Football: High Court countdown: Battle begins for football's future
OFT investigation: Premier League insists that clubs must make television deals together - or the game will suffer
Tuesday 12 January 1999
IF THE Premier League loses its landmark court case against the Office of Fair Trading, which starts in London this morning and will last for up to four months, football will change forever. The case will essentially concentrate on whether football clubs should make television deals individually or be allowed to continue to negotiate collectively, as they do now, under the umbrella of the League.
Depending on whose picture of the future you believe - and both will be presented to a judge who will decide the case - an OFT win could either see the game charging headlong towards chaos, confusion and ultimately ruin, or entering a new age of consumer heaven where everyone's footballing appetites will be well-catered for at an affordable price.
By implication or direct argument the League will present a grim image of the country's richest clubs being forced by law to make individual television agreements against their will. The logical extension of this, it will imply, will be fixture disruption, sport dominated by broadcasters not sportsmen, and an ever-growing gulf between the big clubs and the small. A few years down the line, the League will imply, a small elite will dominate football and the remainder will be left to rot.
Mike Lee, a League spokesman, said yesterday that these outcomes were all possibilities but the core issue is that the OFT is seeking to end collective bargaining - whereby the League sells television rights on behalf of its 20 members for the good of the League as a whole - without heeding the implications.
"That's why this case is so fundamental," Lee said. "[Collective bargaining] is the product of a democratic agreement," he added, explaining that rights are sold collectively because it is precisely what the clubs themselves want. "The Premier League rule that provides for collective licensing is being challenged."
There is no doubting football's importance to the broadcasters - Sky's initial expansion was driven by its football coverage while Match of the Day remains a BBC staple - and vice versa - through the huge funds football acquires from rights. Yet Mike Lee maintains that the League - not television - should remain the game's driving force.
"Only the governing body, looking at all aspects of the game [primarily fixtures and the needs of both clubs and fans], working with all the clubs, is in the best position [to oversee television deals]," he added.
The OFT will argue that this is not the case and will say the public is being short-changed as a result of the way that television deals for Premier League matches are currently done. It will argue that the public does not have access to a wide enough range of Premier League football on television because the League - along with Sky TV and the BBC, the League's two allies in the case - is acting against the public interest by selling and buying rights on a collective basis.
It will argue that in an information age at the dawn of the digital revolution and in an era of widespread use of new technologies such as the Internet, there is plenty of scope to offer football supporters more choice over how to view the game. Each season, Sky currently shows 60 live Premiership games of the 380 played and the BBC has the rights to screen the highlights, mainly on Match of the Day. The OFT will argue that, in theory, all games could be screened live: regional broadcasters might be interested in showing matches in their vicinity as might clubs wanting to provide a service for their supporters. The OFT's core point, in business terms, will be that the current situation is a cartel and that cartels lead to lack of choice, lack of innovation and high prices.
The two sides, over the next 12 to 16 weeks, will call on a variety of witnesses from the worlds of football, business and broadcasting. The daily proceedings are likely to be less than rivetting, but the outcome will be of huge significance. Expert opinion is divided over which way the verdict will go. And the implications will be far reaching, not only for football in particular, but for sport in general - especially rugby and cricket.
All this is a far cry from the days when the BBC paid five guineas to screen the FA Cup final and there were more people inside Wembley Stadium than watching the match at home via the fledgling medium of television. As recently as 1979, seasonal rights for top-level football cost little more than pounds 2m and even a decade ago, that figure was no higher than pounds 11m. The existing Sky/BBC deal is worth more than pounds 743m over four years to the Premier League and the next - to be negotiated in 2000 and to come into play a year later - is likely to see more than pounds 1bn paid if secured by the same parties.
With such high stakes, the outcome of the case that starts today takes on an even greater significance. At the moment, the League splits 50 per cent of the Sky/BBC money equally between its members, allocates 25 per cent on the basis of merit at the end of each season, and gives the remaining quarter in "facilitation" fees (dependent on the number of television appearances).
If the OFT wins the case, the League argues that a free-for-all will follow, with its member clubs likely to be swallowed up by television companies. The Arsenals and Manchester Uniteds are sure to become richer still - and are making contingency plans for this eventuality by seeking advice on how they could benefit most if the OFT wins - while the Wimbledons and Southamptons will find it ever harder to compete in an already difficult environment.
It is hard to fault the OFT's case in business terms, but for the good of football it is hard to oppose the League's standpoint. Never mind that it has started to consider its own place in an open market (perhaps as controller of its own digital television station). And never mind the irony in opposing a situation which could lead to the kind of breakaway engineered by itself when splitting from the Football League.
THE OFFICE OF FAIR TRADING
The OFT's role is to ensure that businesses act in the public interest and that consumers' choice of goods and services is safeguarded. It has monitored the Premier League's television contracts with Sky and the BBC since the first deal was struck in 1992 and now feels the consumer is suffering. The OFT will argue that in joining together to sell their TV rights collectively, the 20 Premier League clubs form a cartel - limiting choice and inflating prices for the consumer. This would not be acceptable in other industries. It will argue that there should be more sellers in the market: that each club should be free to negotiate individual television deals with broadcasters. The OFT will also say the current cartel limits the amount of football shown on television and, although 60 Premier League games are televised each year, the other 320 are not and there is an unsatisfied demand for football. The OFT will argue that the current deals prohibit regional football programmes and prohibit clubs from screening their own matches for their fans. The OFT is also likely to argue that Sky TV is too dominant in the sports' rights market and other broadcasters' lack of access to football is not good for consumer choice.
THE PREMIER LEAGUE
The Premier League will argue that football cannot be treated in the same way as other products, such as cement, for instance, and that individual clubs cannot be treated as different brands. It will argue that the Premier League as a whole is the brand and that the 20 members should be able to continue to negotiate collectively. The League's case is likely to be argued using a range of doomsday scenarios, outlining what would happen if its members are given the right to negotiate individual television deals. The conclusion will be a few clubs creaming off most of the television money and a widening of wealth gap. Should that happen, there is the danger of an eight or 10-team breakaway that will damage football as a whole. Also, there would be fixture chaos if a large number of broadcasters were involved in trying to arrange matches and that mini-cartels, led by television rather than football interests, will be established. Further, investment trickling from the top level of the game down will dry up as the business interests of clubs - driven by broadcasting revenue - are pursued. The League will say such divisions will fatally undermine the competitive nature of the game.
Sky TV and the BBC are the Premier League's co-defendants in the case and will follow the same basic arguments as the League. They will point out how the fortunes of the game have been transformed over the period of their joint deals with the League. Although the onus will be on all three defendants to prove why the current situation does not harm consumer interests, the broadcasters are likely to take a back seat. In court, both will be supportive of the League's case and will argue for maintaining the status quo. Privately, their opinions might differ, however. The BBC will support the League (its football portfolio might be at risk otherwise) whereas Sky would not necessarily be unhappy with an OFT victory. While that would increase the chance of other broadcasters claiming the jewel in its crown, Sky would remain - with experience and contacts throughout the Premiership - well placed to secure deals with individual clubs. Its position could also be viewed as ambivalent owing to Sky's current bid for Manchester United. Should that deal, after an investigation by the Monopolies and Mergers Commission, go through, Sky would own the largest club in the world and want to exploit its television rights.
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