Premier League big winner again as TV rivals vie for live football rights

http://www.theguardian.com/media/2015/feb/05/premier-league-football-live-tv-rights-bids

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Not a ball will be kicked, but for the chief executive of the Premier League, Richard Scudamore, Friday is the biggest day of the season, when he will tear open rival bids from media giants vying for the league’s multibillion-pound live TV rights.

For the executives from Sky and BT bidding in a high-stakes auction expected to easily top the current £5.5bn deal, there are likely to be a few sleepless nights. The competition is expected to be so fierce that there will be no outright winner from the first round of bidding and the process will tip into next week.

The one certainty is that the Premier League will be the ultimate winner. And by extension its 20 clubs, their players, their agents and the luxury car showrooms of Wilmslow and Park Lane.

The usual City speculation, as febrile as anything on transfer deadline day, is in full swing. Some believe that Discovery, the US broadcaster owned by Rupert Murdoch’s sometime rival John Malone, could enter the fray after acquiring Eurosport and may squeeze out BT. Others raise the prospect of Qatar-owned BeInSport, which has invested billions around the globe in recent years, making a dramatic entry into the UK market.

It is becoming difficult to recall the pre-Premier League era when just 14 top-flight football matches were aired live each season. In 1990 the BBC and ITV paid £3.2m a year. Under the current deal, for 154 live matches per season, BT and Sky shell out £1bn a year.

Analysts at UBS this week predicted another 45% rise in the value of the rights, to £4.38bn over three years, with Sky paying £3.3bn to retain a majority for the three seasons from 2016/17.

Since paying £738m for the rights to 38 matches per season to become the junior partner to Sky Sports, which paid £2.3bn for 116 games, BT has won FA Cup rights and spent a further £897m on exclusive live Champions League rights from next season.

That boosted BT’s chances of succeeding where ITV Digital, Setanta and ESPN have failed in challenging Sky’s dominance. It must retain enough Premier League matches to underpin a subscription service in which it plans to house its Champions League rights.

A strategic battle has been raging for months behind the scenes at BT’s St Paul’s headquarters. Some favour a gung-ho attempt to take on Sky for the majority of the games, but others urge caution, pointing to the money already invested in other rights and preferring to continue to use BT Sport to attract and retain broadband customers.

The auction comes at time when BT has other investment priorities, including this week’s £12.5bn acquisition of the mobile operator EE, and the impact of a recent regulatory decision on the wholesale fibre rates it offers rivals.

Sky has diversified into a hugely more complex empire than could have been envisaged when Rupert Murdoch’s ramshackle outfit first won the live rights to the nascent Premier League in 1991, but those rights remain key to its business. It could be forced to pay substantially more to hold on to the rights it has or lose some plum packages to rivals.

Sky Sports’ managing director, Barney Francis, has sought to shore up its position by agreeing a string of rights deals in other sports, including cricket and this week’s £75m deal for golf’s Open Championship from 2017.

The Premier League auction process has changed a lot since the then Spurs chairman Sir Alan Sugar covertly called the Sky chief executive Sam Chisholm and told him to blow his ITV rivals out of the water before the league’s launch. The process has become more strictly audited since European competition authorities insisted the rights go to more than one bidder – rules that the Premier League says remain in place.

That does not stop rumours of sharp practice abounding. Given their strategic importance and the impact on share prices, those involved play their cards closer to their chests than ever. Last time, BT plotted its surprise entry into the market around the kitchen table of one of a small group of executives and dispatched an undercover intern to deliver the bid.

This time there are slightly more games on offer – 168, compared to 154 – and they are split across seven packages offering a variety of kick-off times and “first pick” opportunities. Each of the packages must be bid on separately and no single buyer can win more than 126 of the 168 matches on offer. For the first time in the Premier League era, up to 10 Friday night matches will be included.

It is the way these packages are constructed by a small cabal of longstanding advisers, drawing on the mechanics of game theory, that has driven the exponential increases in value over the past two decades.

The arrival of BT could not have come at a better time for Scudamore, offering the prospect of two well-funded rivals going head to head for years to come. Now firmly back in the driving seat after surviving a storm over sexist emails sent privately from his work address and undergoing major heart surgery last summer, he is hoping for another bumper increase.

The BBC has already agreed to pay £204m for the highlights over three seasons. With overseas rights deals also expected to increase in value, the final total is expected to easily top the £5.5bn achieved in the current cycle.

In an era of financial fair play, where the biggest clubs are required to break even, the need to bring in ever more TV revenue has increased still further. But the riches will spark new calls from MPs and fan groups for a greater proportion to be redistributed. The shadow sports minister Clive Efford told the Guardian that the way revenues were distributed perpetuated “a culture of greed” at the top of the game.