Real goal is money in TV football sale

The future of British television is at stake in the pounds 800m fight for the rights to broadcast all the big match action
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The Independent Online
The biggest television contract in British sport is again up for grabs. At stake: a staggering amount of money. For the rights to broadcast matches of the Premiership, the country's top football attraction, the winners may have to stump up pounds 800m over five years, including exclusive rights to live games, highlights and overseas sales.

This is about more than football. Brian Barwick, of BBC Sport, said: "Sport has an important role in bringing the nation together."

He may well be right. As many as 9 million people tuned in to the European Cup final on ITV earlier this month.

It is also about the future of television, and who controls it. For at some point during the next five years, the digital revolution will come to British television, allowing broadcasters to transmit far more programmes along the same frequencies.

The result will be hundreds of new channels and technological innovation that will make the introduction of colour in the 1960s look like a minor design upgrade.

In that environment, football becomes what one Premiership official calls "a hot property" - one of the few kinds of programming viewers will actually pay subscription fees to see. The door will be open to pay-per- view broadcasts, allowing viewers to select the games they want to watch, even the camera angle they prefer.

We are a long way from the days of the duopoly, when the BBC and ITV divided up the spoils of footie on telly, and the clubs earned paltry sums.

The Premiership knows it; the broadcasters know it. Since 1992, when BSkyB signed an exclusive contract with the breakaway Premier League, it has emerged as the country's most profitable broadcaster, earning pounds 250m this year alone.

The current contract, which still has a season to run, provides the clubs about pounds 60m a year, or pounds 305m over five years, including pounds 4.5m a year from the BBC for Match of the Day highlight rights, and pounds 14m annually from overseas.

The BBC and the ITV have gone head-to-head in the current contract negotiations, hoping to secure rights to the Premiership highlights to supplement the sporting events they have managed to retain for terrestrial television viewers (snooker, horse racing, some tennis and golf, the FA Cup and, of course, the Olympics).

Neither has the money to bid for the live, exclusive rights to top-flight football, which can only really work on pay-TV. But highlights alone could fetch as much as pounds 20m a year, league insiders suggest.

So successful has the Premier League contract been for Sky that virtually every commercial broadcaster in the United Kingdom has looked at the idea of bidding for the next exclusive deal. .Granada's chief executive, Charles Allen, decided in the end "it was far too risky. Certainly the ITV companies will want to bid for some of the highlights, but any other approach struck us as being ill-advised".

Yorkshire-Tyne Tees also looked at the prospects of a bid, but found the figures being bandied about a bit too rich for its blood. "Everybody is getting too greedy," Ward Thomas, the company's chairman, said.

The list of senior broadcasters lining up for a shot at winning all or part of the Premiership contract is still very long indeed: Rupert Murdoch, his lieutenant Sam Chisholm, Michael Green of Carlton Communications, Kelvin MacKenzie, managing director of Mirror Television, and, of course, both the BBC and ITV, who are set to do battle over the lucrative rights to highlights, currently held by the BBC for its Match of the Day

There are at least two serious contenders for the exclusive live rights: Murdoch's BSkyB, current holders of the television contract, and a consortium made up of Mirror Group and Carlton.

Murdoch's chief negotiator, Sam Chisholm, has earned a reputation for hard-nosed tactics, bullying and tenacity. Mike Southgate, head of sports at ITV Network Centre, said: "I'm sure Sam won't let the Premier League slip away."

Opposing him is the Sun's former editor, MacKenzie, who clearly relishes the fight. The two men have been on frosty terms since MacKenzie's abrupt departure from BSkyB two years ago, after rows that insiders say were monumental. The two freely rubbish the other in private: and Chisholm's nickname for MacKenzie cannot be repeated in a family newspaper.

On the sidelines, Lord Hollick's MAI is still interested, although it recently lost a potential partner, Pearson Television, which has elected to withdraw from the main battle, much to the apparent disappointment of its chief executive, the sport-mad millionaire broadcaster Greg Dyke.

Pearson has revealed, however, that it would supply general-interest programming to the new cable channel that Carlton and Mirror Group are planning to create if they win the contract.

Barring the emergence of a surprise bidder, two serious offers will be presented to the 20 Premiership chairmen in Coventry on 8 June. Neither group will discuss details of their bids, for obvious competitive reasons.

But the Independent has learned that both BSkyB and Mirror/Carlton are offering an innovative revenue-sharing scheme, giving the Premier League a share in future revenues from broadcasts rather than a set figure, divided among the clubs.

That fits with the League's stated goal of retaining far more control over its rights this time around.

"We managed in the last contract to break the duopoly [of the BBC and ITV] and change the nature of the income we were receiving," says a League insider. "This time, we expect to generate even more."

