Sports Economics 1

ECONOMICS AND ECONOMIC VALUE OF THE ENGLISH PREMIER LEAGUE (EPL)

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 Sports Economics 2

Table of Contents

Introduction.................................................................................................................................................2

English Premier League (EPL) Organisation...............................................................................................3

Match Economic Impact..............................................................................................................................3

EPL Economic Value..................................................................................................................................4

Gross Domestic Product (GDP) Contribution by EPL.............................................................................5

Labour Economics...................................................................................................................................6

The Labor Economics of UK Players and Foreign Players within the UK..........................................6

Wage Determination for EPL Players.................................................................................................7

Tax Receipts............................................................................................................................................8

Promotion of Tourism, Technology, Gambling and Gaming...................................................................8

Variables that Influence Match-Day Attendance and Ticket Pricing Strategies..........................................9

Average Weekly Earnings of the Football Fans.....................................................................................10

Capacity Utilisation...............................................................................................................................10

Derby Matches......................................................................................................................................11

Club Brands...........................................................................................................................................11

Previous Season's Performance.............................................................................................................11

Match-Day in the Week.........................................................................................................................12

Recommendations for Continuous Dominance and Increase of Economic Value of EPL.........................12

Reverse Order of the Reward Money....................................................................................................12

End-of-Season Playoff...........................................................................................................................13
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Increase Broadcasting Rights to More Countries...................................................................................13

Conclusion.................................................................................................................................................13

References.................................................................................................................................................14
 Sports Economics 4

Introduction

It is said that football is more than just a sport but the world's most preferred game. It is

estimated that more than four billion people worldwide are football fans while more than 270

million people participate in the sport worldwide. All the activities in football inevitably lead to

the economic value of the sport, which extends beyond the football clubs to the nation's GDP and

the infrastructural development of other junior leagues (Terekli et al., 2018). English Premier

League (EPL) is the largest league in England and the world, and it comprises 20 teams, each

with 23 registered players. In this paper, the economics and economic value of EPL will be

discussed in detail (Terekli et al., 2018). The paper covers the EPL match impact in relation to

the general revenue generation, employment opportunities and other economic impacts of the

EPL games. The Gross Domestic Product (GDP), tax receipts, employment opportunities, and

tourism contribution of the league will also be analysed based on Ernst & Young (EY) reports.

Factors influencing match attendance and audience, together with a recommendation for

maintaining and increasing competitive advantage and revenue generation, will be established in

this research.

English Premier League (EPL) Organisation

The premier league is a privately owned company that comprises 20 member clubs that

participate in the league in one season (Terekli et al., 2018). Each club functions as an

independent organisation shareholder in the premier league company. All the clubs are guided by

the rules established by the premier league, FIFA, Football Association (FA), and Union of

European Football Association (UEFA), together with European and English Law. The company

uses consultation as the key to EPL and shareholder meetings essential to making ultimate

decisions on the league policies. The shareholder meetings are held on a regular basis (Premier
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League, 2022). In contrast, the Annual General Meeting (AGM) is held towards the beginning of

a new season, where relegated teams transfer their shares to the championship league and

promote teams transfer their shares to the perimeter league (Premier League, 2022). The

shareholder meetings are used for implementing new policies or amendments, whereas a two-

thirds vote policy is used to declare new policies and decisions.

Match Economic Impact

The EPL clubs are strategically located in different geographical areas across England,

facilitating the significant distribution of economic benefits and developments across the

country. All the England's major nine regions are represented by at least one EPL club.

According to EY researchers, the EPL, which involves 380 matches distributed across nine

months, generates significant direct and indirect revenues from diverse commercial activities

(Ernst & Young, 2014). These activities significantly influence growth and preserve dominance.

The league has achieved television broadcasting rights on sports in over 190 nations resulting in

an audience of more than 730 million homes (Ernst & Young, 2014). The income generated from

television broadcasting has elevated from £40 million in the 1990s to more than £1.7 billion in

the 2013/2014 season (Ernst & Young, 2014). Also, the ticketing of the live games has been a

great source of income since the EPL clubs averagely manage to achieve 95% stadium utilisation

with average game attendance of 36,691 (Ernst & Young, 2014). Other revenue sources for the

clubs include sponsorship deals, merchandise and advertising.

The impact of the EPL continues to grow and reach higher levels. The appeal of EPL

football to fans worldwide and in the UK is indicated by the growing cumulative global

audience, which reached 3.2 billion in 2019/2020 (Ernst & Young, 2022). Before the COVID-19

pandemic, stadium utilisation reached 97.8 per cent across all the EPL club stadia (Ernst &
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Young, 2022). The continued growth has enhanced the increased investment of the EPL into the

community locally and nationally at all football levels. In the 2019/2020 season, the EPL offered

parachute payments and solidarity to more than 138 National League Clubs and English Football

League, where more than £455 million was distributed to other community football and leagues

(Ernst & Young, 2022).

