Importance of English Premier League Clubs on Economy - Research Proposal Example

Topic: Importance of EPL Clubs on Economy Name: Institution: Date: Introduction 2 Table 1. Revenue generation of top six EPL Clubs 3 Research Questions 4 Literature Review 4 Big data being embraced by the world’s richest football league 6 Methodology 7 Types and Sources of Information or Data 7 Analysis of Data 8 Ethical considerations 11 References 11 Introduction According to Goddard & Sloane, (2014) the English premier league (EPL), also referred to as the Barclays Premier League was established in 1992 and swiftly turned to be a predominant sports league in the world. The league consists of 20 football clubs and within a complete season each play their opponents twice making a total of 38 games. One match is played on home ground while the other is played on away ground. It is important to note that the entire season runs from August through May. Just like in the business world, a complete season of the EPL present a fiscal year. Every season three top clubs from the championship side are promoted to the EPL while the last three from the EPL are relegated to the championship side. However, the top four clubs get tickets to participate in the UEFA Champions League. This is the most superior football tournament in the world it features top clubs across Europe. Its superiority is also in relation to its financial strength. Currently the Premier League clubs are: Arsenal, Aston villa, Burnley, Chelsea, Manchester City, Manchester United, Liverpool, Southampton, Newcastle, Tottenham Hotspur, Stoke City, Crystal Palace, West Brom Albion, Hull City, Leicester City, West Ham United, Everton, Sunderland, Swansea and Queens Park Rangers (Slack, Byers, & Parent, 2011). This international top football has been intensively commercialized during a spell of two decades since its inception in the early 1990s. In this respect, the EPL has been the vehicle to inspire the rate of commercial growth. This can be attributed to a consequential capacity to generating income and the profitable broadcasting contracts. According to the Deloitte’s Football Money League (2013) Manchester United is position 4 globally as it generated £363.2 million in 2013. In 2013, England had 6 teams in the top 20. However in spite of the large money chunks realized in the Premier league top teams, there still exists a wide gap to the team with the smallest amount of income generation. In 2013 the least amount of earnings was realized by Wigan Athletic as they were just able to get £56 million. When a comparison, between the economics of the Premier League now and two decades ago, is done it is easy to realize that there is a big difference as in 1993 the highest revenue realized was just £25 million. This amount is just about £30 million less than what is earned by the lowest earner in 2013. Top 6 premier league clubs in revenue generation (2013) Total Revenue (in £ “000, 000”) Broadcasting Revenue (in £ “000, 000”) Broadcasting Revenue ( presented as a % of the Total Revenue) 1. Manchester United 363.2 101.6 28 % 2. Manchester City 271 88.4 33 % 3. Chelsea 260 105.4 41% 4. Arsenal 243.6 88.4 36% 5. Liverpool FC 206.2 63.9 31% 6. Tottenham Hotspur 147.4 62.3 42% Table 1. Revenue generation of top six EPL Clubs Source: Deloitte’s Football Money League (2013) It is important to note that the extent to which each of the above clubs impact the wider economy is very different. It is expected that a team like Manchester United will have a bigger impact on the wider economy as compared to Tottenham Hotspurs. This is for the reason that Manchester United has a bigger revenue than Tottenham Hotspur. The economics behind this is dimensional as it can be in form of taxes, job creation, and many other related facets. For this reason it can be hypothesized that the higher the total revenue implies higher impact to the wider economy through the indicated channels. Though the indicated channels like taxes may not be the only translation of this they may the significant channels. It is important to find out how premier league clubs such arsenal contribute to the economies at both the local and national stage. Research Questions a) What impact do English Premier League clubs have on the economy? b) Are footballers from the English Premier League clubs good for the economy? c) What do promotion to the Premier league mean to the county economy? Literature Review Consistent with Slack, Byers, & Parent, (2011) there is need to understand the journey of the English Premier League, from one of the most despicable to one of the most praiseworthy. This is to help any reader appreciate the impact the EPL clubs like arsenal have on the wider economy. For the reason that this is a multifaceted issue, a look at the literature review will help in understanding the facets involved. Two decades ago, the soccer of England was a universal disgrace. It is important to discuss how it made one of the most significant comebacks in in the history of sports. The English Premier League also commonly referred to as the EPL has undergone significant transformation over the past twenty years. All these transformation are very apparent given the economic weight the individual clubs possess. The economic success of the premier league is an amazing story, the outcome of an outstanding and unanticipated change. I992 the soccer of England appeared to be a national past time for the reason that it was more of a national embarrassment. This was a time when the top flight clubs consequently separated off from the Football Association lower leagues after an antagonistic contract disagreement. In the early 1990s, the English football had wasted an antiquity, which was a century old, as the