If there has been a guiding principle forEnglish football’s Premier League (PL) clubs this season it is this: ‘don’t getrelegated at the end of the season’.
The reason for this is very clear; at thestart of next season, the PL’s new domestic television deal begins. Announcedin February 2015, the deal is a record breaking one worth £5.1 billion to thePremier League and its clubs between 2016 and 2019.
Sky paid £4.2 billion for five of seven TV packages on offer, whilerival BT paid £960 million for the other two in a TV rights auction. In total,the deals are worth 71% more than Sky and BT’s previous contracts with the PL.
Some commentators have therefore predicted that even the club finishingin last place at the end of next season’s league will be likely to earn upwardsof £100 million in PL prize money alone. This is why for clubs in this season’sPL relegation has not been an option.
While the financial returns associated with being a PL club have beenstrengthened by the new deal, so too has the PL’s main mode of consumption –satellite television. Indeed, unless someone in Great Britain pays asubscription to either Sky or BT, they will be unable to watch any games liveon their television over the next three years.
Yet this situation is nothing new, satellite television has been theplatform upon which the financial power and global presence has been built. Forthose British people who only have terrestrial television at their disposal,then they normally have to satisfy themselves with watching short edited PLhighlights programmes.
The history of football on British television is rather different thoughfrom the current situation. Club and international games were first broadcaston the BBC (the country’s state broadcaster) in 1937 and 1938 respectively. Thefirst live club game was then broadcast on television during 1946.
However, for the next decade little football was shown on television,part from England internationals and the Football Association (FA) Cup Final.Significantly, the latter became one of British sport’s ‘Crown Jewels’, aposition the competition retains today.
The ‘Crown Jewels’ is a small number of sporting competitions that arethought by the government to be so important to national identity and socialwell-being that, by law, they cannot be shown exclusively on pay-TV channels.Hence, the FA Cup even today is broadcast on terrestrial television.
Throughout the 1960s and 70s, the appetite for football on televisiongrew in Britain and several highlights format programme emerged during thisperiod. At the same time, the English FA always became aware of significantglobal interest in its football.
The period was therefore also characterised by a growing number ofoverseas broadcasters acquiring the rights to show English games. In part, thisfirst-mover competitive advantage explains why English football today retainsits commercial power ahead of its rival European leagues.
By the late 1980s, such had been the rise in demand for televisedEnglish football that games were increasingly being shown live on television.This was reflected in a massive increase in the value of television rights. In1988, ITV (an independent television company) acquired the rights in a fouryear deal worth £44 million. In 1983, a two year deal had cost only £5.2million.
This proliferation in values was a portent of things to come; in 1992, asthe English First Division was re-branded and re-launched as the PL, Skysuccessfully bid for the television rights. This marked the move of footballfrom terrestrial to satellite TV and at the same time resulted in more gamesthan ever before being shown on television, and at different times too (mostnotably Sundays and Monday evenings).
In 1992, its original deal with Sky cost £191 million; by the time Skysigned its deal with the PL for the period 2004-2007, the new deal’s value hadincreased to £1.02 billion. Around that time though, domestic and Europeancompetition authorities had started to pay close attention to the way in whichSky and the PL were buying and selling television contracts.
As a consequence, in the next deal running from 2007 the PL soldtelevision rights to both Sky and a new market entrant, Setanta, for £1.7billion. By 2013, another company had entered the market – BT, the former statetelecommunications company. With Sky and BT successfully bidding, this deal wasworth £3.1 billion, both companies sharing the right to broadcast games.
While rights values were surging dramatically at home, overseasbroadcasting revenues were also growing. In 1992, the PL made £38 million byselling the rights to show games in more than 200 countries; by 2016, thisfigure is expected to be £1.1 billion or more.
There are several reasons why the PL has become such a commercialphenomenon. One reason is that the English have always been open to sellingrights overseas, in a way that the likes of Germany’s Bundesliga has not.
At the same time, the PL and its clubs have embraced the idea of needingto change kick-off times to suit TV audiences, both domestically and overseas.In countries such as Spain, leagues have suffered financially by failing torespond to the changing nature and location of TV audiences.
Similarly, whereas Spanish clubs have historically negotiated televisionrights deals on an individual basis, English clubs negotiate as a collectivethrough the PL. This creates a more compelling product proposition forbroadcasters to buy, while strengthening the negotiating position of the PL andits members.
There are clearly some issues with this model of selling rights, notablythat clubs effectively cede control of broadcast rights revenue generation tothe PL. Some also question whether the way in which the PL allocates suchrevenues is appropriate, fair or acceptable. That said, any talk of clubsbreaking away from the PL is non-existent implying their general satisfactionwith the current system.
Looking ahead, one can only see further growth in the value of PLtelevision rights values. Several rivals to Sky have long been monitoring themarket, most notably including Discovery, Al Jazeera and ESPN. At the sametime, developments in digital technology and the likes of social media willpresent ongoing opportunities.
In the medium-term at least, we should therefore expect the PL to retainits position as one of the world’s most appealing broadcasting properties.