EPL Economic Value

Football sport continues to grow globally, as does its economic value. The sport has been

generating significant revenue for the United Kingdom and promoting infrastructure growth. The

economic impact of EPL has been majorly demonstrated by the annual Economic Impact

Assessment (EIA) research by account and consulting giant Ernst & Young (EY) (Premier

League, 2022). The area has also attracted other researchers to establish the impact of the EPL on

the UK's economy. This section discusses the economics and economic value of EPL in the UK.

Gross Domestic Product (GDP) Contribution by EPL

The various revenue streams created by the EPL teams and involved stakeholders

generate significant indirect, direct and induced economic value to the UK economy. In the

2013/2014 season, the revenue streams generated an economic output of £6.2 billion, of which

£3.4 billion contributed to the UK's GDP (Ernst & Young, 2014). According to research by Sport

England indicated that the UK generated Gross Value Added (GVA) amounting to £20.3 billion,

in comparison to EY's research that showed in the same season UK generated a GVA of £2.22

billion, illustrating that £1 of every £10 of the UK's GVA value is generated from EPL (Ernst &

Young, 2014). The indirect and induced economic activities also generated £620 million and

£490 million, respectively.

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A recent study by EY on the economic impact of EPL in the UK's economy showed that

during 2019/2020 season EPL generated more than £7.6 billion (GVA) in the UK's economy

(Ernst & Young, 2022). The direct economic impacts contributed £ 3.9 billion, while the indirect

impacts contributed £1.5 billion (Ernst & Young, 2022). The induced impact contributed £2.1

billion. This shows that although the league was suspended for three months due to the COVID-

19 pandemic, the league was able to generate significant revenue for the economy. The EPL

club's economic value has increased by more than 840 per cent since the 1998/1999 season

(Ernst & Young, 2022). The EY's economic impact assessment revealed that the league's total

economic contribution remained equal to the pre-pandemic levels and the GDP contribution of

the 2016/2017 season (Ernst & Young, 2022). This was achieved irrespective of the £1.3 billion

loss in match-day and broadcasting revenues in the 2019/2020 and 2020/2021 seasons due to

COVID-19 restrictions that required the EPL matches to be played behind closed doors without

fans (Ernst & Young, 2022). According to the report, more than 72% of the EPL economic value

came from outside London in the 2019/2020 season (Ernst & Young, 2022). In EPL, clubs from

the North West of England generated more than £2.1 billion in GVA and more than 21,000

employment opportunities in that region (Ernst & Young, 2022).

Labour Economics

Football, especially the EPL league, is a labour-intensive industry that requires a lot of

employees ranging from staff, coaches, players and other stakeholders. In 2013/2014, the EPL

teams had a significant workforce of 103,000 Full-Time Equivalent (FTE) (Ernst & Young,

2014). The total number of jobs in 2013/2014 was 95,483, where 60,145 and 30,000 were from

indirect and induced labour (Ernst & Young, 2014). The direct labour opportunities comprised
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the remaining share. Indirect employment has the most significant share of job opportunities due

to the labour intensity of the EL value chain, such as catering, hospitality, and retail.

In the 2019/2020 season, the EPL has shown substantial employment growth since

1998/1999. Currently, the league supports more than 94,000 jobs across the UK (Ernst & Young,

2022). The EPL directly provided 12,000 opportunities, while 47,000 employment opportunities

were indirect jobs. The induced job opportunities contributed to 35,000 employments (Ernst &

Young, 2022). The number of EPL club-related-employments has elevated from 11,000 jobs in

1998/1999 to more than 87,000 in the 2019/2020 season, hence a rise of more than 650 per cent

(Ernst & Young, 2022).

The Labor Economics of UK Players and Foreign Players within the UK

The current regulations in relation to labour mobility for professional football players

outside and inside the UK are straightforward and were established by Football Association (FA)

(Premier League, 2022). The regulations require players to have UK citizenship or to meet

minimum requirements on a number of international games played for their nations (Ernst &

Young, 2014). Players can file an exceptional appeal where special consideration can be done.

In the EPL, each club has 23 players whose names are submitted at the beginning of

every season, making a total of 460 players for the 20 participating football clubs. In the

2017/2018 season, 41% of EPL players were citizens of the UK. Most of the EPL football clubs

have 9.35% of players who are UK citizens. On average, the EPL clubs pays domestic players

approximately a total of £424,301 per week, which translates to £45,379 per player per week,

indicating the clubs' valuation for its domestic players. The EPL has high foreign direct

investment, attracting the most skilled foreign players to come and capitalise on the high wages

from the EPL clubs. From the 23 player rosters submitted by the EPL clubs at the beginning of
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the season, 59% of the players are foreign players. The foreign players are paid £15,000 higher

than the UK domestic players. On average, the EPL pays the foreign players approximately

£56,970, representing the current value of the foreign players by the EPL clubs.