most talked about sports competition in the globe. The clubs in England were detaching themselves from a stretch of 10 years, which had witnessed their reputes drown in the deep sea to appalling levels both internationally and domestically. During the 1985, football hit its all-time low in the nation that gave birth to the sport. Clashes brought about by Liverpool supporters during a European Cup match held in Belgium resulted to the death of 39 fans of Juventus, an Italian club. The clashes instigated by the Liverpool fans resulted to collapse of a concrete wall at Heysel Stadium, which in turn led to the tragedy. Subsequently English teams were indefinitely forbidden to compete in Europe. The ban lasted for five consecutive seasons. The same subsequently witnessed one of the nastiest football insurgences in history between fans of Luton and Milwall back in the United Kingdom. Additionally to he stints of hooliganism in history, English football was forced to deal with perilously deteriorating soccer grounds from the era of Victoria. Merely weeks prior to the awful occurrences at Heysel and only 2 months after the Luton –Milwall conflicts, 56 deaths resulted from a horrendous stadium fire at Bradford City. When the 1980s was coming to an end, the soccer in England was not defined by the players’ achievements, however it was defined by the vehement reputation of the stadium disasters as well as that of the fans. With all such occurrences witnessed in the past, the EPL clubs were pathetic and contributed losses to the wider economy. Just like any other business, which ought to be profit making, the clubs were on the losing end due to the reputation they had attained within the dark years of soccer in England. The image of the clubs were not that interesting and they could not even manage to attract big sponsors. In general this is to assert that currently the English clubs, specifically the EPL top flights are assets to the wider economy as compared to the past decades when it was an evident liability on the economy. A good example that ascertain this aspect of it being a liability is on April 15, 1989. This was a day scheduled for Liverpool and Nottingham Forest FA Cup semifinal at the Hillsborough stadium. 96 people lost their lives as a result of police negligence. There exist a significant difference on the economic impacts of the EPL clubs now and in that time. Such occurrences just led to the deterioration of the wider economy. Big data being embraced by the world’s richest football league In regard to the Deloitte’s Football Money League (2014) when EPL clubs like Arsenal, Liverpool, Manchester United, Manchester City etc. open new seasons, it is not always the thousands of supporters at their specific home stadiums that watch most closely. The English Premier League currently boasts of a new variety of observers: sophisticated firms of data, which methodically trail every event, applying statistics to find out best means of winning. The EPL has got high stakes currently. Overwhelming audiences of TV make it to be the richest league in the globe, and it was projected to net revenues of $4.8 billion (£3.1 billion) during the 2014/2013 season. However, even though EPL clubs like Arsenal realize a lot of revenues, they subsequently spend a lot. It is always said that talent is pricey. This is s reality in the EPL clubs as the salaries of players engage 70% of the clubs average takings. It is important to note that this figure hits even 94 percent in some clubs. What is at stake is even more than pride. Relegation can leave clubs with revenues that hugely fall short of the expenses since income in the lower league are a quarter of the EPL’s. Many have discovered that being relegation to the lower leagues has the capacity to induce a death spiral. For the reason that team sheet imply the boundary between insolvency and glory, clubs like Arsenal hire scouting network networks which involves exploration of the whole world in search of the suitable talents at the right price. The EPL clubs currently have their individual economic setting. These clubs exclusively operate just like most businesses which are business oriented. They involve use of resources to gain profits. Profits are achieved in many ways within the EPL. Survival in the EPL, i.e. avoiding relegation implies additional fund and the allocation depends on the position taken. Again sale of players involves cash inflows to the club. There are many deals/contracts, which clubs and individual players involve in thus making additional revenues. Also match tickets are a source of revenue for such clubs. The purpose of looking at such is to realize how dimensional the economics of the EPL clubs is. This subsequently affects the wider economy as it will be discussed later. Analysis of the impacts of EPL clubs, such as arsenal, on the wider economy should not be done as an isolated case but considerations should be taken as it turns out to be a multifaceted issue. Cash inflows and cash outflows of these clubs have an obvious impact on the wider economy (Deloitte’s Football Money League, 2013). Methodology The study involves a secondary research that will be conducted for the purpose of understanding the overall research question and achieving the research objectives. During the study, data was collected from a number of sources such as. This research paper will involve the use of qualitative case study approach as the main research methodology. This is a technique will provide an insight on the research topic, the economic impact of the EPL clubs, like arsenal on the wider economy, in an appropriate way. It subsequently enables the participant to understand the related implications of the research topic. This approach has the quality