London: BSkyB paid £38 million (Dh218.7 million) to broadcast 66 live matches during the first English Premier League season in 1992-93. Today, that amount would scarcely buy six games.
The next Premier League auction to decide who will broadcast live matches from the 2016-17 season is expected to take place early next year and some analysts believe the total annual rights bill could top £1.5 billion. This is because of greater competition in a sports rights market that has for so long been dominated by Sky.
“It is always difficult to know what will happen in each auction round,” says Daniel Geey, a sports lawyer at Field Fisher Waterhouse, “but it is probably the most important auction for Sky for some time. It is facing a relatively new competitor with deep pockets, one that is looking to protect its broadband customer base and which completely outbid Sky for the Uefa Champions League and Europa League rights.”
The intervention by telecoms group BT in the 2012 auction when it secured the rights to broadcast a limited number of top Premier League matches, is fuelling speculation that it poses a greater threat to Sky this time around. Paying £300 million a year to pinch Champions League rights from Sky and the terrestrial broadcaster ITV heightens the sense that the old order is under threat.
The Premier League deal is built around seven live broadcast packages. It is expected to follow a broadly similar pattern for the next round. Currently, Sky pays an annual £760 million for five packages to broadcast 116 games a season, while BT pays £246 million for 38 games. The average price per game is £6.5 million.
“We put the rights into a competitive market,” says Dan Johnson, Premier League director of communications, “but make no predictions on whether there will be an uplift [in prices in the next auction] or how large it might be.”
Johnson expects the auction to take place under the same conditions as in 2012 with a “no single buyer” rule, even though the European Commission deal that guaranteed the sharing of rights — in force since 2007 — has lapsed. “We will not step away from competitive contracts,” he says.
Last year, analysts at Berenberg bank estimated that BT could make a business case for paying as much as £1.15 billion for Sky’s share of the Premier League packages. The analysis was partly based on revenue streams from a bigger share of the matches and the impact it would have on its broadband subscriber base.
“We don’t think Sky can afford any more changes in the balance [of rights],” says Sarah Simon, senior analyst at Berenberg. “It has to hold on to the same share of matches and win back some of the top games from BT. If BT were to take, say, five Premier League packages — [and given] it already has Champions League games — would anyone still need to go to Sky for football?”
Some question Sky’s desire, or ability, to pay more after deals agreed in November, to acquire Sky Italia and take a majority stake in its German counterpart, increased its net debt.
“Sky is a more diversified business than it was even five years ago,” says Michael Underhill, senior research analyst at Enders Analysis. “Sport is crucial for its subscribers, but Sky would survive even if it worked as a 50-50 provider with BT.”
Underhill is among those who believe prices will plateau or rise less sharply in this round of bidding unless a third player enters the process — Al Jazeera is often mentioned.
For BT, premiership football has become a weapon in its battle for broadband subscribers. Its sports channels are offered as free add-ons for superfast-broadband consumers and its approach initially was seen as a defensive measure to slow Sky, which has had strong growth in customer numbers. BT has reported increased broadband subscriptions.
BT will not be drawn on its Premier League intentions.
“If BT is sensible, it will not bid for all the rights,” says one analyst, who did not want to be named. “It is not in as good a position to monetise them as Sky. Its overall TV package is nowhere near as good as Sky’s and it does not have the capacity to deliver.”
— Financial Times