Mirror/Carlton face an uphill struggle. The consortium intends to create a new channel, and offer the Premiership matches on cable. They are open to a subsidiary deal with BSkyB, whereby the country's 3 million satellite viewers will also be able to subscribe. But there are huge risks in any attempt to create a subscriber base from scratch.

Cable is still in its infancy in the UK, with only 1.3 million homes connected. Moreover, digital cable - offering perhaps 150 channels - is even further off, and so the available capacity on the cable network is severely restricted and pay-per-view not yet technically feasible.

Doubts about the timing of digital television could play into Mirror/Carlton's hands, however, as the clubs themselves are uncomfortable discussing pay- per-view rights at this stage.

An adviser to the clubs said: "Sky is not moving into pay-per-view for at least a couple of years, and it is dragging its feet over digital."

As a result, Mirror/Carlton may even be preparing to offer a radical one-year deal at four times the current level, in return for renewal rights later, when the digital revolution is truly upon us.

A senior City banker advising the consortium told the Independent: "The chairmen don't know what is coming. They think [the Coventry meeting] is just a standard normal meeting, but they are wrong. The existing contract could be torn up and redrafted for the 1996-97 season for four times the existing amount."

BSkyB, too, concedes that a new contract may not contain detailed proposals on pay-per-view. "The new technology wont be around for another two or three years," says Vic Wakeling, BSkyB's head of sport. "We are discussing all of this [with the League] but things are not going to change for a while."

More likely is an offer to extend the current contract, at a higher price, with a "framework" within which to discuss pay-per-view at a later date.

Virtually everyone in sport agrees that BSkyB has the edge. A senior ITV broadcaster said: "There will be more than one bidder but Sky will win it. They are bloody smooth operators."

They also have a controversial matching right in the current contract, allowing them to clinch renewal by equalling the best offer on the table.

Still, the Premier League insists that a renewal with Sky is not a foregone conclusion. The clubs have taken legal advice on the matching clause, and are convinced it could not stand up to legal scrutiny.

There is another reason BSkyB could have trouble securing the contract. Its existing agreement is already the subject of an inquiry by the Office of Fair Trading, which could refer the matter to competition authorities. An adviser to one leading club said: "The OFT inquiry has trimmed Sky's ambitions and made them move more cautiously."

But BSkyB has a further advantage that Mirror/Carlton will find difficult to beat. It has a four- year track record broadcasting Premiership matches, and has introduced a range of innovations. "You've seen that they have set the standard that others have had to follow," said one Premier League chairman.

The main negotiators and winners in the play off for Premiership millions

The three leading rivals

MAI

Key negotiator: Clive Hollick

Market capital: pounds 3.7bn

Likely strength of bid: Much rumoured, but details sketchy

MG/Carlton

Key negotiator: Kelvin MacKenzie

Market capital: pounds 2.7bn (Carlton) pounds 980m (MG)

Likely strength of bid: Strong links to cable industry and to a mass market newspaper. But have they got the money?

BSkyB

Key negotiator: Sam Chisolm

Market capital: pounds 7.7bn

Likely strength of bid: The front-runner. Well-capitalised, with shrewd negotiators

What the teams are paid

Team Pts Chair TV Payments Ground

1995/6 (pounds m) Capacity

Manchester United 82 Martin Edwards 2.99 55,300

Newcastle United 78 Sir John Hall 3.10 36,649

Liverpool 71 David Moores 2.48 41,000

Aston Villa 63 Doug Ellis 2.22 40,310

Arsenal 63 Peter Hill-Wood 2.12 38,500

Everton 61 Peter Johnson 2.12 39,655

Blackburn Rovers 61 Robert Coar 2.01 31,089

Tottenham Hotspur 61 Alan Sugar 2.17 33,147

Nottingham Forest 58 Fred Reacher 2.06 30,539

West Ham United 51 Terence Brown 1.98 26,014

Chelsea 50 Ken Bates 1.73 28,600

Middlesbrough 43 Steve Gibson 1.83 30,000

Leeds United 43 Leslie Silver 1.71 40,000

Wimbledon 41 S. G. Reed 1.47 26,500

Sheffield Weds 40 Dave Richards 1.51 36,020

Coventry City 38 Bryan Richardson 1.48 23,500

Southampton 38 F. Askham 1.43 15,000

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Manchester City 38 Francis Lee 1.32 28,053

QPR 33 Peter Ellis 1.34 18,919

Bolton Wanderers 29

1.18 20,500

The TV payments system under the current contract involves a base payment (pounds 878,725 this past season) for all Premier League teams, topped up by extra payments each time a team appears on television. A payment of pounds 77,255 is made to a team each time it features on Sky Television. An appearance on Match of the Day is worth pounds 7,725. At the end of the season, each team is given a payment based on its standing in the league. The last place team is given pounds 49,165 and the top finisher earns pounds 49,165 multiplied by 20 (the number of teams in the league). All others are given an equivalent multiple based on their rank.

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