and the capacity to unearth persistent issues in regard to the research question. The use of qualitative research strategy was implemented for this study due to its characteristic of using words, stories, interpretations and observations to explain the condition. This research paper is intended to apply qualitative research because of its flexibility of use and also its ability to allow the researcher to express her ideas and thoughts in the within context of the research. Types and Sources of Information or Data It will be possible to collect data from different sources for different reasons. Based on the content of the information, the data collected will be used for a number of resolutions; it will be necessary to have the knowledge of where to derive the data that proves important for the study. Some of the significant sources of information that will be investigated include: 1. Publications on the English Premier League. 2. Archival Records. 3. Documents. 4. Federal and State Databases. 5. Other internet sources. Analysis of Data During the study, various approaches will be used in data analysis process. This will involve determining the revenues generated by the clubs in a particular year. For instance, during the season 2011-12, the contribution of the EPL to the Exchequer was projected to be approximately £1billion. According to the tax firm this was the first time in history that such a forecast was made. According to Saffery Champness an accountancy firm in the United Kingdom, whereas people may lament the colossal wages of premier league stars, the significant constructive contribution, which soccer makes to the tax man is normally overlooked. In the season 2010-2011, it is documented by the tax firm that the twenty premier league teams contributed approximately £725million to the Exchequer. It is significant to note that £188million represented National Insurance contributions and £458million represented income tax on salaries. Such amounts were expected to rise the following seasons. A key factor is the newly instituted broadcasting contracts which have led to the rise in the broadcast revenue of the EPL by approximately 30 percent. Past trends show that such increments have been applied in increasing the wages of players over the three year cycle. A huge rise of the generated tax for the Exchequer will result from the 50 % tax top rate announced from 6th April 2010. It is important to note that this influences various premier league stars. It is thus important to realize that tax has a great impact in the wider economy. With the huge amount of tax from the Premier League clubs the government is able to drive its economic objectives thus enhance stability of the wider economy. Most economic activities of the government are reliant on the taxes produced and the English Premier League clubs have done a considerable task in contributing their taxes. Taxation is a multifaceted subject which can be analyzed from many angles. Subsequently it is important to note that the amount of tax produced by the premier league clubs such as arsenal is very huge and can help in sustaining a number of economic activities. In addition, data analysis will involve determining the amount of tax paid by a player as a result of being awarded dues with the tax man on a periodic basis. Economically taxes are part of the economy and have a major impact on the economy. Players who pay their dues are assets while those who evade taxes are considered a liability to the wider economy According a senior tax manager in sports and Entertainment Group at Saffery Champness (HMRC), Peter Hackleton the red lines had been established for some time by the HMRC, however what is normally overlooked is the substantial contribution that the football makes in the United Kingdom. He further notes that this disregard trickles down particularly to the premier league clubs. This is to imply that people fail to appreciate the economic importance of the premier league clubs while it is a significant role in the wider economy. These same taxes generated by these clubs are very important in building of economic infrastructures thus subsequent economic growths. According to the tax firm, tax structuring is generally appropriate for any highly paid professional and if undertaken within the confines of the tax legislation in existence it is faultlessly lawful. What ought to be understood here is that the ever rising wages of the footballers translate to higher taxes which consequently imply high growth rate within the economy. To further understand the economic benefits of the premier league club, data analysis will involve investigation of a case of Hull City which was promoted to the topflight in the 2011/2012 season. When this club earned a direct elevation, for the first time in the club’s history, fans were over joyous as a dream they had hold onto for a long period had come into reality. The following days the achievements of the club on pitch were substituted by suppositions in regard to the Hull and East Yorkshire wider economic impact of the promotion. Whereas Hull City anticipated to receive approximately £60m bonanza from the payments of the EPL, there existed a wider agreement that the economic benefits were going to be experienced across the region, beyond the club. Among those who believed that the success of Hull was to boost the economy was a senior economics lecturer at Hull University Business School. Communicating with the Hull Daily Mail just a few days after the promotion of the club, Dr Michael conveyed that “You might be talking something like £100m to the local economy,” he further asserts that, "You look at the amounts of money earned from being in the Premier League and it is tens of millions of