contribution of the Premier League to the UK economy. Given the main activity of the Premier
League as the creator and organiser of a football competition involving 20 Clubs, and its role
as a facilitator of negotiations on broadcasting rights we have also included within our
estimates the economic impact of the 20 Premier League Clubs. Our EIA is, therefore, split
into two distinct sections: (1) the economic impact of Premier League as a company; and (2)
the economic impact of the Clubs competing in the Premier League. Our methodology takes
into account the transfer of payments from the Premier League to the football Clubs in order
to avoid any double counting of revenue streams.

30
The Input-Output model uses a supply and use matrix showing how much of each good is used in final production
to calculate the economic impact of supply chains following a change in demand.
31 th
Wassily Leontiev is a Russian 20 Century Economist who won the Nobel Prize in economics for creating the
Input-Output methodology.
32
The Leontiev Inverse is a mathematical matrix process which is used to calculate the relevant multipliers.
33
http://www.ons.gov.uk/ons/rel/input-output/input-output-supply-and-use-tables/index.html
34
Ibid

EY ÷ 28
Appendix A: methodology

The EIA quantifies the effect of Premier League and the football Clubs activity on three key
economic variables: (1) Gross Domestic Product (GDP); (2) Employment; and (3)
Government Revenue

In the following sections, we set out how we have calculated the direct, indirect and induced
impacts within this EIA.

Direct effect

Both the Premier League and the football Clubs contribute directly to the UK economy
through the GVA they create, through the jobs supported and through their contribution to the
public finances.

Their direct contribution to the UK’s GDP is the GVA they generate in the course of their
productive activity. This has been calculated by subtracting the costs of goods and services
purchased by the Premier League and the Clubs in the course of its activity from the total
value of production.

The data for the computation of the Premier Leagues’ GVA have been obtained from its
consolidated income statement and financial statements, integrated with its accounting and
human resources records. The data for the computation of the Clubs’ GVA have been
obtained from their annual accounts.

The direct employment of the Premier League and Clubs has been measured by headcount
as reported in the Human Resources records, and converted into full time equivalents.

The tax contribution of the Premier League and Clubs has been calculated from tax returns.
Our estimate includes Corporation Tax paid on profits, National Insurance contributions and
PAYE Income Tax. It also includes VAT contributions on spending that can be directly
attributed to VAT goods, such as match day tickets.

Indirect effect

The activities of the Premier Leagues and the Clubs generate additional demand for the
factors of production at the national level through the goods and services they purchase
through the domestic component of their supply chains. The businesses in the supply chain
in turn generate additional economic output and demand for goods and services along their
own supply chains.

The goods and services purchased by the Premier League have been measured directly from
its purchase records, while for the Clubs the data was sourced from the annual accounts.
These enter the calculation of Premier League’s and the Clubs indirect output. For the
Premier League’s contribution the additional effect on the suppliers’ own supply chain has
been estimated using (Type I) multipliers obtained from Input-Output tables. The indirect
effect on GDP has been calculated through the application of GVA/Output ratios to the
indirect Output thus obtained. Meanwhile for the Clubs contribution, the additional effect on
the suppliers’ own supply chain has been estimated by using a (Type I) sports industry
multiplier obtained from Input-Output tables. The indirect effect on GDP has been calculated
through the application of the sports industry GVA/Output ratios to the indirect Output.

Similarly, the indirect effect on employment has been calculated using official data from the
ONS to calculate industry specific productivity ratios which are then applied to the indirect
output to calculate the indirect employment.

Indirect Tax revenue has been calculated as the sum of the amount of Corporate Income Tax
(CT) that would be paid on indirect GVA plus the amount of employee’s Income Tax (IT) and
National Insurance (NI) that would be paid as a result of indirect employment numbers.
These have been estimated using data from Her Majesty’s Revenue & Customs (HMRC), an
average salary calculator and data from the ONS.

EY ÷ 29
Appendix A: methodology

Induced effect

As household disposable income increases due to the increased provision of labour services,
so does household spending. Naturally, not all of the increase in disposable income will be
spent; the Marginal Propensity to Consume (MPC) describes the proportion of additional
household income that would be spent rather than saved. Increased household spending in
turn generates economic activity within the economy to satisfy the additional demand for
goods and services.

To reflect the fact that there will be substantial differences between the consumption
behaviour of professional football players and other types of consumers, we have employed
two separate methodologies for estimating induced impacts. These two methodologies are
set out in the following sections.

Non-players

For non-players, induced effects are calculated by multiplying the additional household
income by the MPC, adjusted by the ratio of imports to local production at the product level.
Data on the MPC, import ratios and household consumption patterns were obtained from the
ONS.

All additional employment and taxes that additional household spending creates is calculated
in a similar way to the indirect effect – e.g., using productivity calculations from ONS for
employment and generic tax calculations from HMRC.

Professional football players

The specialist skills possessed by top footballers enable many to command high wages. For
this reason a separate methodology has been applied to capture the induced impact of these
high net-worth individuals (HNWI).

For players’ spending a ‘leakage factor’ has been applied to their disposable income to reflect
the fact that, for many players, a share of their earnings would be spent outside of the UK.
Players were grouped into three different geographic areas, with each being assigned a
different leakage factor to represent leakages such as remittances or foreign spending (see
Table 5).
Table 5: leakage ratios

Geographic area Leakage factor

UK 10%

Indirect and induced impacts 25%

EU 50%
Source: EY assumptions
The estimated UK expenditure is then distributed to a ‘player spending profile’ (see Table 6).
The player spending profile was created based on our research on HNWI and other sports
star expenditures.35 Using this profile we calculated the additional impacts of player spending
using the (indirect and induced) methodology above.

35
http://www.forbes.com/sites/robertlaura/2012/05/24/how-star-athletes-deal-with-r5%etirement-financial-lessons

EY ÷ 30
Appendix A: methodology

Table 6: spend profile

Spending profile
Retail spending 25%

Food and beverage spending 5%

Buying/Selling or renting of property 25%

Accounting and tax consultancy 5%

Human health activities 10%

Sports and recreation activities 25%

Other personal services 5%

Source: EY analysis

EY ÷ 31
Disclaimer

Disclaimer
This report (Report) was prepared by Ernst & Young LLP for the Premier League using
information provided by the Premier League and other publically available data.

Ernst & Young LLP does not accept or assume any responsibility in respect of the Report to
any readers of the Report (Third Parties), other than the Premier League. To the fullest extent
permitted by law, Ernst & Young LLP will accept no liability in respect of the Report to any
Third Parties. Should any Third Parties choose to rely on the Report, then they do so at their
own risk.

Ernst & Young LLP has not been instructed by its client, Premier League, to respond to
queries or requests for information from any Third Party and Ernst & Young LLP shall not
respond to such queries or requests for information. Further Ernst & Young LLP is not
instructed by the Premier League to update the Report for subsequent events or additional
work (if any) performed by Ernst & Young LLP. Accordingly, without prejudice to the generality
of the foregoing, Ernst & Young LLP accepts no responsibility to any Third Party to update the
Report for such matters.

Ernst & Young LLP reserves all rights in the Report.

EY ÷ 32
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