The Cost of Relegation: 5 Reasons to Stay in the English Premier League

Dan Wheeler@@DanJLWheelerContributor IApril 3, 2013

The Cost of Relegation: 5 Reasons to Stay in the English Premier League

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    With around six weeks to go before the end of the Premier League season, the battle to avoid relegation is getting more and more frantic.

    Supporters of Reading, Queens Park Rangers, Aston Villa, Wigan and Sunderland face a nerve-wracking time as they hope and pray their sides can pull off the great escape.

    But it's not just those teams in and around the relegation zone that are nervous. 

    Fans of Newcastle, Norwich, Stoke, Southampton and even West Ham will not be totally relaxed about their chances of being in the top flight next season.

    Relegation always feels like the worst thing in the footballing world. However, this year's feeling may be amplified as the new, bumper TV deal starts next season.

    In 2012-13, the relegation stakes have never been higher. Here are some key reasons for not wanting to drop out.

Missing out on the New TV Deal Windfall

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    The announcement in late 2012 of a new TV rights deal for the Premier League confirmed just how much it means to be part of the action from next season.

    The £5 billion contract to televise Premier League games domestically and around the world will see the 20 top-flight clubs get more money than ever before.

    Even if your side gets relegated at the end of the 2013-14 season, it will still pick up around £60 million.

    To put that into context, that is what Manchester City got for winning the title in 2011-12Wolverhampton Wanderers finished bottom last season and still went away with nearly £40 million

    Added to that is the prize money, which, last season, was around £750,000 per place. 

    To soften the financial blow of going down, each relegated team receives "parachute" payments. At the moment, that figure is £48 million over four years, with £16 million paid out in the first two years and £8 million in the following two (providing a club is not promoted).

    Even if your side bounces back at the first attempt, that is still a shortfall of at least around £45 million.

Crowds Will Fall

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    It stands to reason, you'd think, that relegation would put a big dent in attendances.

    With the best will in the world, selling a home game with Barnsley is not quite as easy as one with Manchester United.

    With ticket prices across the country rising and attendances generally falling for all but the most successful clubs, the battle to get more bums on seats has been a long-standing one.

    Relegation from the Premier League is going to have an impact, as Wolves, Bolton and Blackburn all experienced when they dropped out in 2011-12.

    Wolves' crowds have dropped by 20 percent, Bolton's by nearly 30 percent and Blackburn's almost 40 percent in the Championship in 2012-13.

    That loss is offset slightly by the increased number of home games in the Championship, but relegated clubs can expect a loss of several million pounds over the course of a season out of the big time.

Loss of Commercial Revenue

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    No one likes to be associated with a loser, right?

    In football, where commercial revenue is one of the main lifelines for clubs, that's certainly the case.

    Selling sponsorships and advertising and attracting corporate interest all becomes much harder once you're no longer part of the Premier League circus.

    Sponsors often have "relegation" clauses in their contracts with clubs that sees them pay less in the event of the club going down.

    Add all that up across the commercial board, and you're looking at a loss of up to £4 million, as recently reported in The Daily Telegraph.

The Wage Bill Will Become Crippling

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    Of all the clubs battling to stay in the Premier League this season, Queens Park Rangers have the most to feel jittery about.

    They spent £23 million on bringing in Loic Remy and Christopher Samba in January, while also signing Jermaine Jenas and Andros Townsend on sizable wages.

    Samba's deal in particular has caused controversy, with his four-and-a-half-year package reportedly worth around £20 million.

    With Remy not far behind Samba's £100,000 per week, the financial oblivion that beckons for the club is obvious for all to see.

    It seems unthinkable that neither Remy nor Samba would have joined Rangers without a release clause in their contracts enabling them to leave should the club go down.

    But the problem with finding a new club is, who is going to match their wages?

    The nightmare scenario for QPR is that, even if the players agree to pay cuts, the shortfall in revenue in the Championship will mean their financial model will crumble.

    And then what?

The Ultimate Nightmare: Administration

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    The Premier League is not all about milk and honey.

    The golden road of the Premier League is littered with the remains of clubs who have lost everything trying to live the dream.

    Nine clubs have gone into administration within five years of being relegated from the top flight, while a number of others have avoided it by a whisker.

    Portsmouth are one of the most vivid, recent casualties.

    FA Cup winners in 2008, they now teeter on the edge of extinction following relegation from the Premier League in 2010 and a further drop into League One in 2012.

    During that period, they went into administration twice in three seasons due to persistent financial problems. They are likely to fall into the bottom division of English football at the start of next season when, ironically, the new mega-bucks TV deal begins.

    The price of all that? Pretty immeasurable.

    So getting relegated from the Premier League will, at the very least, cost a club around £50 million. But that's a best-case scenario.

    It could end up costing them their very existence.


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