Alex Fynn: Our football clubs need a financial revolution

From the Royal Society of Arts lecture by the author of 'The Great Divide' and former director of Saatchi and Saatchi
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Football clubs make their money from three major sources: match-day income (gate receipts, sale of season tickets, corporate hospitality, catering, programmes); commercial income (sponsorship, stadium advertising, merchandise); and television. Historically, these have contributed a third each to a club's total income.

The first two categories have associated overheads. Television offers 100 per cent profit. One day, a TV executive decides your rights are worth a certain amount, the next day they're worth double that. Manchester United earned £20.42m from television last season but, under the next Sky contract, if they win the Premiership again, they will net twice that figure.

The creation of the Premier League in 1992 and accompanying Sky deal to televise matches is now regarded as the defining moment in English football history. However, it was not just money that Sky brought: the satellite broadcaster changed the game forever by repackaging it. The last ITV contract in 1991 paid £18m for TV rights to the old Division One. Under the first Sky deal, that figure rose to £30m, which was shared between the 22 clubs then in the new Premier League. But Sky's vigorous presentation provided a platform on which the game's commercial revolution could take place. It is entirely due to Sky that clubs have since seen a vast growth in income from match-day and commercial sources.

Unless there is an infrastructure outside the Premier League which creates a valued place for smaller clubs, then money will always rule at the expense of merit. You can't measure a country's strength by 20 clubs alone. The likes of Wolverhampton Wanderers and Norwich City in the First Division are playing in a back alley. As for Rochdale and Halifax Town in the Third Division, they exist as relics of history, and the determination of a small band of loyalists to keep them alive. Yet they could so easily be improved, to provide a sense of community and a more viable business opportunity.

If you are creating a showcase top division, you must add lower divisions offering local events. At the moment, Leyton Orient are compelled to travel hundreds of miles to play Hartlepool and Darlington, but who is interested? It would be far better for Leyton Orient to play againstStevenage Borough and Dagenham & Redbridge. The point is not that England has the biggest league in the world, but that it could be made even bigger if it was structured properly. If that means clubs at the bottom end going part-time, then so be it, as long as they remain in the system that allows progress to national level and full-time.

Will it happen? Very unlikely. The best is a compromise which would find its nearest equivalent in Germany, where there are 38 full-time clubs – 18 in the top division, 20 in the second – and a semi-professional regional structure with fluid movement of clubs and players. By making 38 clubs matter, the stigma of relegation is lessened. This approach also brings into play other elements such as a well-run youth system, judicious transfers, good coaching and local business interest. These factors may explain why Germany, France, Italy and Spain are more successful than England in major European tournaments. In these countries, there is a place for everyone, with merit playing an important role alongside money.

Television in this country has not yet tired of football. It continues to deliver an audience of free-spending males and young families that is attractive to advertisers (ITV) and subscribers (Sky). But ITV and Sky are neither philanthropists nor fans. Their interest is in ratings. And if the viewing figures fall, then so may the sums of money pouring into the game. Such a decline would compel clubs to cut their cloth accordingly. Paradoxically, it could be the best thing to happen if football is to have a sound economic future.