The public reaction to the announcement that English Premier League clubs will receive £5.1bn for the domestic television rights from 2016-2019 flags the need for integrated thinking by the clubs when deciding where to invest this massive cash inflow.
Integrated thinking is the foundation of Integrated Reporting, a relatively recent corporate reporting development that seeks to promote more holistic, long term decision making. According to the International Integrated Reporting Framework, integrated thinking is the active consideration by an organisation of the relationships between its various operating and functional units and the capitals that the organization uses or affects. Integrated thinking leads to integrated decision-making and actions that consider the creation of value over the short, medium and long term.
So what has this got to do with the Premier League rights deal? Initial negative press reaction assumes that the deal will mainly benefit Premier League players and their agents with talk of the first £1m a week player by 2020. Leading politicians have called for more money from the sale of domestic TV rights to be put into grassroots football and reduced ticket prices. In response, the chief executive of the Premier League, Richard Scudamore is reported to have said: "We're not set up for charitable purposes. We are set up to be the best football competition."
I agree that the Premier League was not set up with a National Lottery type mandate to donate so much of their income to 'good causes' but an aim to be the 'best football competition' should be qualified with 'over time'.
Integrated Reporting promotes integrated thinking over a broad range of factors affecting long term sustainable success - what it terms as the 6 capitals (financial, manufactured, intellectual, social & relationships, human and natural). Directly applying this to Premier League clubs would mean them answering the following question first:
How, when the rights are next up for auction, do we want to be seen as having dealt with the current rights deal?
I don't believe it is impossible to conceive a position that if all that has happened is that player wages have continued to skyrocket, that Joe Public, who ultimately pays subscriptions to fund these deals, has decided enough is enough and has reverted back to terrestrial TV offerings and finds something else to do on a Saturday lunch-time or Sunday afternoon. It may be fanciful to think that this might happen across the board but I know for a fact that it was the result in at least one household of the last rights deal.
Integrated Reporting can help by promoting integrated thinking across the six capitals that recognises the need to balance paying competitive wages to attract the right players as well as investing in the broad spectrum of factors that will help ensure Premier League football remains, at least, as popular as it is now because without sufficient interest in the product then it becomes unsustainable.
Consideration will be given to investment in stadia improvements, training facilities, coaching staff at all levels, youth training academies etc. But it requires broader thinking to consider the impact of the following on the football environment, in say, 5 years time:
- Match ticket prices - the atmosphere generated by fans at matches is said to add to the attractiveness of the product
- Match Timings - generally governed by the TV companies and known sometimes to be set so that it is impossible for fans to return home by public transport after the match (in these cases clubs could consider subsidising coach travel).
- Community projects - generally well catered for but should there be more?
- The state of football from the grass roots to the professional levels below the Premier League - if this is allowed to deteriorate then will the elite product hold such widespread attraction?
- Success or otherwise of the English national team - there are conflicting views as to whether the ability of Premier League clubs to buy in the best overseas talent has had a detrimental effect on performances of the national team and this argument will continue to rage. However, it is not difficult to imagine the impact success at the 2018 World Cup would bring (even if that only means getting past the quarter-finals). Are the Premier League and its constituent clubs doing all they should to support this objective.
I believe that these broader issues all have apart to play in determining whether the Premier League is the best football competition and if it is whether it is likely to in the position over time. The questions do not relate to charity they relate to good long term business sense and as such should resonate with what is clearly one of the UK's most successful businesses.
And for those that take this broader view of their business, it is important that they communicate this information - otherwise they risk getting tarred with the same brush as those that don't - and this is where the Integrated Reporting framework can help by setting out how businesses can effectively tell their own story rather than rely on others to do so.
According to Scudamore, the deal makes Burnley football club economically bigger than Dutch football giant Ajax but that doesn't mean that the Premier League clubs can getaway cleanly without deciding wisely how they will invest their new riches.