By David Owen
February 10 – Premier League club revenues are set to soar for the rest of the decade after the top tier of English football on Tuesday unveiled a colossal new £5 billion-plus domestic rights deal. The figure represents an increase of some 70% over the league’s current domestic deal until the end of next season. This in turn was up 70% on the 2010-13 total, reflecting the arrival of telephone company BT as a major buyer of popular sports content.
BT and long-time Premier League partner Sky once again split the rights in the new deal, covering 168 matches in each of three seasons between August 2016 and May 2019. Sky secured the lion’s share of the live action, acquiring five of the seven packages on offer, totalling 126 matches a season. BT bought the remaining two packages, totalling 42 games.
The Premier League put the total raised by the sales process at a remarkable £5.136 billion. This, remember, is just the market for live domestic rights; overseas deals will undoubtedly add greatly to this figure.
Richard Scudamore, Premier League chief executive, said it was “an endorsement of what the Barclays Premier League delivers that these broadcast partnerships have been extended and enhanced today. We are grateful for the continued belief that Sky Sports and BT Sport have in the Premier League and our clubs, both as a sporting competition and organisations to work with…This outcome provides a degree of certainty so clubs can continue to invest and run themselves in a sustainable manner; it also allows us to start planning how the Premier League can continue to support the rest of the football pyramid.”
Interestingly, Scudamore also alluded to “significant interest and participation in the process from other highly credible parties”. The identity of these parties and the nature of their participation will be key pieces of information as analysts set about pinpointing winners and losers from the new deal.
The reaction of Sky and BT share prices on Wednesday morning may provide another pointer. According to Austin Houlihan, senior manager in the sports business group at Deloitte, the professional services firm, the domestic rights fee per live game has now reached £10.2 million, compared to £6.5 million per game in the current cycle. BT said that its £320 million per season package equated to £7.6 million per game, an increase of 18% on the £6.5 million per game it currently pays.
Sky and BT investors (and customers) may well be keen to hear how the companies plan to develop revenues to justify this increased cost. Mobile devices may feature prominently in their answers.
In prior years, the widespread assumption would have been that most clubs would simply fritter away their extra revenue on ever higher wages and transfer fees. Recent financial information has suggested, however, that the leopard – for now – is changing its spots, with many clubs trimming losses or becoming more profitable. This may be attributable in part to UEFA’s Financial Fair Play (FFP) initiative. Alternatively, it may simply be that revenues have been surging at such a rate that costs have been unable to keep up.
Says Deloitte’s Houlihan: “The current cycle of Premier League broadcast deals generates over £5.5 billion in domestic and overseas rights fees, delivering a key competitive advantage for the English top-flight compared to other European leagues. This is strengthened hugely by the new live rights deals…
“In 1991-92, the season before the inception of the Premier League, top-flight clubs generated less than £15 million in broadcast revenue. In 2013-14, the first season of the current three year cycle, the 20 top-flight clubs shared broadcast distributions totalling £1.5 billion…
“With this latest round of Premier League deals we see no signs that the ‘media rights bubble’ is going to burst any time soon. Top-tier domestic league football continues to be highly attractive to pay-TV, delivering subscription-driving content through 10 months of the year.”
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