David Swan takes a closer look at the new Italian football TV deal and its financial consequences.
In true Italian style it dragged on and on, but on Monday 16 of the 20 teams managed to agree the terms relating to the new TV rights, enough for it to become official.
The new deal did not come about entirely from Serie A clubs actually managing to get along and willingly agree to the terms. The deadline for paying an instalment of player wages was set by Covisoc (Commissione di Vigilanza sulle Società Calcistiche) – the financial authority arm of the FIGC – for last Thursday, leaving many of the smaller clubs with less financial certainty and in need of guaranteed income to budget to meet the looming cut-off.
Nevertheless, at least it forced the hands of the clubs, as an agreement in principle was made last week. All bar Chievo, whose projected earnings from the deal are one of the worst of the 20 and who always planned to appeal the decision, were expected to sign up to the three-year TV contract that encompasses 2012-13, 2013-14 and 2014-15. The surprise came on Monday when it came to ratifying the deal, with Palermo joining them in voting against the terms, and Fiorentina and Napoli abstaining.
Part of the problem that caused the initial disagreement amongst the teams, and thus the delay, was the dividing of 15 per cent of the revenue based on results from the past five years, present in the previous TV deal as part of the Legge Melandri – a law implemented to provide a fair method of splitting the money, but something that has caused more arguments than solutions. Many of the medium and smaller clubs were not in favour of splitting the 15 per cent this way, probably because their income would decrease, but in the end the clause was kept.
In fact, the entire Legge Melandri percentage splits that were present in the previous deal that covered 2010-11 and 2011-12 were carried over. 40 per cent of the money is divided equally amongst the 20 teams. 30 per cent is based on people – 5 per cent on the population of the city in which a club plays and 25 per cent on the number of fans. The remaining 30 per cent is split based on performances – 5 per cent depending on the previous season, the aforementioned 15 per cent on the last five years and 10 per cent on results from 1946 to the sixth season before last.
That the Covisoc deadline was near more than likely prevented this matter being debated further. The Legge Melandri and its methods for dishing out the revenue has caused factions amongst Serie A’s clubs ever since it was first put forward in 2007 – the fact that the League is bound by its stipulations for another three years is important.
There were a few alterations compared to the previous agreement. The total value of the deal has increased – the last one was worth around €860m per season, whereas this year it is €966m. That will increase by €17m for the second year to €983m and then a further €24m for the final year, meaning 2014-15 will see a pot of around €1.007b split amongst 20 teams.
However the €17m and €24m increases will be used exclusively to reward the top 10 in the League at the end of that season. The top three at the end of 2013-14 will get 15 per cent of the €17m – around €2.6m. Fourth and fifth get 10 per cent, while 10th place gets 5 per cent. For 2014-15, the top 10 will be sharing €24m.
The other bone of contention was the parachute payments for the three teams relegated to Serie B. These continue for two years – under the previous deal a relegated team received €5m if they had played in Serie A for two seasons before going down, and a further €2.5m if they failed to return to Serie A at the first attempt. These figures are halved for a team that only played in Serie A for one season before being relegated – in other words, if you are a newly promoted team like Sampdoria, Torino or Pescara.
It means the potential payout from Serie A to the three relegated teams was €22.5m according to the last TV deal, provided they were three teams that had played in Serie A for two years. This amount is weighted, so that the bigger clubs with more revenue pay more towards the sum than smaller clubs.
Unsurprisingly, the five big clubs were not particularly pleased by this, but as you only need 15 out of 20 votes to successfully pass a motion, they knew they were going to be outvoted by the rest, so there was little point continuing the fight. As if to rub salt into the wound, the maximum payout to relegated teams now increases with this new agreement, from €22.5m to €30m.