Wage Determination for EPL Players

The economic theory indicates that, in competitive labour markets, the employees' wages

equalise the incremental elevation in the organisational revenue achieved from their work. It is

commonly referred to as the Marginal Revenue product (MRP), which is computed by

multiplying the employee's work value (Marginal Physical Product (MPP)) by the price of their

service or product (Quansah et al. 2022). In professional football, the players' MPP is the

incremental contribution to the club's performance. The relevant prices are the sensitivities of the

club's revenues to the performance of the club. For example, a highly skilled football player

helps a team to win more games, and the more games a team wins, the higher the direct and

indirect revenues generated for the team (Quansah et al. 2022). This economic theory establishes

that players' wages are equal to MRP and sets the base for understanding the labour market and

wage determination of EPL players. However, three real-world factors influence the wages of the

players. First, the clubs are utility maximisers, and their sports success is more important than

profit making. Another factor is the off-field image rights of a player. Players who can bring

more sponsorships and merchandise have a higher salary (Quansah et al. 2022). Lastly, the

players' agreement with a club determines their wages too.

Tax Receipts

The massive economic impact of EPL on the UK's economy is shown by the £2.4 billion

collected through taxes in 2013/2014. Employee PAYE has the largest share of the taxes, with a

total tax of £91 million (Ernst & Young, 2014). The national insurance contributed £475 million,
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and employees contributed £276 million (Ernst & Young, 2014). Also, during the 2013/2014

season, the VAT generated approximately £390 million, with business rates and corporate tax

contributing £25 million and £298 million, respectively (Ernst & Young, 2014).

The recent analysis for the 2019/2020 season by EY on the economic impact of EPL has

shown that the total tax contribution from the league is more than £3.6 billion into the UK

exchequer (Ernst & Young, 2022). Out of the total tax contributed, £1.4 billion was accounted

for by the EPL players through their national insurance contributions and income taxes. Since the

1998/1999 season, the total tax contribution by the league has increased by £3.1 billion (Ernst &

Young, 2022). Since the 2014/2014 season, the tax contribution has increased by more than 50%

(Ernst & Young, 2022).

Promotion of Tourism, Technology, Gambling and Gaming

The EPL league attracts tourists from across the world who visits England to watch live

matches and EPL football-related activities. The continuous growth in tourism catalysed by EPL

activities has promoted the rapid growth of hospitality, technology and gaming, gambling, media

and the public infrastructure in the UK (Consultancy.uk, 2018). This indicates that the economic

value of EPL goes beyond the football matches in stadia. During the 2014/2015 season, the UK

recorded more than 800,000 tourists who visited England, which was the main reason for

attending the EPL match (Consultancy.uk, 2018). During the season, £285 million were waged

on monthly EPL matches. Also, over 100 million copies of EA FIFA games were sold in the

same season (Consultancy.uk, 2018).

The Premier League brought in £1.4 billion from international broadcasts in 2019/2019,

making up the most significant portion of the UK's audiovisual exports and almost equal to the

combined earnings of Channel 5, ITV, BBC, Sky, Channel 4, and the independent sector (Ernst
 Sports Economics 11

& Young, 2022). Hence, EPL football is a crucial part of the UK's media projection in other

countries and a significant factor in developing the UK's goodwill and soft power (Ernst &

Young, 2022).

Variables that Influence Match-Day Attendance and Ticket Pricing Strategies

Match-day revenues are one of the most significant revenue streams for the EPL football

clubs. Therefore, each club focuses on increasing match attendance by employing suitable

pricing strategies. Match-day attendance and ticket pricing are, in most cases, directly related.

When a match ticket is overly priced, attendance may be low due to the higher price; hence

higher price lowers the demand for tickets (Consultancy.uk, 2018). However, there are games

where the demand for the ticket is higher than the ticket supplies, and therefore higher pricing is

used to regulate the number of attendance for the match. In 2020 the EPL contribution of match-

day revenue was dominated by broadcasting, contributing 13% of the total revenue

(Consultancy.uk, 2018). In the 2019/2020 season, the clubs generated more than £683 million

(non-trivial amount). This section discusses the determinants of ticket pricing in EPL.

Average Weekly Earnings of the Football Fans

The average weekly earnings of individuals determine the ticket pricing and the number

of fans attending a match. Lower values of average weekly earnings indicate lower purchasing

power of match tickets by football fans, leading to lower demand (Quansah et al., 2021). The

EPL football clubs rely on data from research centres to determine these average weekly

earnings for more straightforward pricing of tickets. Although fans' loyalty may influence match

attendance, tickets are priced depending on the relative value of the average weakly earning.
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Capacity Utilisation

The capacity utilisation of the stadium is an essential factor in determining ticket pricing

and the number of match attendees the club can accommodate. The stadium capacity indicates

the number of tickets that can supply to the market, which may lead to a market shortage if there

is excess demand. When there is excess ticket demand, EPL clubs increase ticket prices to

manage the excess demand (Quansah et al., 2021).

