Prior to the resumption of Premier Soccer League football in the bio secure bubble, I took a look into the financials of both the Absa Premiership and footballs mother body SAFA and I felt that it was basically impossible for the PSL to survive without finishing the league while SAFA needed a bailout of some kind to have any chance of survival. I’m glad to say the league did resume and they completed the season as I predicted but concerns around the financial viability of the league remain
To begin with, there are three main income streams for sports leagues and federations. These are broadcasting rights, commercial income (sponsorship & advertising) plus match day revenue (tickets & hospitality). There are also sometimes grants.. Onto the Absa Premiership then.
According to the latest available Annual Financial Statements from the League (July 2019), the PSL had a total net income of just R64,438.00! While they may have made a modest profit, the picture I am about to paint shows just how bad things are in 2020
In these difficult economic conditions in both the global and South African environment, impressive revenue growth and stable financial performance once again reaffirms the strength of the league and the confidence of the corporate world in professional football in South Africa.
Dr Irvin ‘Iron Duke’ Khoza
From a revenue perspective, I’m sure you all remember Dr Khoza raving about how the league had generated R1 billion in revenue for the first time ever last year. While that was great, just R65k in net profit is worrying. Going forward in this post is where things start looking bad.
The revenue split has two major standouts which are Broadcasting at 600 Million and sponsorships at R358 which made up 96% of that R1 billion. If SuperSport were to claw back 40% of broadcast spend for games not played (14 of 38 games), that would equate to R240m that the league would have to pay back.
There was an announcement by Dr Khoza that the Glad Africa Group would come on board as sponsors of the Championship from 2020 but there was no indication as to how much additional revenue that would be, only that league winners would pocket R3 million from the previous R300,000.
For the 2018–19 season, the PSL gave each club a monthly grant of R2 million, with funds coming from TV broadcasting rights and national sponsorships. The Premiership champion earns a R10 million prize. The league recently announced that grant payments will continue despite Covid
In summary, the League spent all their income and more in the previous financial year. While the league met its obligations, higher cash reserves would have made sustaining its viability in these trying times easier. Perhaps a change in business model is worth looking into.
An unlikely alternative, should they be unable to complete the season, may be to take out a loan like Ligue 1 in France did. From what I found in the financials, the league had no borrowings in 2019. The Sun City return plan suggests they are intent on a return.
The additional Glad Africa sponsorship which came into effect in 2019/20 is a much welcome boost to revenues and more corporate players are needed for the league to grow. However it will not be enough to cover expenses if the league is not completed. Simply put, IT MUST HAPPEN!