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Extra competition drives up Premier League deal

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David Bond | 18:48 UK time, Wednesday, 13 June 2012

Once again Premier League football has shown its extraordinary ability to defy financial gravity.

Its new three-year deal with Sky and BT is worth an astonishing £3bn - a 70% increase on the current contract which is due to expire next summer.

Much of the growth can be explained by the increase in live matches - up from 138 to 154.

But it's also down to extra competition in the marketplace. Sky remain the League's main media partner but the price of the rights was driven up by interest from other companies such as current partners ESPN and Al Jazeera.

Manchester City

The Premier League's success continues to grow. Photo: Getty

In the end Sky paid a premium to retain their grip on live football - paying £2.28bn for their 116 games. But BT also bid high - securing their 38 matches for £800m.

No wonder the League's chief executive Richard Scudamore seemed so pleased with himself as he announced the deal.

To put all this into some context Sky paid £304m for a five-year rights deal back when the League first started in 1992. Apart from a couple of deals where the numbers have remained largely flat, it has been on a steep upward curve ever since showing the unique importance and value of live top class football to drive media business models.

Remember the deal announced today is only for UK live rights and doesn't include the ever growing market for overseas rights which are likely to increase significantly from the current £1.4bn when it is renegotiated for the new 2013-2016 deal.

It's also worth noting that the Premier League's deal is now worth way more than the global TV rights for the World Cup and the London 2012 Olympics.

Exactly how BT will show the matches is unclear although they say they will be setting up a new football channel and will be making their games available to other TV platforms.

Sky will continue to show their games on Sundays, Saturdays at 5.30pm and Monday nights. BT will get Saturday 12.45pm kick-offs, midweeks and bank holidays.

The increase in the number of live matches will inevitably lead to more scheduling issues and more irritation for supporters who go to watch their team in person and are forever bemoaning the fact they come second to TV.

But today's deal is another reminder of the remarkable financial success story of the Premier League.

The challenge for England's top clubs - especially at a time of increasing financial regulation from Uefa - will be to try and stop the new windfall flowing straight out of the TV companies' bank accounts and into the pockets of the players.

Comments

  • Comment number 1.

    Great news for the PL, just hope the punters at home won't be expected to pay a premium for it, but if BT are launching a new football channel then no doubt that will be the case.

  • Comment number 2.

    I think the big thing is that unlike America where you have NFL, NBA, MLB, NHL and College Sports, in the UK the Premier League is dominant. For instance who is going to keep ESPN now, what sports could they buy to keep their subscriber base? None.

    The interesting thing to see is though is whether customers will continue to pay higher and higher subsciptions, or there will there be a breaking point.

    It also shows that even though SKY have paid a huge amount for rights in the past, the profits they are making from the gravitas football gives them are extreme

  • Comment number 3.

    Cost of games for BT equates to £7m per game, if BT get an extra 500,000 subscribers it will cost £14 per person per game, but I'm sure they have a good plan.
    Much the same as ITV digital and Setanta.
    Best of luck BT but I won't be one of the subscribers.

  • Comment number 4.

    If only a fraction of this money could be pledged to grass roots and youth coaching.

    I fear the foreign legion currently plying their trade in the premiership will grow ever more numerous and obscenely richer.

  • Comment number 5.

    tom finneys overcoat @4

    Good and bad news, I feel it is creating an even greater rift than what we have already. Premier league first the rest of football as a whole [including the grass roots you mentioned] who gives a damn.

    But for the Premiership clubs it's Christmas time and they do not have to do anything because what is needed is already in place .

  • Comment number 6.

    3 KHFCFAN

    You're not taking into account tv advertising revenue. Half a million subscribers at 14 quid a pop might well represent break even, but the ad revenue will be significant too. They don't buy the rights for the fans, its for the ads. That's why ratings matter. The higher the ratings, the more viewers, the more they can charge for adverts

  • Comment number 7.

    @3
    I think the clever thing that BT have done is gone for the prime packages. ESPN/Setanta never showed Big4vBig4 clashes . BT will, on a Tuesday or Wednesday night. Big difference.

    Plus BT are going to sell it direct via superfast broadband, i.e. you won't need to be a sky/virgin subscriber, just have a good internet connection. This is where the real value comes from, using football to sell internet/phone packages

    Btw I am aware Big4 is an outdated term now, but you get the jist!

  • Comment number 8.

    Joe: The main reason I have ESPN is basketball. I'm generally more likely to watch that or rugby on that channel than football where most of the stuff I'm interested in is on Sky or the terrestrial channels. Besides they'll seemingly still have most of the continental leagues. not sure I'll bother with the BT channel.

  • Comment number 9.

