Never will you see a more loving embrace

Arsenal survived relegation by one point

There’s not just one League in England anymore, there are two leagues. Symbiotic leagues which feed off each other, enrich each other, and ultimately enrich the billionaires and millionaires who own, operate, and play in those leagues.

In The League you have 20 teams who play each other home and away, are awarded points for wins and draws, and the club with the most points at the end of the season wins a trophy. That League trophy is one of the most difficult things to get your hands on. In the 20 years that the League has existed just 5 teams have won: Manchester United, Arsenal, Chelsea, Blackburn Rovers, and Manchester City.

In addition to winners, there are losers: and while the winners get a trophy, the losers get kicked out of the League.

There’s also prize money awarded to each team in this League. Each place that a team finishes up the table in the League earns £755,062 cumulative. The winners receive £15m and the losers just £755,000. Already the seeds of inequality are planted. Not only do the losers get kicked out of the League but they receive a pittance in prize money.

This League has, however, a soft spot. There are lucrative domestic and foreign television contracts which are divided equally among all 20 teams to the tune of £32.5m.² In addition, all 20 teams are guaranteed that 10 of their games will be played live on television and thus earn them an additional £5.8m.

Among all of their various prize monies, television contracts, and other awards, the bare minimum that a League team will earn is £39m and the maximum which a team could earn is around £61m.

And if a team is booted out of that League, there’s a “parachute payment” of £15m which is given to teams to help them fight their way back into the League. That parachute payment is reduced the year after their first year of relegation and reduced further the year after that but is still a massive payment considering the fact that the league below The League only pays out an average of £1m in prize monies.

For many teams just being in this League is considered a huge achievement. There are two other competitions, cup competitions, that teams play in at the same time as they participate in the League: the Football Association Cup and the League Cup but more important than winning either of those two competitions is staying in the League. It’s even referred to as “survival” when a team avoids relegation because it’s the difference between life and death for some clubs.

This doesn’t mean that winning the FA Cup or the League Cup is completely without merit. Rather that those trophies are considered “stepping stones” to larger, more important trophies such as winning the League. Winning the FA Cup is a stepping stone, staying in the League is survival.

It’s simple math. The difference between surviving relegation from the League and winning the FA Cup is £25m. That’s £25m the club can spend on upgrading their stadium, on buying players, on training grounds, and on making their club better.

But there’s a second league above this League. A super league if you will. And unlike the League, it’s not friendly, things aren’t shared equally, and there are no parachute payments for relegated teams. It is pure capitalism: the rich get richer, the poor get poorer, and the have-nots are left to rot in the gutter.

Unlike the League, there are 32 teams from the leagues all over Europe and there is no egalitarian home and away play round robin to decide the winners and losers. Teams are only guaranteed 6 games and £6m. In those six guaranteed games there are bonuses that go to teams who win (£700,000 per) or even draw (£350,000 per). Those six games are used to determine who will go into the next round with the top two teams from each group selected to the round of 16. After that, it’s a knockout competition.

Making it to that round of 16 guarantees an additional £2.64m. That round’s prize money alone is more valuable than winning the FA Cup.

The next round is worth £3.3m.

The next round is worth £3.7m.

And if you win, the prize is £7.9m.

The total prize money up for grabs is £363,440,000. But there’s a hidden prize. One more valuable than the prize money. And completely determined by how powerful your league is. This is what this “Champions League” refers to as the “Market Pool”.

That Market Pool prize money is worth £300m and nearly 25% of that money goes to the four teams from The League. And the League winner, the best team in the best league in all the world? The Champions League pays them 8% of the Market Pool money, or nearly £24m. Just for showing up.

All totaled, if a team were to win all 13 of their games in the Champions League and if they were the champions from The League the payout would be £51,477,360.¹ Give or take a few pennies here and there.

Only the top three teams from The League are guaranteed admission to the Champions League. The fourth placed team has to survive a promotion battle between another similarly placed team from a different league in Europe. This is almost exactly the same system that teams from the league below the League use to get into The League.

For a club like Arsenal, who don’t have the backing of a man who is willing to spend £1bn to win the League, achieving third place and thus securing Champions League football is crucial, financially, to ensuring that Arsenal are even remotely competitive in the League. People wonder why Arsene Wenger prioritizes the Champions League over the FA Cup and even more so over the League Cup but it’s really quite simple.

As I illustrated above, almost no team in England would take an FA Cup trophy if it mean that they were relegated from the League because it’s financial suicide. The same applies to the Champions League, except in an even more direct, more cut-throat, more capitalist way: there are no parachute payments to help a team get back into the Champions League.

