Market Insight: LaLiga’s new TV rights distribution model: a level playing field?

15 January 2018 | Broadcasting & New Media
Market Insight: LaLiga’s new TV rights distribution model: a level playing field?
The past decade has seen LaLiga’s biggest clubs thrive commercially, topping the Deloitte Money League of the world’s highest-earning teams for 11 consecutive years. Those sides continue to boast the world’s best players, with all but three of the winners of Fifa’s player of the year awards this century making their magic in Spain.

The league’s two standout teams, Real Madrid and Barcelona, have dominated their domestic league and the Uefa Champions League, Europe’s premier club tournament, and have historically come away with the lion’s share of LaLiga’s TV rights income, helping to cement their position above the rest of the league.

In the past, Spanish clubs had settled their own television deals, which led to a huge disparity in revenue, with Barcelona and Real Madrid swallowing vast profits that rivals with smaller followings could not match.

In 2014/15, for example, both high-flyers earned €140 million each, while bottom team Almeria came away with a lowly €18 million, almost eight times less than their more affluent counterparts. Indeed, Barcelona and Real Madrid’s combined earnings of €280 million represented around a third of the total profits on offer from broadcasters.

Now, though, things have changed. 2016/17 was the second season of a new rights distribution model for Spanish soccer’s top flight, after LaLiga introduced a different system that aims to alleviate some of the disparity between its clubs.

The new model sees ten per cent of TV rights revenue given to second-tier Segunda B, with the remaining 90 per cent divided so that 50 per cent is equally shared between the league’s 20 teams, 25 per cent allocated according to results across the previous five seasons, and the final 25 per cent distributed based on metrics such as the number of television subscribers and viewers per match.

The overall revenue from LaLiga’s TV rights has grown under the new system, leaping from €851 million in 2014/15 to the €1.247 billion reported for 2016/17.

Barcelona, unsurprisingly, led the way, having earned a mammoth €146.2 million last season, with Real Madrid snapping at their heels with €140 million. Next came Atlético Madrid, whose rights revenue reached €99 million, while strugglers Alaves and Leganes earned just €39.6 million each.

Athletic Bilbao were fourth highest in the income distribution table with €71 million – less than half that of Barcelona – while Valencia were fifth with €67.4 million.

It is clear then, that even though the new TV rights distribution model has ensured a more equal sharing of wealth, cutting the ratio from top to bottom teams from almost 8:1 in 2014/15 to 4:1 in 2016/17, the gap between the top and bottom earners remains significant.

England’s Premier League, meanwhile, boasts a ratio of 1.54:1 between its top and bottom clubs. The league’s TV rights distribution system sees its principal differences in the sharing out of overseas rights separately from domestic ones. Aside from that, the same percentage as the Spanish league is apportioned equally.

However, where LaLiga takes into consideration five seasons’ worth of standings to divide another 25 per cent, the Premier League looks at current league positions only, reducing the influence of a club’s long-term success to ensure that newly promoted teams are not adversely affected by the system - and ultimately ensuring all 20 teams are given a more equal helping from the pot. The remaining 25 per cent is apportioned according to the number of live televised matches in the UK.

With the Spanish top flight currently negotiating its next round of broadcast deals, and the league’s president Javier Tebas suggesting they could be worth as much as €2.3 billion, it remains to be seen whether LaLiga will manage to rebalance the wealth amongst its clubs further and continue to level the playing field.

 

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