    Being a Norwich fan or a team looking to get into the Premiership it is going to be crucial to stay in the league or obtain promotion in order to "jump" on board the Premiership Gravy Train.
    The only problem is teams like Portsmouth spent heavily, hoping to stay up and use those payments. Look where they are now! Prudence is still key for many teams

  • Comment number 10.

    This is only good news for your Balotellis' & your Andy Carrolls' who are definitely going to get richer than their wildest dreams!

    Far too late for me to change careers' now, online streaming it is then!

  • Comment number 11.

    original jonblaze

    streaming is the answer, if you want to watch any sport today.

  • Comment number 12.

    All this user's posts have been removed.Why?

  • Comment number 13.

    Undoubtedly Sky subscribers will end up paying more. As a Liverpool fan that's something I will never have to worry about.

  • Comment number 14.

    With all this money could we expect to get the Premier League to develop some world class English players?
    For all the money pumped in to football the acadamies are not as yet producing the goods. A few good players yes but we still have a long way to go in getting the skills levels up to the average continental standard never mind the leading countries.

  • Comment number 15.

    The one fact that blew me away was that this new deal was worth more that the global TV rights to the World Cup and the London 2012 Olympics. That just underlines the vast amount of money involved.

  • Comment number 16.

    With that sort of money the Greek economy could be saved!
    Business as usual for the Premier League but if people are willing to pay for it then maybe the bubble will never burst. I don't like Sky, I don't like the people behind that company and the influence they have had in this country. But you can't knock their success.

  • Comment number 17.

    Heres a bizzare thought....use it to do up the grounds, invest in youth, lower our ticket prices and continue to lower the players wages......resulting in no more debt. The money will not always be there. Also you wont get players who think they are above everyone else including the law, refs and managers. ITS NOT HARD !!!!

  • Comment number 18.

    Terrible news for football fans as opposed to armchair supporters.The deal will mean wages remain high and Premier League clubs will continue to justify their ridiculous admission fees because they have 'world class' players. In addition we are certain to see even fewer 3pm kick-offs.

  • Comment number 19.

    @4. Tom_Finneys_Overcoat wrote:

    If only a fraction of this money could be pledged to grass roots and youth coaching.

    Based on past performance, just under £36.5m of this increase is expected to be passed on to the lower leagues, including grass roots and youth coaching, or about 8.75%. I'd hope the PL passes on much more, but with the FFP rules coming into effect, I expect the players and agents will collect most of the new cash - and the fans will be paying it!

  • Comment number 20.

    One thing that really annoys me is splitting the rights into separate packages.

    My understanding is that this was done to break the monopoly from 1 provider. In these situations, this is usually to drive competition in the market and reduce the price to the CONSUMER!

    All that happened, as a Sky subscriber, was to pay the same for less games and have the option to pay another £12 p.m for ESPN. Errr - how does that work!

    The reality is now that the Premier League get a great deal, players get ridiculously wealthy, the gap between the EPL clubs and lower leagues get bigger - but as a fan the price just goes up and up to watch the domestic league of our national game.

    There should be a law to make at least a game a week onfree to air tv.
    The FA should ensure that more EPL money trickles down the league.
    Salaries should be capped at a percentage of the clubs income.
    I'm sure that the EPL think it's great but all that is happening is that clubs, players and sky are getting fat off the back of the normal bloke in the street who now needs to pay about £60 a month just to watch some football on TV!

  • Comment number 21.

    The Premier League is arguably the best league in the world and as such this country should be getting every match live on TV. The fact is that you can still see more live Premier League football in South Africa than you can in the UK. What a joke!

  • Comment number 22.

    As long as we get MOTD every saturday i dont care what happens lol

  • Comment number 23.

    Yet another disgusting deal and again nothing on Free to air which should be a legal requirement. Again those who have season tickets will have to put up with ridiculous fixture scheduling.

    Sky should not have been allowed to bid considering their owners recent activities.

  • Comment number 24.

    This is terrible news! Working class people have already been priced out of going to the grounds. Now they won't be able to afford a tv subscription. Not only that, but the knock on effect that this will have for all the other leagues is disgusting. It wasn't that long ago that teams like Dundee Utd, Ipswich, Nottingham Forest and Aberdeen were competing and winning at the highest level of Europe. Money and greed has killed it. And I'm going to kill my sky subscription in protest, as they have ruined it.

  • Comment number 25.

    @23. So you saying that because a subsidiary of a shareholder that only holds a third of the shares in sky broke some rules that sky shouldn't be able to bid for something? So the other 66% of the shareholders should see their investment lose its value?

    I'm also sure you would be the first to complain if the BBC spent the TV license money to show some games live on free to air!

  • Comment number 26.