According to research, the most affordable ticket prices are positively and significantly

impacted by capacity utilisation from the prior season but not the most expensive ticket prices.

According to the findings, the cheapest ticket cost will rise by 0.72% if capacity utilisation

increases by 0.01 (Quansah et al., 2021). Therefore, despite the statistical relevance of capacity

utilisation, the economic significance is relatively low. This seems to imply that EPL clubs raise

prices for the least expensive tickets when demand rises, reflecting the constrained supply of

tickets.

Derby Matches

In the history of EPL, the games involving local rivalry generate higher demand for

match tickets, ceteris paribus. These games are called match derby matches, and they take

special status over regular league games, with loyal fans viewing for local bragging rights

(Quansah et al., 2021). These matches attract more ticket demand and are highly attended to the

total capacity of the stadia.

Locally important Derby games are predicted to increase demand for the least expensive

and most expensive tickets by 7% and 10%, respectively (Quansah et al., 2021). Since these

games are frequently anticipated by supporters and present the opportunity to win local bragging

rights, clubs in the EPL are eager to charge a premium for local rivalry.
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Club Brands

The EPL teams have a varied number of followers and fans. There are those whose

influence is distributed globally and globally, and there are clubs with regional favouritism. The

larger the audience for a particular club, the larger the club's market (Matthew, 2020). Teams

with larger audiences enjoy a larger market and demand for tickets, achieving larger stadium

utilisation capacity.

Previous Season's Performance

In contrast to the club's reputation over a long time, the team's position in the previous

league season influences the number of match attendants and audience in the short-time

performance. When a team manages to get into top numbers in the league, the following season

may have increased audience and demand for its ticket (Matthew, 2020). This is because top

teams in the league are known to have a quality game that is more entertaining to fans.

Match-Day in the Week

Games played during the weekend tend to attract more audience and attendance in the

field because people possess more leisure time on weekends. Weekdays attract fewer attendances

and attendees due to work commitments and tight schedules. The EPL clubs use the weekends to

exploit higher ticket prices. Research shows that match tickets can be increased by 2% during the

weekends (Matthew, 2020).

Recommendations for Continuous Dominance and Increase of Economic Value of EPL

The EPL has been dominating the football sector across the world. However, other

leagues in Spain, Germany, France and Italy are rapidly rising and growing their influences

which may hinder the competitive advantage of the EPL league (Matthew, 2020). This section
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discusses recommendations to help EPL maintain a competitive advantage and dominance in

football.

Reverse Order of the Reward Money

Several teams dominate the competitiveness of the EPL, while other teams are fighting

relegation due to a lack of finances to facilitate their activities. The current price money should

be changed so that the bottom teams get a higher reward for them to invest in quality players,

media broadcasting and marketing plans (Peter and Kennedy, 2017). The larger teams generate

very high revenue from ticket sales, media coverage and high price tickets. Therefore, the

smaller teams at the bottom of the table should be rewarded with a high amount to transfer better

players.

End-of-Season Playoff

Instead of the top teams in the table being crowned winners at the end of the season, the

top six teams should enter into an end-of-season playoff (Peter and Kennedy, 2017). The

playoffs should be used to gain more competitive advantage since these teams have a larger

audience, and they will be battling to find the real winner of the league.

Increase Broadcasting Rights to More Countries

The EPL needs to increase broadcasting rights and TV coverage to more nations

worldwide to increase the audience and competitive advantage (Peter and Kennedy, 2017). A

large market share translates to more broadcasting and tourism revenue for the clubs and the

nation.
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Conclusion

In conclusion, the economic value of the EPL extends beyond the direct club activities to

social and infrastructural development in the regions where the football clubs are located. The

league has been dominating the football industry and has the most extensive TV coverage rights

to more than 200 nations. The league generates high revenue, contributing significantly to the

UK's GDP. The economic value of EPL has been through significant contribution to the nation's

GDP, increased employment opportunities, tax generation and promotion of tourism, technology

and gaming export. The economic value contribution happens directly, indirectly or through

induced economic activities. One primary source of revenue and competitive advantage of EPL

is ticket pricing and live match attendance. The ticket pricing and match attendance are

influenced by factors such as capacity utilisation, derby matches, club brands and match day.

The league can potentially maintain a larger competitive advantage and increase revenue

generation. The recommendation to achieve continuous growth includes implementing an end-

of-season playoff and granting more broadcasting rights to more nations and media houses. The

future of EPL is great, and the league will continue gaining dominance in the global football

market.
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