The impact of the new Serie A TV deal
May 25, 2011 Leave a comment
Many eyes in European soccer are fixated on the Italian courts, and are anxious to learn the outcome of the new television deal for the Serie A. This is not only a domestic issue, but an international one, as teams are eager to determine their budgets for signing players this summer.
Currently, all but four teams (Lazio, Napoli, Siena, Genoa) generate over 50% of their total revenue from television contracts. The bigger teams, like Milan, Inter, and Juventus, favor a system that allocates revenue based on how many supporters a team has. They argue that this will force teams to create a stronger following within their fan base, and earn the right to be seen on the brightest stages. On the other side, the smaller teams propose a TV deal that involves a complicated distribution formula, which will still favor the bigger teams, though there is likely to be a reduction at the top end. Under the new regulations, 40% will be divided equally among the 20 Serie A teams; 30% is based on past results (5% last season, 15% last 5 years, 10% from 1946 to the sixth season before last); and 30% is based on the population of the team’s city (5%).
The last 25% is based on the number of fans, and highlights a common thread in revenue sharing for all sports. The big teams – Juventus, Inter Milan, AC Milan, Roma and Napoli – favor a system which takes into consideration only one team per supporter. This means that a team like AC Milan can take advantage of its large domestic and international fan base, and receive extra revenue based on casual fans who are not invested enough to follow the smaller teams. The smaller clubs favor a more complex system, which takes into account the fact that many fans, especially in the center and south side of Italy, support one of the big teams but also support their local team.
If the big teams get their way, and the revenue is split based on a survey of fans across Italy, then the top five clubs stand to receive $268 of the $323 million (83%) of this piece of the TV deal. This is obviously troubling for the smaller teams, however the big teams argue that they need this revenue to stay competitive with the rest of Europe. The smaller teams believe that the overall history of unbalanced distribution of revenue is the reason for the big teams being so big in the first place. The smaller teams also argue that the big teams do not effectively manage their resources, and point to the fact that Milan, Juventus, and Inter currently hold 76% of the total bank debt of the Serie A (268 million).
Regardless of how the revenue is split, it indicates that there should be more parity in the Serie A going forward. Time will tell whether or not this will bring Italian soccer back to its glory days, but many believe that it will steer it away from the perception of corruption and irresponsible spending that it has earned over the last decade.