UK Premier League money drying up means overseas broadcasters could now call the shots

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Growth in the Premier League’s domestic broadcast revenues has stagnated. There is less money to be shared between the league’s 20 teams as a result of last week’s auction.

“The 2019-2022 cycle has gone for about £1.5 billion per annum for 160 games,” says Sam Boor, a consultant in Deloitte’s Sports Business Group. “The previous cycle was for 168 games and it went for £1.7bn. That means the current cycle just went for £9.3 million per match as opposed to £10.2m per match.”

Sky – as has been the case every year since 1992 – retains its hold on the majority of live Premier League coverage in the UK. Sky won four of the five packages awarded, with rival BT securing just one.

Two more packages – designed primarily for online content providers – were unsold amid reports they failed to meet the Premier League’s minimum price. There was no great play on the part of Amazon or Facebook and it’s left the league, and therefore the clubs, someway short of the sums they’ve gotten used to.

“You’ve still got 40 games because the Premier League are offering more this cycle,” says Boor.

“Of those 40 remaining games they are all going to be played simultaneously. What that means is that those 40 games are going to be four rounds of 10.

“Whoever buys the rights to those will be streaming them all at the same time or showing them on TV at the same time.

“Given that, you would expect the value of those rights wouldn’t get to the same level as what was achieved in the last cycle.

“So, we don’t think it’ll reach £1.7bn for the total package. It might fall five or 10 per cent short.”

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The value of the Premier League’s domestic broadcast rights exploded for the period covering 2016-2019, growing by around 70% compared to the previous deal. That led to a sustained financial boom in England with 10 of the Premier League’s clubs making it into Deloitte’s Money League for 2018, which ranks the top 20 clubs in world football based on revenues. Four more Premier League teams appear in the places from 21-30.

English clubs split something in the region of £5.14bn between them during the life cycle of the previous deal but all signs indicate that the next cycle will come up short.

Clubs will now have to look elsewhere to make up the shortfall and it is likely that overseas broadcast rights will become the next major battleground for revenues.

“If you look at the overseas rights, whilst the domestic rights have plateaued or held constant, the overseas rights could get quite close to the level of the domestic rights,” says Boor.

“The value of the overseas rights is about £1.1bn per annum. The Premier League sold rights to USA, South Africa, China, Brazil and key African markets in the last 18 months.

“Some of those were on significant increases on the previous rights deals. There are still some left to be drip-fed out to the market in the coming months.

“So, we’d expect an uplift in the overseas rights which we think will stimulate growth in the value of the overall rights packages.”

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Late last year, the Premier League’s clubs were scheduled to discuss how the proceeds of the overseas broadcast rights would be shared out in the future. In 1992, clubs agreed to an even split of what was then an insignificant market. All Premier League clubs take an equal share of what is paid by foreign broadcasters.

This is at odds with the domestic model where – on top of an even split of some of the pot – clubs make more or less depending on their performances and the number of times they are shown on television.

“The total pot of whatever it will be for the next cycle, it will be distributed and every club will get the same amount,” says Boor.

“So, as the value of those rights increases, the larger clubs and more successful clubs in the league have started to probe the question of the Premier League – why aren’t those distributed on a similar basis?”

The so-called “Big Six” of Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham favoured replicating the domestic model to some extent in the international deals. The Big Six wanted 35% of the overseas broadcast money to be awarded based on merit instead of a flat split.

“For smaller clubs ultimately, if they are currently getting a good share of a large number, the risk through their eyes is they may see it as relinquishing an amount they are currently guaranteed to get,” says Boor.

“The Premier League is a competitive league. For it to be competitive and have value, the unpredictability of the Premier League is what’s been such an attractive trait.

“The fact that any club, at any point in time, can pretty much take points off the others, a lot of the mid-table and other clubs would argue that’s just as much of a driver as having your big Uniteds and Citys in the league and doing well in European competition.”

Premier League trophy New YorkGetty Images

Premier League rules would have required 14 clubs to go along with the proposal in order to enact the change but, before the October showdown, it was clear that was not going to happen and the plans were dropped for the time being.

English football has exploded in popularity all around the world over the past few years, meaning that broadcast revenues are still rising. The latest three-year Premier League TV rights deal in China with digital broadcaster PPTV is thought to be worth $700m for example – a 10-fold increase on the previous numbers. US broadcaster NBC pays around $1bn for a six-year deal.

The Big Six argue it is their clubs and their players responsible for the league’s booming growth; that they are, therefore, deserving of a bigger slice of the pie.

“For the bigger Premier League clubs, they arguably create the value of the brand overseas,” says Boor.

“So, for the Manchester Uniteds, the Citys, those are the ones that appeal to people in Hong Kong, in China, Japan, in the US and they are driving the brand value of the Premier League. Their argument is they should be entitled to a larger share. They’re contributing to that.”

The Premier League negotiates around 80 separate overseas broadcast deals and analysts estimate that revenues from that sector are in line to grow by as much as 40% in the next cycle. Clubs are currently making around £39m each per season under the current overseas deals and that figure will grow once the new US and Chinese deals are factored in.

With growth only going to come in the international sector, there could be an added drawback for local fans already vexed by varying kick-off times, rising ticket prices and a lack of re-investment in grassroots. There is now greater potential for overseas broadcasters to dictate the terms of the broadcast, instead of merely being the grateful recipients of the content.

The Premier League will feature in 2019-2022 a Saturday 19:45 kick-off for TV. Little consideration has been given to fans travelling to and from games at that time but it does give US broadcasters a nice weekend slot as opposed to an early morning one.

“The Premier League are definitely altering the kick-off times,” says Boor. “The timeslots they’ve made available in the new package are probably more attractive for some of the key markets definitely.”

Premier League Richard Scudamore

Moreover, will there be a return for Premier League CEO Richard Scudamore’s detested 39th game plan where teams will play an extra round of fixtures overseas?

“The rights holders that are streaming the Premier League in those countries could argue it would be great given that we’re paying a significant amount, we should have a game hosted in our country for our market,” says Boor.

“There are a lot of logistics that go behind that, thinking how it could play out fairly for all clubs. I don’t think we’d expect to see that in the next few years.”

The growth ceiling hit in the domestic TV market may not be the end of the Premier League’s boom times but it could certainly provide a hint that more trouble might be coming down the track.

Are we facing a future where the league is in hock not only to domestic broadcasters but to overseas ones? A future where the top six teams threaten to tear the league apart for a greater share of the revenue?

Just some considerations for the Premier League as it is forced to face the truth that further growth might come at a massive cost.  

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