The Impact on Teams That are Relegated

Relegation, is word that no team ever wishes to mention in a sentence. However, when performance declines and teams fail to live up to the league requirements and point system, they must be condemned to the lower leagues. That's how the business of professional sports works. The unfortunate part of a team getting relegated is the fact that there are consequences and ripple effects to the process. Forget about the team losing its morale, there other crucial factors that really cause stress for a team undergoing such a transition.

According to Sky Sports and Deloitte Sports Group, relegated teams potentially face a cost of up to $55,000,000 USD, when exiting the top or premiere divisions. Top division clubs usually receive a share percentage which financially, can equate up to $100,000,000 USD, from the league. This is due to the leagues' revenue that is generated through TV and streaming incomes, locally and internationally. When teams are relegated, they begin to receive less of that money and that is the reason why some teams go through tough financial periods. Those that are fortunate are able to find a way to recover, but sadly, others don't.

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A glimmer of hope for relegated teams, is that they still receive some sort of payment from the leagues they were relegated from. While this does give a team a bit of breathing space, it never really makes up for the shortfall. Major sponsorship deals are often lost as well because corporates forecast that there will be a decline in the teams' ability to promote and advertise their brand. Match-day ticket sales and merchandise sales take a hit as too. When thinking about all the cost factors that come into play, one certainly understands why team management becomes upset when teams are losing a number of matches in a row. Basically, it's more cost effective to stay in the league, than to face relegation!

Sources: Sky Sports

https://www.skysports.com/football/news/11661/11358620/the-cost-of-relegation-what-is-the-financial-impact-of-dropping-out-of-the-premier-league

By: Zila Mbekela

Sports Agent in Japan