That’s why Liverpool have struggled for three years to get back in to the Champions League. That’s why Kenny Dalglish was fired. Winning the League Cup is meaningless if you finish 8th to a team like Liverpool who have aspirations of winning the League and getting back into the Champions League. That’s why Arsenal’s 15 consecutive years of Champions League football is a massive achievement. And that is why Arsene Wenger sat on the bench last Saturday, clutching Pat Rice, and looking like a manager whose team was on the verge of relegation.

Because they were.

Times have changed in The League. The old days when winning the FA Cup meant something have all but disappeared. At most it’s seen as a stepping stone to bigger and better things as Manchester City used it last year. But a manager would certainly never risk relegation from the Champions League places to win it.

Remember that next time someone tells you they would rather finish 8th and win the FA Cup: 8th place is relegation.

1. UEFA Champions League Distribution
2. Premier League Prize Money

43 thoughts on “Arsenal survived relegation by one point

  1. +9 Vote -1 Vote +1trex

    I am gonna make my wife read this…. She ll understand a lot how it works in football….. Awesome writeup….:)

  2. +6 Vote -1 Vote +1Ssinderias

    Wow! The numbers are pretty stunning! Makes sense though since Le Professeur is a master of economics

  3. +2 Vote -1 Vote +1jax

    I remember as a very young boy Arsenal winning the FA cup in 1950 and thinking it was the best thing that could possibly happen as back then it was a highly regarded achievement. How times have changed. There is of course the entrance (for the winner) into EUFA Europa league to consider, as this is a worthy competition with some decent prize money.

  4. Vote -1 Vote +1LMG

    Does anyone know how much they get taxed though? Just wondering how much of all this income is actually going to be used.

    1. Vote -1 Vote +1jax

      I’m not sure if it still works this way, but the money is only taxed on what is left after player purchases and other outgoings (as in most businesses). It is not taxed as a whole and is not best left in the account where it will be liable to taxes.

      1. Vote -1 Vote +1LMG

        Yup, that’s right, but I was just wondering what the tax rates/brackets were.

        Another question I’m curious about: Is it their EBITDA that they are taxed upon? I’d imagine that ammortizations would be a huge cost and so they’d want to tax the amount after amortization

  5. +5 Vote -1 Vote +1Limestonegunner

    5th place is relegation, and if Chelsea win this year 4th place is relegation.

    The only way to rescue the FA cup is to make the prize money really big. The only way to do that is to get big money for the TV rights, but how can tv rights for a domestic cup competition ever compete with the international rights for the competition between the best teams in Europe?

    The international audience has become the key. You and me. And we aren’t as interested in watching Yeovil Town play Bolton in the 3rd round as we are watching Udinese v. Arsenal in the qualifying round.

    That’s why Liverpool’s suggestion that international tv rights for the PL shouldn’t be paid out equally since that audience is there mostly to follow the bigger clubs: ManU, Liverpool, Arsenal and now Chelsea, ManCity, and even Spuds. The CL doesn’t divide its TV revenues equally, it indexes it according to size and lucrativeness of the team’s domestic league tv audience. So there is a good argument to be made that international PL rights should operate on at least a similar distribution formula as the domestic PL money that favours the big teams shown more frequently on tv in England.

    It would certainly help Arsenal against lower table clubs. But it would increase the hegemony of bigger clubs, our competitors, and make it harder to get relegated from the CL places. Then AW wouldn’t have to bury his head on Pat Rice’s chest in anxiety.

  6. +8 Vote -1 Vote +1Spen

    Excellent article and really brings home how pointless the ‘no trophy for 7 years’ argument is.

  7. +2 Vote -1 Vote +1NorCalArsenal

    Another great piece that I am sure took a while to assimilate all the information. Thanks.
    I am sure that this is exactly why Arsene equates these things to “trophies”. People who beat him up over it just don’t understand it.
    Liverpool won a trophy and got to the FA cup final and yet queen Kenny was fired. Why? Because this is a business and the Glazers can’t sell that silver do dad in the cabinet for millions.
    The good and bad of this for Arsenal is that we have be able to stay in these spots, build a new stadium and remain competitive. However, if we don’t work harder on our squad we will drop out and struggle to get back up. Just ask Liverpool.

  8. Vote -1 Vote +1jaymin

    This is a perfect and straightforward explanation anyone who reads will understand. Really well put Tim.
    “For a club like Arsenal, who don’t have the backing of a man who is willing to spend £1bn to win the League” I don’t know about this though. Should FFP turn out to be as weakly enforced as Man City fans hope and Swiss Ramble predicts, I think Arsenal’s resident facebook investor will pony up, to the delight of the fans. After Man United is purchased by Qatar! Football is as ridiculous as horse racing, more so every day.

