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The finance of football A commercial look at The Premier League

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Welcome to my sport column – An occasional look at various commercial sides of the sports industry which ultimately deliver the live events we enjoy.

The Premier League is the single most valuable cog in the sports industry in the UK and it alone supports the employment of more people than our (admittedly ever dwindling) police or armed forces, delivering over £2.5 billion to the Exchequer. It’s an industry I joined with Mark McCormack’s IMG in 1988, a year in which Murdoch bid £47m for the First Division (Premier League as it was) TV rights, when Nottingham Forest finished 3rd in that First Division and when Spurs broke the British transfer record of £2m for a 21 year old called Paul Gascoigne.  

And yet for all the Premier League’s growth in finances, media coverage and global fan bases, there are many who still refer to it as “only a game”. What a wonderfully romantic notion. Unlikely to be shared by the chairmen of the two clubs contesting the Championship play off, a £300M game. Nor by the family of Suleiman Omondi who took his life when Arsenal lost the Champions League semi-final. Nor by the football authorities who finally bowed to the inevitable and introduced Video Assistant Referees, belatedly accepting that for all the complications there’s way too much at stake now to get the decisions wrong. A blatantly bad decision one day ending up in a court of law? Don’t bet against it.   

Looking at the Premier League is timely given the recent renegotiation of their TV deals, the most highly prized weapon in their commercial armoury. And yet the fascination for me lies beyond the eye watering sums of money involved but more in the way it lifts the lid as it does every 5 years on many of the underlying tensions between different stakeholders within the sport.

The traditional broadcasters and the tech/streaming companies

Shareholders in BT and SKY (most of us with a pension) can breathe easy with their retention of the major packages at a reduced cost per match of £9m, down from £10m. SKY managed to hang in there this time but query for how many more rounds. Common sense prevailed between SKY and BT who have not only now called off the attack dogs, they have even agreed to sell each other’s content.

Murdoch once described sport as the great battering ram. In the UK, he may as well have said Premier League football. The problem for SKY is that they are starting now to compete not with like-for-like broadcasters but with far richer organisations whose business is not in broadcasting but in streaming any and all forms of services and content to their multi-million user bases and for whom Premier League is just a means, not the end. Their agendas are wider and their pockets are deeper.

In the end, there was probably no great threat from the big tech companies this time, but that never stops the Premier League from doing a great job talking them up. Let’s not forget that the present circa £5 billion rights fee figure was less than 5% of that when the Premier League began. The time however is drawing nearer when the tech companies will jump into the ring. Amazon have bid for live sporting rights in tennis, while Facebook bid for the Indian Premier League cricket but this cycle has come slightly too early for a mainstream bid. As we are seeing, these companies face bigger challenges of their own right now.

When they do enter the fray, we are likely first to see some alliance between the new and the old akin to Facebook’s partnership with FOX in the US on Champions League. It is not difficult to anticipate Facebook, given their enormous audience, first enticing the Premier League with the promise of growing their audience into new markets, then bidding for the overseas rights themselves, then later bidding for the exclusive global rights.

The domestic broadcasters, the overseas broadcasters and the paying fans

 The UK market has financially plateaued, the big growth now being seen in the overseas broadcast rights. The new China deal alone is over 10 times the size of the last cycle while, in the US, NBC is paying $1B for a 6 year deal. The UK and overseas broadcasters have sat comfortably together to date. I expect that to change when the value of the overseas rights starts to match the value of the UK rights and the overseas broadcasters start flexing their muscle on kick off times. The evening kick offs for the US audience and the morning kick offs for the Asian audience will become increasingly commonplace. Spare a thought for the paying fan trying to get back from London to Manchester at 10pm or travelling down for a 10am kick off as the League’s biggest paymasters become the fans on the West Coast or in Asia.  

The Premier League and the grass roots game

As the Premier League gets ever richer, we can expect calls to grow for the world’s richest league to do more for the grass roots of the sport and keep feeding the golden goose. And they should be heeded if the domestic football fabric within which the Premier League sits, and which it feeds off, is to be strengthened.

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About Graham Walpole

Graham Walpole is a solicitor by training and spent the majority of his career as Senior Vice President at IMG, the world's leading sports and entertainment marketing agency. Roles at IMG included running the European Legal Department, managing IMG Asia's sports business out of Hong Kong and setting up IMG's European Consulting division. Since leaving IMG, Graham has had a variety of positions including CEO roles at Lyndhurst Racing (the team arm of A1GP, World Cup of Motorsport), at London Irish RFC and presently at KICCA Media, a new sports/lifestyle content media business operating in partnership with leading Premier League footballers.

Articles by Graham Walpole

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