Sports Broadcasting Rights

As we approach the business end of the football season, the business end of football becomes increasingly important. Premier league survival is more important this season than ever before, whilst promotion to English football’s elite division has never looked so appealing. The reason for this is simple: the staggering sums of money now associated with broadcasting rights to show premier league football matches both in this country and abroad.

Next season, a new three-year deal begins that is worth at least a staggering £8 billion. This sum is divided up into £5.136bn for domestic rights in the UK – paid for by Sky Sports and BT Sport  – and £3bn for international rights. The Premier League signs 80 broadcast contracts around the world, and football leagues in those countries look on with envy at the financial success of the EPL (English Premier League). Earlier this year, Deloitte revealed that all but three of the 20 Premier League sides were in the world’s 30 richest clubs; it’s safe to assume that all the English clubs are assured places in future rich lists.

The reason for the wealth flooding the EPL is the fact that Premier League broadcast rights are negotiated on a collective model, not individual deals. Every club gets a fair share of the TV money; Manchester United can’t go it alone and strike up their own deal with broadcasters because they have the most fans, and therefore – in theory –  the most viewers for TV channels. Instead, the Premier League’s 20 clubs have agreed that the appeal of their product is based on the quality of the competition on the pitch, which means the involvement of both sides. Leicester City are evidence that the big clubs don’t always get things their own way, and the league is all the more exciting and unpredictable as a result.

The domestic TV money (£5.136bn) is divided up like this: 50% is shared equally, 25% is distributed based on final positions in the league table and 25% is paid in facility fees (to cover the cost of transmitting games live in the stadium). The international TV money on top (£3bn-plus) is split equally. The resulting figures are, quite simply, hard to get your head around:

• Last season’s bottom club, QPR, earned £68m for their efforts
• The club that finishes bottom next season will receive at least £100m
• This will equal what Chelsea got for winning the 2015 title
• Next season’s champions will receive at least £150m

La Liga in Spain had individual broadcast deals in the past, and Real Madrid and Barcelona clearly benefited from negotiating their own deals with TV companies. But Spain’s football bosses have decided that they want to follow the lead from the Premier League and adopt the collective model to create a more even playing field.

This season, so-called unfashionable sides like West Ham, Stoke City and Crystal Palace have been able to tempt star names like Payet, Shaqiri and Cabaye respectively because they can pay wages that compare favourably with more famous clubs across Europe. And the attraction of the Premier League will only continue to grow with the launch of the new TV deal next season.

There is no reason to believe that the value of the EPL’s broadcasting rights will decrease any time soon, either. You see, Google/YouTube haven’t got involved yet, and that would make negotiations very interesting…

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