And the "rights holders" - the clubs and associations - know it, too. The Premier League, the jewel of British sport when it comes to TV, is already salivating at the prospect of signing a lucrative new broadcast and sponsorship deal when the current pounds 304m, five-year contract with Rupert Murdoch's BSkyB runs out at the end of next season.
Preliminary negotiations on the next contract have already begun, and a deal could even be reached by early summer. So far, there are only two publicly known candidates: BSkyB and a joint venture between Mirror Group and Michael Green's Carlton Communications. Sky, of course, has the edge, for three principal reasons. First, it has the right to match the best offer on the table, as prescribed in the current contract. Second, it has very deep pockets, fuelled by three years of ever-increasing profits that could hit an annual level of more than pounds 200m in 1996. Third, it has a canny, risk-taking, if bombastic, negotiator, in the person of Sam Chisholm, the chief executive and a Murdoch chieftain, against whom any would-be competitor will have to be extraordinarily wily.
The traditional broadcasters ought to learn a few lessons from Chisholm. His great coup, three and a half years ago, was to sign an exclusive deal with the top 20 football clubs - the Premiership - which gave him the ultimate marketing tool to foment the growth of pay TV in the UK. Along with movies, sport has given consumers a reason to shell out for a satellite dish or to sign up for cable television. More than 5 million have already done so, of whom more than two-thirds have taken Sky's premium channel, including Sport. On present estimate, there will be close to 10 million cable and satellite subscribers by the end of the decade, sending subscription revenues to perhaps pounds 1.6bn a year - the amount earned by commercial broadcasters ITV and Channel 4 from advertisers and close to the pounds 1.7bn given over to the BBC by licence fee payers.
It is that stellar growth that has emboldened the Premier League clubs to increase their price. They know that Sky desperately needs to keep the rights if its amazing growth is to continue. They also hope that a few competitors will put their hats in the ring, if only to see the price bid up. League officials talk about pounds 200m a year for the rights - no doubt a fanciful figure, but suggestive of their growing confidence.
The Mirror-Carlton joint venture remains a wild card. The companies plan to create a new sport channel on cable to broadcast the matches, and are open to a deal with a terrestrial broadcaster whereby some games, or at least highlights, would be made available to the wider public. The consortium's backers are also ready to offer Sky a deal for satellite rights, covering the 4 million dish subscribers in the UK.
Sky is privately scathing about the prospects for a competing bid, professing a confidence seemingly strong enough to see off any would-be poachers. They question whether any traditional broadcaster has either the money or the guts to take the large risk of attempting to build a whole new subscriber base for the Premiership.
Unsurprisingly, the Mirror-Carlton coalition is just as scathing about Sky. The tensions run particularly high given the characters involved. Mirror's TV man is Kelvin Mackenzie, former editor of Murdoch's Sun, and - briefly - a senior executive at Sky. He and Chisholm had legendary stand- up rows during Mackenzie's brief tenure. In the current negotiations, things have become decidedly personal.
From the outside, Sky's edge looks assailable on only two fronts. First, its current contract is the target of an inquiry by the Office of Fair Trading that could force changes in the terms of any renewal period. One possible outcome would be to limit any renewal to a period of just two years. This would ensure that Sky did not hold the rights at a critical time in British broadcasting, in which digital TV is rolled out. DTT will provide broadcasters with a hugely increased amount of capacity, opening the door to wall-to-wall transmissions of games and even holding out the prospect of pay-per-view for individual matches. That way lies the serious money, even if it represents a huge change in the way TV sport is viewed - a prospect traditionalists will no doubt loathe.
The OFT also questions the cartel arrangements whereby all 20 teams group their rights for broadcast purposes. If these rights are unbundled, there may be scope for the leading teams - Newcastle, Arsenal, or Manchester United - to do side deals or, indeed, to break away as a Super Premier League, perhaps with European clubs. This might provide for a different mix of broadcast rights.
Sky's other weakness is its own undoubted success. Most traditional broadcasters scoffed at Sky in the early days, when the red ink flowed copiously. But in recent years, it has provided a blueprint for all to use, encouraging even unlikely candidates to have a go.
But not everyone will. Some media companies have already decided to stay away from the bidding, to concentrate on other opportunities in the media revolution. For example, Pearson and MAI, partners in Channel 5, looked long and hard but, says one informed source, decided to "close the file" late last year. Granada talked to Carlton about sport, but decided in the end to launch satellite entertainment channels in league with BSkyB.
Barring an intervention by regulators, Sky is likely to get its new contract - at a price. But the next round of negotiations, perhaps two or three years down the road, may throw up other potential bidders. Sport is too lucrative a market to be left unchallenged for ever. Chisholm and Murdoch have shown it can be done, and their model will be an attractive one for would-be media barons.Reuse content