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Thanks a billion ... body blow for Sky as BT lands Champions League

Offering around £200m more than the satellite broadcaster will hardly cause a dent in its annual results

The football world was stunned by the news yesterday that BT had spent almost £1bn on a deal to snatch coverage of the prestigious Uefa Champions League from rival broadcaster BSkyB.

Uefa accepted the telecoms giant's huge offer of £299m per season for exclusive live rights to screen both the Champions League and the Europa League for three seasons starting in 2015-16.

The bid by BT's fledgling sports arm, BT Sport, which has been on air for only 14 weeks, so comprehensively trounced its rivals – by around £200m – that the tender process did not go to a second round. Sky, which holds current UK rights to the Champions League jointly with ITV, pays Uefa some £80m a season and is believed to have offered £500m in the three-year tender. ITV, which has been paying £55m a season, was prepared to contribute a further £188m over three years.

Such was the scale of BT's £897m outlay that it felt the need to point out in its statement that the company's recent annual results meant that £299m a year was a cost it could "incur without changing its current financial outlook". BT Group reported revenues of £18.1bn for the year ended March 2013 with reported profits before tax of £2.3bn.

The deal will give BT Sport coverage of 350 games across the two tournaments and will make the service "the natural home for football fans", it claimed.

Loss of the Champions League is a body blow for BSkyB, which has used football as a driver of subscriptions for more than 20 years and had been desperate to retain the flagship European competition. In its statement, Sky made clear that it felt BT had overpaid. "We bid with a clear view of what the rights are worth to us. It seems BT chose to pay far in excess of our valuation," it said. "We take a disciplined approach and there is always a level at which we will choose to focus on something else. If we thought it was worth more, we'd have paid more."

The IoS understands nonetheless that BSkyB, when confronted with likely failure, sought unsuccessfully to enter a fresh bid.

ITV will now bid for a Champions League highlights package. "ITV is proud to have been the UK free-to-air broadcaster of the Champions League, since it launched in 1992, and of the Europa League. But we were not prepared to pay over the odds in the latest live rights round," it said. ITV will instead invest more in drama and entertainment.

John Petter, head of BT's consumer division, defended the deal. He told The IoS: "To get all the games today, you have to pay £40-plus per month. We are not announcing our pricing today, but the plan would be to make games much more affordable and accessible."

He said that the deal firmly underlined BT's long-term commitment to sports broadcasting. "The line has been put about that it's a marketing gimmick – we have demonstrated comprehensively that it's not true."

The finals of both tournaments will be made available for free, he said, with at least one European game from every British team in the competitions also offered free-to-air. But viewers who have become used to seeing key fixtures on ITV will now have to pay.

The former head of BBC Sport Roger Mosey expressed concern that more events might be bought up by pay TV. "The BT vs Sky scrap, and all the massive inflation in sports rights, makes it even more important that listed events remain free-to-air for all," he said.

The deal represents something of a risk to Uefa, turning away from audiences approaching 10 million in favour of BT's money. But Uefa officials are said to have been impressed with BT Sport's coverage of the Europa League this season. BT Sport also covers Germany's Bundesliga, France's Ligue1 and Italy's Serie A.

Guy-Laurent Epstein, Uefa's events marketing director, said: "Uefa is delighted to welcome newcomer BT Sport to the family of Uefa Champions League rights holders. Since its launch in the summer, BT Sport has been Uefa's partner for the Uefa Europa League and has demonstrated its ability to deliver premium sports coverage."

Sky can only console itself by having more money to spend on other things. "We will now redeploy resources and continue to bring customers the best choice of TV across our offering," it said.

The cash-rich satellite broadcaster has a reputation for seizing sports rights from more hard-pressed terrestrial broadcasting rivals. It paid £2.3bn for the lion's share of Premier League rights for the three seasons from 2013-2014, with BT paying £738m for a smaller package.

The BBC Match of the Day presenter Gary Lineker said the European rights deal would encourage Richard Scudamore, the Premier League chief executive, to believe the English league could become richer still.

"The next Premier League deal will be interesting," said Lineker. "Probably much lip licking in the Scudamore abode this morning."