Football's nail-biting finish

As talks kick off tomorrow for the next set of TV rights, clubs expect a £2bn windfall.
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The Independent Online

The Craven Arms near Coventry was witness to delirious scenes one sunny afternoon in June 1996. While the subject was football, this had nothing to do with cheering fans. In fact, the celebrations were confined to a group of five smartly dressed businessmen whose euphoria attracted the attention of the Craven's largely blue-collar clientele. The quintet were the executives who had masterminded BSkyB's £670m bid for the exclusive rights to show four years of live Premiership football. The euphoria was prompted by a phone call informing them of their victory.

Tomorrow morning, at a meeting in London of the chairmen of the 20 Premier League clubs, negotiations for the next set of rights will begin in earnest. An innocent advertisement, inviting interested parties to bid, appeared on Friday in two newspapers. What it failed to mention was the widespread belief that the talks could enrich football by as much as £2bn and, in the process, decide which media company will dominate TV viewing for the next decade.

Vic Wakeling, managing director of Sky Sports, is the only member of the famous five who will be involved in the pay-TV company's bid to renew its contract. In the meantime, Britain's televisual landscape has also changed dramatically. Companies like NTL, TeleWest and CWC have installed a network of television cables all over the country. BSkyB and ONdigital have sold more than 3.5 million digital set-top boxes. By 2006, when the Government plans to shut off the terrestrial signal, we will all be either digital or cable viewers.

Nor has English football stood still in the intervening years. BSkyB's £670m investment has provided domestic clubs with the wherewithal to buy some of the world's best players. Manchester United, for one, have fully exploited the investment by winning the European Champions League. This season they may retain their title, and Chelsea are also in the running for Europe's top club title. Leeds United and Arsenal are favourites to contest the Uefa Cup Final.

The guardians of England's top football clubs are not blind to the strength of the domestic game and its value to broadcasters. Well-sourced leaks suggest that, even for a contract foreshortened by a year, they expect to pocket about £2bn. The test will come in the next three months, when they find whether football is as vital to the television media as they suppose.

The early indications suggest it is. The Premier League's decision last time to accept only a four-year deal means its rights are back on the market at a time of unprecedented competition between the digital and cable companies to win the eyes and wallets of the nation's viewers. In one arena, ONdigital and BSkyB are slugging it out with increasingly lucrative deals to encourage terrestrial viewers to enter the world of digital multi-channel TV through their set-top boxes. In the other, NTL is hoping to become the dominant cable operator once its merger with CWC is consummated. Its opponent is TeleWest, itself about to merge with Flextech, the programme maker.

But British viewers are still predominantly terrestrial beasts. ONdigital and Sky have installed boxes in only a fraction of the 24 million homes with TV sets. Likewise, only a third of the viewers who could use the services provided by the three big cable companies have so far subscribed. The spoils of war are obvious and most of the combatants appear to share Rupert Murdoch's view that sport is the key to winning them. It was the chairman of News Corporation, which owns 40 per cent of BSkyB, who said: "Sport overpowers film and everything else in the entertainment industry." Certainly, Sky's success owes much to its eight years of exclusive football coverage. Over 70 per cent of its subscribers are willing to shell out the £21 a month required to watch live Premiership football.

ONdigital, which has been showing this season's Champions League games, has found the tournament to be a key selling point for its set-top boxes. Both ONdigital and NTL, the other likely contender, can show Premier League football to their subscribers but have to buy the package from Sky - at an extortionate price, they believe. By cutting out the middle man and acquiring rights of their own, they could either bank the difference or offer a better deal to their customers, or both. They would also avoid giving their arch-rival an enormous plug every time Sky Sports action goes out on their platform.

Then there is the contest for highlights - rights that will go for far more than the £70m paid by the BBC last time. Brian Barwick, ITV's head of sport who defected two years ago from the BBC, would like nothing better than to deprive his ex- employer of Match of the Day.

With this background, it is no wonder Premier League chairmen foresee a huge windfall. With the help of consultants David Kogan and Spectrum, Premier League chief executive Richard Scudamore seems to have decided that giving everybody a slice of the cake rather than granting an exclusive contract is the way ahead.

"The way to maximise revenue is to grant rights to a number of media companies," says the finance director of one Premiership club. "It seems to have been accepted that we'll get more money that way."

A likely scenario, therefore, would allow all three broadcasters the rights to a package of games, which they would then have to share with their rivals. To ensure core terrestrial viewers could still enjoy the game, a Saturday evening highlights programme on BBC or ITV would continue. More money would be generated from the sale of internet rights.

But it would be foolish to take anything for granted when the Premiership is made up of clubs with such diverging interests. The current contract largely ignores the fact that most of football's appeal to TV depends on a few clubs. So it is that half the £670m Sky paid last time is split equally between all 20; a quarter is paid according to appearances on TV, and only the last quarter distributed according to results. It is a formula that was accepted only grudgingly by Martin Edwards, Manchester United's chairman.

The spectre that the likes of United, Chelsea and Newcastle could split off and forge their own deals has been raised by the increasingly close links between football and the media. BSkyB has stakes in four Premier League clubs. NTL has holdings in three. Granada, which owns half of ONdigital, controls a chunk of one.

If any team is likely to break away it's Manchester United, though noises from within Old Trafford suggest it is resigned to a collective deal. But one concession would allow their loss-making channel MUTV to show highlights of United fixtures after two days' breathing space. Other clubs would follow suit and pocket the proceeds of their own dedicated channels.

On the surface the League's unity should hold, but beneath it lies concern that an overkill of football on the box will hit attendances. Aston Villa have struggled to win crowds this year, blaming TV coverage. Only Manchester United can consistently fill their ground when a game is broadcast live, but even that strength could be tested.

The Premier League is likely to split games according to days of the week, so one broadcaster will show matches on Sunday afternoon, another on Monday night, and so on. It is a fulsome diet that will sate the appetite of even the greediest fan. There are those who believe the Premiership has sold its soul to the media.

"They're tendering, and that's the wrong thing to do," says Alex Fynn, a consultant who has advised clubs and federations on TV rights. "They'll get a good deal, but not necessarily the best because they don't really know the value of their package." He fears the chairmen may be out of their depth in the media industry and doesn't rule out BSkyB and NTL stitching up a deal thath isn't to their best advantage.

Another source close to the negotiations says: "It seems to me that Sky is in such a strong position. Why should they bid top buck? It would be easy for Rupert Murdoch to stuff the Premier League by doing a deal with the other bidders."

It is a game whose result will be in doubt until the final whistle. The question is which of the Premier League or the media will be Manchester United ... and which Bayern Munich.