    I do feel that at a time of recession the 'People's Game' seems less and less to be just that. This is an obscene amount of money to spend on football rights and we know from experience that most of this money goes on footballers' salaries.

    Also, this may be described as a competition but it always seems to be the same winner, Murdoch's BSkyB. ITV digital, Setanta, ESPN come and go but BSkyB persists. ESPN and now BT get the lesser games and it will cost extra which will probably make this unsustainable. I for one have been watching less and less of Sky and I am considering not subscribing for the first time.

  • Comment number 27.

    I'm lucky, I get to go to matches at least once a week, many times twice in a week throughout the season. Although I'll go anywhere to watch a game so it is often cheaper. Tranmere is just as enjoyable as a day at Goodison or Wigan.

    But I have not got a clue what i would do, if I was younger, with kids who also loved their football. I would not be able to afford it and I do feel sad for those people who want to go but simply cannot afford it.

    As for Sky and the rest of the broadcasters, I've cancelled the sports packages because i felt they no longer gave me value for money.

    Also 'streaming' footy gives you more choice and it's basically free. Do i feel guilty when i do it? NO football gets enough already, from me.

  • Comment number 28.

    I suspect that at least one big club will still go to the wall over the next few years aka 'doing a rangers' .... because players wages as a proportion of a clubs income stream, will simply expand to suck up the new funds. As it is, very average players (&their agents) in the PL, are getting weekly incomes that most of us take several years to earn. This is not desirable, nor indeed ultimately sustainable.

    If the UEFA rules do turn out to have teeth i.e. Stop clubs following the Man City syndrome, then maybe, just maybe, there will finally be some restraint on whats spent on wages, and clubs will move back from the edge and start getting long-term financial models that guarantee the clubs futures.

  • Comment number 29.

    David,

    You have missed the major issue here. English football generates billions and billions of pounds, yet the FA are still struggling to pay for the Wembley Stadium redevelopment.

    Where is all this money going and more importantly why isn't the FA getting a bigger and fairer share???? How much money does the Premier League get? Is the Premier league just like any other business on the high street, owned by the wealthy few, in tax havens such as the Caymen Islands??

    The gulf between the billions pounds of Premier League revenue and the FA's poor finances is unjust.

    The lack of transparency suggests that the people in command are being financially rewarded to maintain the status quo............regrettably the FA appear to be grouped with UEFA, FIFA and brown envelopes!

  • Comment number 30.

    While BSkyB are pouring more and more money into the EPL, they are threatening to pull the plug on their deal with the SPL if Rangers are thrown out. They want to control which teams are in the leagues and which are not.

    That is a warning to the EPL that BSkyB will start interferring if they are not happy with the way the league is being run or if one of the big 4 get into trouble.

  • Comment number 31.

    I was concerned until I saw how few matches BT is actually getting. I won't miss them if there is no US outlet or if (like Setanda) they go PPV. All the Sky games are on FoxSoccer in the U.S.A.

    My guess is BT can re-sell its package to either NBCSports of ESPN for the US and get back most of what they're investing here. The US ratings for EPL are surprisingly good and both those channels are putting more money into their coverage.

  • Comment number 32.

    It's a ridiculous deal. It's simply too much. Sky subscription prices are going to end up going up to nearly 70% as a result. Sky may even lose a significant amount of subscribers than gain as a result. This deal is going completely against the financial fair play rules. All the top clubs are going to end up spending a lot more and make further losses and I don't think it will be long we will see another football club in the situation that Rangers are in now. I predict now we will see the fall in the amount of Sky subscribers and a massive increase in the amount of users watching the matches for free over the internet

  • Comment number 33.

    11.6% rise in number of gains accounts for most of a 70% rise in the value of the contract.
    Maths in the UK takes yet another hit

    To Dana Blackhorn (#31) - You don't need to worry about that. The rights being discussed here are for UK only. US distribution comes under the international rights so won't affect your viewing until they are renegotiated for the 13/14 season (I think) at which point if someone outbids Fox then you might have to change packages (note Fox probably has more PL games than Sky as outside UK the 3pm saturday games can be shown live)

  • Comment number 34.

    Sportsfan (#32),

    You may be right about the internet part (which could cause issues when the next deal is negotiated).
    However the rest of your comments are either not well thought out or are not expressed well.
    If the clubs were overspending before hand they will continue overspending with any new deal - no matter the size.
    Financial responsibility is the responsibility of the clubs themselves and no-one else (except possibly FA/PL to prevent collatoral damage to other clubs and the league's image).
    If clubs are sensible then the extra income can be used to prevent another Rangers situation (simple start paying taxes as it appears that the Taxman is one of the few that will refuse a CVA

 

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