  9. +3 Vote -1 Vote +1Bunburyist

    Nice work, Tim. By the way, the other Arsenal blogger named Tim (you know, Tim Stillman, not to be confused with Tim of 7amkickoff, a mistake made a poster the other day who was so aggrieved at the error that he gave you a thumbs down for admitting you weren’t Tim Stillman? Yeah, that guy. Anyway…) wrote this today, which provides a fitting addendum:

    “It’s clear that Champions League qualification is a priority to the club. It is to every club. Alex Ferguson is the only manager to win the Carling Cup since 2006 and still be in his job come the end of that calendar year. For Mourinho in 2007, Ramos in 2008, McLeish in 2011 and now Dalglish, their respective club owners found it a piffling distraction.”

  10. +1 Vote -1 Vote +1Calvin

    Brilliant Tim! Bloody brilliant!!!
    I gotta say, I really do feel next season is gonna be huge for us. It feels a bit like Arsene is returning to his old ways, his winnings ways, now that he has abandoned the youth project. Next season we have to fight for the title!

  11. -14 Vote -1 Vote +1Dave28

    By all means congratulate Wenger for the team qualifying for the Champions League but in a way is it worth it when it seems that the likely scenario for next season is yet another round 16 humilation with inept defending redolent of poor coaching & transfer window purchases (or lack of thereof). The Europa League is at least a trophy which is a realistic target and who knows may help to build up “mental strength” in the way the Fairs Cup victory in 1970 did. Roll on 8 years without a trophy but then again it’s the taking part that matters isn’t it? And Silent Stan isn’t bothered.

  12. Vote -1 Vote +1Bunburyist

    Completely unrelated to the original post, but I am just hating all the rumors today about Van Persie not wanting to sign. In the end, he may sign and then say “nothing reported in the press was true,” but when there are no noises except the (seemingly completely) fabricated stories written by the media, it’s hard not to feel something is not quite right.

    Of course, speculation is futile, but it’s also the food of football fans, especially in the summers.

    Agh. I think it all started with one article in The Sun yesterday, and now most of the papers are running with it (again, in the absence of anything resembling evidence).

    I’m already making excuses to placate myself in the event he does leave:

    1) Somewhere in the near future–possibly even at the Euros, or more likely in a Netherlands friendly–is another season-ending injury, and it would be just our luck that we sign him on a massively lucrative contract only for him to get injured in every subsequent season, just as he probably will wherever he signs in the future. (This is premised on the idea that 2011-2012 will go down as the only season in which RVP stayed completely fit.)

    2) Actually, I don’t have any other contingency plans…

    I haven’t seen the host of clamoring suitors I thought there would be (so far just some initial winks from Juventus and Man City), and this curious lack of interest may indeed stem from the fact that clubs will be reticent about spending a top fee for a player with only one season of injury-free play out of eight or whatever it is.

    Can I finish writing now?

    Yes.

    I need a drink.

    1. Vote -1 Vote +1Bunburyist

      Oh! I just thought of another ameliorating lie I can tell myself:

      2) We will break with type by actually re-investing every penny we receive from the Van Persie sale into established world-class quality!

      Ugh. I really do need that drink.

      By the way, any thoughts on what we could get for RVP (weighing his undoubted quality against the fact he’s only got one year left on the contract)?

      £40m? More? Less?

      I’m throwing up.

      1. +2 Vote -1 Vote +1Tim Post author

        1) Stop reading the British sports papers. If Robin signs with Arsenal, you’ll know about it on the dot com. If he refuses to sign an extension with Arsenal, he told us he will tell us. If he is sold, you will read about it on the dot com.
        2) Pour yourself that drink
        3) Put on some sunglasses and relax. It’s summer and at least you’re not in Calgary.

      2. +2 Vote -1 Vote +1Bunburyist

        I’m on my second drink already, and I have to say I am 100% positive Van Persie will be an Arsenal player next season!

        FUCK YEAH!!!!

        I’M A FUCKING ROCK STAR!

        (yeah, I know, 2 drinks…)

    2. Vote -1 Vote +1Eurazian

      If he ends up going to Juventus, or Barca or Real Madrid, I won’t be particularly unhappy, so long as we can get a reasonable price. Those teams are not our real competitors.
      If he goes to Man City, that is a problem. Firstly, because it would be weakening us to strengthen a rival, and secondly because it would add more credence to the perception that we are their feeder club. I don’t ever want to see RVP suiting up against us, but if it’s in the context of a CL match, I can handle it. Hearing him talk about what a great club Man City is or whatever would be too sickening to contemplate.

      Mind you, City would be the club we would get the best price from. I think they’d happily fork out 30-35 million for him, because money means nothing to them. Other clubs might pay 20-25. At the end of the day, aside from having only one year left on his contract, RVP is still something of a risk. He’s only had one year free of injury, he’s getting towards 30, and the chances of him having another injury free season are not as good as you’d want them to be.

