BT Sport win rights to Champions League football: How TV’s balance of power has been shifted by £897m deal that blows Sky Sports out the water
BT secures rights to broadcast Champions’ and Europa Leagues for three seasons from 2015
Sunday 10 November 2013
The game changed irrevocably at 2am this morning, when BT agreed to pay £897 million to secure exclusive rights to broadcast the Champions’ and Europa Leagues for three seasons, from 2015. It will be football, Jim, but not as we know it.
The orthodoxy, that our national game began not in 1863, with the formation of the Football Association, but in 1992, when Sky assisted at the birth of the Premier League, was instantly outdated. A new era will obliterate old certainties, although the rich will inevitably get richer.
The price of progress ensures the game will continue to grow away from its natural audience. The biggest clubs will become bigger, and change hands between foreign speculators more often. Football’s inflationary spiral will benefit agents and players, who are already regarded as mini-corporations.
BT’s business strategy, to use sport as a driving force in its evolution from a telecommunications giant to a more modern, multi-faceted media company, is less of a blunt instrument than the “battering ram” Sky used to sell satellite dishes. But its impact promises to be greater.
The football coup will add momentum to BT’s attempts to confirm European rugby’s new Champions Cup, which it has already agreed, contractually, to broadcast. With clubs in England, France and Wales understood to be anxious to abandon the Heineken Cup as early as next season, and the Premiership already in BT’s portfolio, another sport is on the verge of fundamental change.
There’s something for everyone, although BT’s promise to broadcast a limited number of football matches, including the Champions’ and Europa League finals, free to air, will fail to soothe those romantics who pine for the days of 3pm kick-offs, local heroes, and snippets shown on terrestrial television.
Uefa, who will receive precisely €1,075,981,484.31 from the BT deal, are effectively able to buy the loyalty of the biggest clubs, who would otherwise be susceptible to siren voices, suggesting the time is right for a breakaway European Super League.
The Champions’ League already distorts competition. Inequalities will inevitably be magnified, because, as part of a complicated formula involving performance and TV income calculated on a national basis, the four English qualifiers stand to share up to €180m (£150m). To put that into perspective, Chelsea received €60m for winning in 2012.
Uefa’s Financial Fair Play strategy will be counter-productive, because it locks in current imbalances and has had its credibility undermined by the opportunism of such clubs as Paris St Germain who, according to a French report today, plan to have an annual budget of €540m funded by their Qatari benefactors from 2016. English football has not been a meritocracy for many years, but its elitism will become more pronounced. The possibility of expanding the Premier League into a two–tiered competition, at the ultimate expense of the Football League, cannot be overlooked.
Richard Scudamore, popularly assumed to have received a £3m bonus for the Premier League’s current record TV deal, which has yielded in excess of £5bn globally, has another bonanza on the horizon. Viewed logically, Sky have no viable commercial option but to bid extravagantly for the next round of Premier League rights, covering the three years from the 2016-17 season. Under the current deal, Sky broadcasts 116 live games a season to BT’s 38, but the balance of power has shifted significantly.
BT insiders claim they will not formulate their strategy until this time next year, but the admission that “we are a big, efficiently run business which can afford to invest when the deal makes sense” is ominous to their traumatised opposition.
Though a highlights package might be forthcoming for the Champions’ League, it is perhaps as well that ITV pundits Martin O’Neill and Roy Keane have found alternative employment with the Republic of Ireland.
Sky executives, whose plan to “strangle at birth” BT Sport was code-named Project Purple, awoke today to find their prospects of remaining major players in the sports TV market had a sudden, deathly pallor.
In what industry figures suggested was an attempt to reassure institutional investors, Sky sought to characterise BT’s Uefa deal as rash. ITV had offered £220m for the package which cost them £155m in 2012. Sky are believed to have offered in excess of £500m for exclusivity, but BT won without the encumbrance of a second round of bidding.
It is understood that Sky, confronted by the implications of failure, unsuccessfully lobbied Uefa to re-enter the bidding process after BT’s negotiations, as preferred bidder for the right to show 350 live European games, began on Wednesday night.
The talks concluded early today, and were eased by BT’s commitment to greater coverage of the Europa League. The competition, unwieldy and derided as a booby prize, is being repositioned. The winners will earn a Champions’ League place from 2015, and Uefa are keen for its relevance to be underpinned.
The TV market is changing. Al Jazeera, who have made strategic deals to cover Premier League football in Middle Eastern markets, are expected to bid for more extensive rights. Companies such as Amazon, Apple and Google are becoming increasingly attracted to football as a platform for the next generation of social media. The onset of fibre optic cabling opens up the possibility of watching matches simultaneously, in high definition.
Premier League clubs have become more valuable commodities overnight. North American investors, such as Stan Kroenke at Arsenal, The Fenway Sports Group at Liverpool and the Glazer family at Manchester United, are in prime position to cash in.
Tottenham, owned by Enic International, a Bahamas-based investment company, are perhaps the most likely candidate for a takeover. The squad, replenished after the world record transfer of Gareth Bale, has Champions’ League potential, and the new £400mn stadium planned for White Hart Lane will dramatically increase revenue streams.
BT have changed the dynamics of sport. Things have accelerated rapidly in the three years since, to declare an interest, I helped launch their online presence in football. Unlike previous challengers to Sky, whose annual revenue, £7.2bn is dwarfed by BT’s £18.3bn, they have the money to fund their ambitions.
In the words of one of their key deal-makers, who was happily sodden, watching his son play rugby in the rain this morning: “We are still the new kids on the block, and have some way to go, but everyone now knows we are serious.” And how.
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