By Robbie Butler

In the coming months those interested in the English Premier League will know the broadcasters that have won the rights to show live league matches from August 2019 to May 2022. I have previously addressed this topic here and here.

I am at a loss to see how the “competition” forced upon the market by the European Commission has in any way helped consumers. With the likes of Amazon, Netflix and Facebook all suggested as potential bidders, the big losers in this could be the very people that opening up the market sought to protect. To understand why, an overview of the seven packages that are on offer from 2019 to 2022 need to be considered. These are presented below. 

Currently, two broadcasters, (BSkyB and BT) share the rights to the 168 live games per season screened. In order to win one of the seven packages a broadcaster must make a single, sealed-bid prior to the decision date. As no guidance as to what others are willing to bid is provided, bidders must bid high in order to have a chance of success. In some cases, this could be interpreted as overbidding in order to ensure success. Great news for the Premier League but bad news for bidders and customers of subscription channels.

The large increase in the cost of winning the rights, which will probably go above £2 billion per season from 2019-20, sustains the inflation we see in the transfer market. The reason players today earn far more than players even ten years ago, is largely due to inflation in the price of live games.
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In theory seven different companies could share the packages listed. If this were the case, seven different subscription charges would be required to watch all live games. As strange as this may seem, consumers would probably be better off if one company, for example Sky Sports as was the case from 1992 to 2007, won the rights to all 200 games. Odd that a monopoly is preferable to "competition".

The reality of course is that this is not competition but instead has led to the creation of seven different monopolies. Prices would fall, and with it transfer fees and player salaries, if more than one broadcaster could buy the same package. Only then will the market be competitive.

By John Considine

The Deloitte Football Money League (DFML) presents a list of the Top 20 clubs by revenue.  The big news this year was that Manchester United had slipped outside the top three for the first time in the 17-year publication of the report. The report also carries information on the benefits of different revenue streams to the clubs.  In this post I will focus on the benefits of broadcasting rights to the clubs.

The figure opposite outlines the proportion of each club’s revenue that comes from broadcast, matchday and commercial revenue streams.  With the focus on broadcast revenues, the clubs are ordered by country with the Italians on the left, followed by the Spanish, English, German and French.  This ordering roughly corresponds to the relative importance of broadcast revenue to the clubs.

It might seem strange to have the Italian clubs lead the list because, with the exception of Juventus, they are sliding down the DFML.  Of course, the importance of broadcasting could also represent the relative importance of the other income streams.  For example, the small matchday revenues (possibly attributed to stadium ownership) for Italian clubs makes the broadcast  revenues seem more important.  While Juventus have the highest proportion of their revenue from broadcasting, the amount they actually receive (€166m) is less than Real Madrid (€188.3) and Barcelona (€188.2m).  The DFML report notes that 2013 was an unusually good year for Juventus in terms of broadcasting.  Despite "only advancing to the quarter-finals of the Champions League, Juventus received the highest distribution (€65.3m) of any club in the competition".  The €166m Juventus received in broadcasting revenues in 2013 was a 77% increase on 2012.

For the last number of seasons the Italian clubs have moved to collective selling of broadcast rights (reversing an 1999 anti-trust ruling in the Italian Courts). In the case of the Italian clubs the key issue is the distribution of the broadcast rights.  Ed Thompson has a superb explanation of how the Italian clubs distribute the revenues (here).  It is a system that heavily favours the status-quo and bigger clubs. Juventus in particular is a big winner under the Italian system.

The Spanish clubs sell the domestic broadcast rights to their games individually.  This results in Real Madrid and Barcelona getting a larger share of that pie.  Last year The Guardian reported (here) that Real Madrid received €140m while Granada received only €12m.  Although Barcelona exited the Champions League at the same stage as in 2012 they received an increase in broadcast revenue from that source.

German clubs benefitted from a new international right deal for the Bundesliga.  Two of the four in the above table also benefitted from getting to the Champions League final.  Although they lost the final, Borussia Dortmund were the biggest winner in terms of the increase in broadcast revenues (45%).  Chelsea's return from Europe went in the opposite direction.  However, this was offset by an increase in revenue from the Premier League.  There was also modest increases for the other Premier League clubs.

The importance of a good run in Europe's premier competition is best illustrated by Paris Saint-Germain.  Their broadcast revenue grew by a massive 93% as a result of reaching the Champions League quarter-finals whereas the previous year they were eliminated at the group stage of the Europa League.  Failure to qualify from one's domestic league can be seriously costly in terms of broadcast revenues.