The £4bn battle for Premier League rights


Today is the deadline for the first round of bids for the rights to broadcast live Premier League football from 2016 onwards.

For the big sport broadcasting guns – Sky and BT – live football is, or has become, a vital part of their business model.

Between them they paid £3bn in 2012, using live football not only as a way to encourage new customers to pay for their services but to defend other parts of their empire, particularly the sale of broadband packages.

I spoke about how important football is for broadcasters (and fans) on the Today programme this morning.

Predicting which companies will be battling it out for Premier League rights can leave you looking a little stupid.

In 2012 – the last time the package of 154 matches was bid for – BT stormed, unannounced, into the market and gained the rights to 38 matches.

They would have liked many more and were only prevented from taking a greater share by Sky lodging an aggressive second round bid.

This time around, Discovery, the owners of Eurosport, has done little to dampen speculation that it might be in the running.

And it would be difficult to the point of impossible to imagine that BT and Sky will not lodge major bids in their attempt to become – or remain – the “home of football”.

As the former chairman of ITV, Lord Grade, told me, there is little more valuable than football for telecommunication and broadcasting businesses.

And he should know, having led ITV’s successful £160m bid for Champions League rights in 2008.

“The audience that top quality live football attracts is hugely valued by advertisers – the beer, the cars,” he said.

“It would have been seen by the advertisers, our pay masters, if we had lost [the rights], that money would have gone to whoever won [them]. It was absolutely crucial, but not at any price.”

“Not at any price” is the key phrase. It is expected that bids will top £4bn this time around.

And with bids binding and sealed, broadcasters have to aim as high as they feel they dare.

“It’s agony,” Lord Grade said of the process.

“With more and more competition, you don’t know who is out there. BT must have taken Sky by surprise.

“You don’t know what Google is up to, or Amazon. Anyone could be out there, it is terrifying.

“You have to keep your nerve and work out what your walk-away price is before you get into the auction.”

The cost of winning rights has certainly been on a vertiginous path. In 2012, the price rose by 77%.

“There is no doubt that the inflation in sports rights has been quite dramatic over the last ten years,” Lord Grade said.

“That really reflects the market.

“You pay more for the best, and the Premier League is the best.

“People are not going to overpay for things that are worth it. Sport delivers. It drives audiences, it is a banker like no other.”

And therefore possibly better, Lord Grade says, than investing £20m in a drama that viewers might not like.

It would certainly be a big blow if Sky lost another significant part of its football empire.

Don’t forget, BT is now also the owner of rights to the Champions League, a contract it took off Sky and ITV .

Jeremy Darroch, Sky’s chief executive, has diversified Sky’s broadcasting offer, investing heavily in drama in particular.

So, football is certainly not as essential as it was.

Nevertheless, investors will be as twitchy as Sky executives over the results of this year’s bidding, the results of which are likely to be announced next week.

I’ll leave the final word to Lord Grade: “Sky is very resilient, and it will reinvent itself, but how many years it would take if it lost all the Premier League I wouldn’t like to say.

“It would be very seriously damaging.”

Source: BBC Sport


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