Originally published in April 2018.
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.
The big clubs and the others
Any changes to the Premier League constitution require a minimum of 14 clubs to vote them in. This has kept at bay for now the aspirations of the big 6 clubs who between them drive the Premier League brand, Man United alone accounting for 50% of all Premier League chat on Facebook. However, their desire to realise their full commercial potential – whether ownership of their own media rights or a greater share of the overseas TV money – represents an endless source of tension. This is especially so with the foreign owners somewhat less bought into the collective philosophy. The big clubs bang their drums and fill column inches every few years with breakaway European League threats, but these are hollow threats for a league built on decades-old rivalries, filling stadia up and down the country, creating the product that is sold around the world. But if ever we wanted a warning about the danger of too much money ending up in the hands of a clique of the top clubs, look only at this season. The Premier League prides itself on being the only unpredictable major league in Europe, not dominated by 1 or 2 clubs, but cannot argue this in 2018. And if Manchester City’s huge spending power continues to go unchecked by the toothless Financial Fair Play, the integrity and appeal of the Premier League product will rapidly erode to the detriment of all stakeholders
The players, their agents and the clubs
The average yearly wage for a player in the English Premier League in its first season 25 years ago was £77k. Today it is £2.6m. The players have never wielded more power or got paid more for it. When football was truly “only a game”, a player was an employee of the club. Now they are like any other capital asset- land, machinery, building or goodwill – and sit in £1bn+ lines on a club’s balance sheet. In many overseas territories, the players enjoy bigger followings than their own clubs, and the players know it and the commercial value that attaches to this in merchandise sales, tours, sponsorships and beyond. And the players’ agents understand every inch of leverage they have with the clubs, using not only the club’s own growing revenues but also the bottomless pockets of the owners of many overseas clubs to extract every last cent for their clients….and of course themselves. Paul Pogba’s agent earned the small matter of £40m from his transfer to Man United.
This is but a snapshot of just a handful of tensions in the “beautiful game”. The stars have aligned for the Premier League for the last 2 decades making it the richest and most powerful league in the world. But it hasn’t always been thus for our top league. Those of us of a certain age will recall Italy’s Serie A as the world’s pre-eminent league in much of the 80’s and 90’s. And looking forward, Major League Soccer is expanding at a pace almost unprecedented in sports history; the Chinese league, driven by the mandate of President Xi Jinping, is paying the largest salaries in world football; the Indian Super League is touted as “the next goldmine” and La Liga’s Barcelona and Real Madrid continue to hold the greatest allure to many of the world’s top players. The Premier League has no divine right to maintain its pre-eminence but for it to do so it will need maintain the delicate balance in its commercial ecosystem in the face of forces both within and beyond its control. Failing that, it risks going the way of Nottingham Forest and Paul Gascoigne.
