4. What are the benefits accruing to elite EPL clubs from appearing in the UEFA Champions League competition? This is a revenue source for individual clubs outside the EPL governance structure and from playing many non-EPL clubs. What are the challenges t

QUESTIONS

1. Compare and contrast the architectures of the NFL and the EPL as regards the role of the central league in the business models of their individual clubs.

The NFL and EPL have their differences in terms of how each league is ran. NFL organizations share revenue at the end of each season. From media revenue to ticket and merchandise sales to concessions, the money is put into a pool and distributed among all 32 NFL teams equally. In the EPL, teams do not share revenue they earn as a club. The EPL does share media revenue, but that revenue is distributed into 3 categories. Basic awards are 50% of the media revenue distributed to the clubs equally. Facility fee is 25% of domestic media revenues but it is awarded based on live appearances. In this instance the teams with the most games broadcasted live receives the highest payment and the team with the least broadcast games receiving the lowest payment. Merit award, rewards teams at the end of the season for standing.

The NFL and EPL not only differ in revenue but also in the sense of player salaries and movement. The NFL has a salary cap for the league, there is a minimum and maximum cap. NFL teams have the same payroll, they have to negotiate pay for each player based on need and value. The NFL also regulates salaries for rookies and how players are paid based on years of service. The NFL also has a draft, where the worst team is allowed to draft the best player.

The EPL differs in this form because there are no drafts and salary caps. It is a free market that allows teams to pay as much as they want for players. The EPL has the fair play rule which requires player salaries to be related to club revenue. If the richest team can afford the best players they can, for the teams at the bottom of the league they have to be financially aware of who they can sign.

2.Consider the system of relegation and promotion. What are the positives and negatives of the system (relative to the NFL system of 32 fixed teams)?

The positives of the system of relegation and promotion is that teams will always have a major form of revenue. Teams at the bottom of the league in sales will earn a profit because of teams like the Patriots or Packers that are consistently bringing in high revenue. The negative to this is that teams that spend money on players and the experience for fans have to share their revenue with the least successful teams in the league.

3.In just one paragraph, describe the difference in how NFL media revenues are distributed relative to EPL media revenues.

Media revenue in the NFL is distributed evenly among the 32 teams. The NFL negotiates it media contracts and at the end of every year will distribute the revenue to each team. In the EPL the revenue is broken into 3 components, Basic Award, Facility Fee and Merit Award. The Basic Award is 50% of the media revenue and gets distributed evenly among the clubs in the EPL. Facility Fee is 25% but distributed to clubs based on the amount of games that were broadcasted live. This benefits the bigger clubs in the EPL like Manchester United which was rewarded with 21.4 million at seasons end in 2014. The 5 lowest clubs were awarded 8.7 million in the same year. The Merit Award is given based on a clubs final standing at the end of the season. The facility fee and merit-based allocation of revenue benefits the major clubs in the EPL.

4.What are the benefits accruing to elite EPL clubs from appearing in the UEFA Champions League competition? This is a revenue source for individual clubs outside the EPL governance structure and from playing many non-EPL clubs. What are the challenges to the NFL creating additional revenue streams that are similarly generated from playing non-NFL clubs?

The benefits from appearing in the UEFA Champions league competition is the ability for the clubs to increase their revenue. The 4 teams that played in the UEFA Champions League competition were able to make up to 45 million dollars in extra media revenue.

5.In your opinion, which model is the most effective for the long-term growth of a league? Discuss the reasons for your choice.

I believe the NFL model is most effective for the long-term growth of a league, it allows teams to bring in more revenue then they probably could have if it was a free market. In a bad year a team can still make a profit whereas a team in the EPL will be relegated to a lower league and lose out on profits. By evenly distributing revenue teams can enhance facilities and fan experience