    3. +1 Vote -1 Vote +1critic

      Only thing that a new contract going to do is improve RVP market value massively.
      Do u honestly believe papers gonna shut dere mouth after he signs? May b for 2-3 months.
      Drink or no drink put ur sunglasses on and chillax.

  13. -1 Vote -1 Vote +1thenry

    RVP situ will be dragged on as it give Arsenal FC good publicity, will he or wont he, same pattern with all the others from Viera to madrid to the eternal henry to barca then cesc to barca crap.
    its a marketing coup we get lots of coverage in press and tv all over the world as a result. its a pattern and keeps the interst in the club trending.

    a lot of fans dont get how the machine works those that get lots of publicity get the higher sponsorship contract as the brand will be flashed along with the Arsenal brand. win win.
    Arsenal FC a brand the world over who cares if we dont win a bunch of tin cups im only interested in the PL or the CL and qualification for the CL AND THE BRAND OF FOOTBALL WE PLAY.

  14. -1 Vote -1 Vote +11NilToTheArsenal

    Nicely done. Pulls stark economic reality to the front of the argument for what is and what is not successful in 21st century football.

    Which is exactly why Robin van Persie is very likely to leave Arsenal. He’d be stupid not to, given that our club will never break the bank for anyone including him, or Thierry Henry or…

    At age 28 his market value may never be higher, and it is extremely unlikely that he’ll be able to replicate the incredible campaign he’s had for us or for anyone else. Like any athlete, he’s a split second and mis-timed tackle away from leaving the game. His crowded hour begins now, and his future is probably not at our club. In football c’est la vie.

    Really good perspective on this blog.

    1. Vote -1 Vote +1JV Mauer

      Aber, as Tim has pointed out before, his leadership off the pitch has also been a major factor in creating the team cohesion whicj allowed us to develop the “mental stwength” which helped us push on from our gods awful start to the season. That alone is worth its weight in tin and would take a long time to replace.

  15. Vote -1 Vote +1Redcore

    Fantastic read Tim!! All the more reason to hope for a Chelsea win in the CL final I guess.

    With no sugar daddy to back them up financially, with several players on wrong side of 30 and with two key players on loan from other clubs ‘relegation’ will impact them much more than the Chavs. Agree?

  16. +2 Vote -1 Vote +1jaymin

    Vote it down or not, the only future for this club is up. If FFP reigns, we will rule. If not, we will become a new Chelsea or City, and we will rule. The position of Arsenal is the most enviable in european football. Wenger has worked miracle after miracle, to keep us in the CL for so long on no budget whatsoever. If he didn’t already have a statue, he’d deserve one. “Wenger with money” is a terrifying thought, in Siberia, Madrid, and Abu Dhabi.

  17. Vote -1 Vote +1Shaun

    Anyone knows how come a side like the Scum next door are able to find their way into the richest clubs list despite not qualifiying for the CL year after year?

  18. Vote -1 Vote +1marek

    With virtually unlimited money, a club like Chelsea or City can eventually achieve trophies (albeit at a financial loss) but at least in Chelsea’s case, success has proven unsustainable. City may go the same way in a few seasons.

    Chelsea’s management situation is notoriously unstable. This season, Abramovich wanted the most exciting new toy as his manager, and it backfired. If Chelsea don’t win UCL this season, they’re, well, relegated. City’s acquisitions of players like Tevez or Balotelli have also almost backfired (City would have been without a trophy had it not been for two extra time goals). You simply can’t spend your way to a settled, gelled team built to a particular manager’s specifications because you constantly have the temptation to spend, spend, spend some more on the newest exciting player or manager.

    Arsenal already has the stability, and Wenger looks like someone who is more likely than most managers to continue giving players a chance (which can be bad or good). Arsenal’s problem is not really that the other clubs are rich, but that the other clubs can poach Arsenal’s players because of the perception that spending money = ambition.

  19. Vote -1 Vote +1Gee

    Great blog post there Tim.

    So so true nowadays about Money driving everything in Football.

    Winning the Carling Cup and FA cup every single year but not getting into the champions league would not make the club any better off.

    If Kenny had got into the CL this season and made an exit in every domestic cup comp to non league sides he would not have been sacked.

    People go on about, you need trophies etc but in all honesty we don’t. Yes it would be nice to have a day at Wembley and win something, but the club does not need to win another FA cup or Carling Cup ever again so long as they continue to qualify for the Champions League.

    This is the brutal truth

  20. +1 Vote -1 Vote +1Sahil

    The best football-finance related post I’ve read. And I’ve read a few on Swiss Ramble (they mostly go over my head though)

    Hat-tip to you, Tim.

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