pounds difference to that of being in the Championship." According to him there normally exists a multiplier –in addition to the direct impacts, there exist indirect impacts for instance those for suppliers, and induced impacts, with individuals gaining more spending capacity. Promotion to the top flight is always a welcome news for the tourism and hospitality industry at the local stage. To even understand this further it will be equally important to take a look at the promotion of Swansea to the premier league in the season 2011-12. According to studies supervised and carried out by the Cardiff University, 420 jobs worth £58.6m to the Welsh economy were protected or created within the first season of the club in the EPL. The research asserts that the economic benefit to the city of Swansea alone was approximately £55.3m. It is important to note that while a bigger percentage of the economic value, which is £50.6m, was directly generated by Swansea club, a number of the jobs protected and created (around 295) were from activities regarded as non-footballing. The most noteworthy aspect of this activity was the purchasing power of the away supporters who stayed in hotels, visited clubs and pubs while attending matches. According to Swansea council, being in the topflight raised activities on its Visit Swansea Bay website by 44%. Subsequently PKF which is a hotel consultancy service stated that occupancy of hotels within the city rose by 9 per cent within a spell of 7 months. This outperformed wales and the rest of the United Kingdom (Kuper, 2014). It is vital to indicate that all Premier League teams, especially those that have got promotions, share the same scenarios. According to the North and Western Chamber of Commerce, the 2010/2011 season that Blackpool spent in the EPL translated to approximately £30m to the indigenous economy. Another city that went through the lows and highs of relegation and promotion turns to be Norwich. Business elites states that whereas the economic profits are real, the effect of the Premier League exceeds just money. According to Caroline Williams, chief executive officer at Norfolk Chamber of Commerce, Norwich City do have more economic impact on the economy when it participates in the EPL compared to when it is in the championship (Kuper, 2014). According to Slack, Byers, & Parent, (2011) it is important to infer that participation in the EPL brings about the feel good factor to the business society. Clubs like Arsenal and Totten ham inspire the businesses of the North London on a local scale as well as those of the UK generally. The same case with the Manchester clubs like City and United. Hospitality and tourism sectors under such areas do experience high revenues when visiting teams come along. The vising fans visit hotel and further facilities thus leading to increased sales thus high profits. Ethical considerations The main ethical considerations to be observed are that records will be accessed under the authority of the clubs where the research will be conducted. This will be achieved by a written request of the need to conduct the research and the date of the research prior to the day of the research. In addition, the researcher will use the results of the research for the purpose of the research and not any other purpose. Furthermore, the researcher will ensure no individual is mentioned in the research as a result o participating in the research. References http://www2.deloitte.com/uk/en/pages/sports-business-group/articles/deloitte-football-money-league.html Slack, T., Byers, T., & Parent, M. M. (2011). Key concepts in sport management. London: SAGE. Giulianotti, R., & Robertson, R. (2009). Globalization & football. Los Angeles: SAGE. Szymanski, S. (2009). Playbooks and checkbooks: An introduction to the economics of modern sports. Princeton: Princeton University Press. Nüesch, S. (2007). The Economics of Superstars and Celebrities. Wiesbaden: Deutscher Universitäts-Verlag / GWV Fachverlage GmbH, Wiesbaden. Dobson, S., & Goddard, J. (2006). The economics of football. Cambridge [u.a.: Cambridge University Press. Great Britain., & Great Britain. (2009). Football governance: Seventh report of session 2010-12. London: Stationery Office. Rodríguez, P., Késenne, S., García, J., & Edward Elgar Publishing. (2013). The econometrics of sport. Jewell, R. T., & SpringerLink (Online service). (2011). Violence and aggression in sporting contests: Economics, history and policy. New York: Springer. In Goddard, J. A., & In Sloane, P. J. (2014). Handbook on the economics of professional football. Narsesian, S. (2010). Football Fans, Their Information, The Web and The Personal Home Page. Newcastle upon Tyne: Cambridge Scholars Pub. Humphreys, B. R., & Howard, D. R. (2008). The business of sports. Westport, Conn: Praeger. Rosner, S., & Shropshire, K. L. (2011). The business of sports. Sudbury, MA: Jones & Bartlett Learning. In Steen, R., In Novick, J., & In Richards, H. (2013). The Cambridge companion to football. Butenko, S., Gil-Lafuente, J., Pardalos, P. M., & Gil, A. J. (2010). Optimal strategies in sports economics and management. Heidelberg: Springer. Soderman, S. (2012). Football and management: Comparisons between sport and enterprise. Basingstoke: Palgrave Macmillan. Calzada, E. (2013). Show me the money!: How to make money from sports marketing. In Wetherly, P., & In Otter, D. (2013). The business environment: Themes and issues. Trosien, G. (2012). Sports in the co-opetition of metropolitan regions. Berlin: epubli. Kuper, S. (2014). Soccernomics: Why England Loses, Why Spain, Germany, and Brazil Win, and Why the U.S., Japan, Australia?and Even Iraq?Are Destined to Become the Kings of the World's Most Popular Sport. New York: Nation Books. Read More