£1.78bn: Record Premier League TV deal defies economic slump
Saturday 07 February 2009
The sighs of relief were audible in Porsche dealerships from Wilmslow to Berkeley Square last night after the Premier League confirmed it had agreed TV deals worth a record £1.782bn with BSkyB and Setanta for its next tranche of live British rights.
What flows into the top echelon of the English game tends to flow straight back out into the players' bank accounts but nobody can dispute that £1.782bn was up there with the best results of an intriguing season.
So up it floats again, the Premier League balloon, defiantly refusing to burst even in the harshest economic climate. English club football will continue to pay the best wages, attract the best players, and be the most successful, on and off the pitch.
It was announced earlier in the week that Sky had won the auction for four of six packages of rights available. Yesterday provided confirmation of the price paid, plus news that Sky had won one of the two remaining packages, and thus five of the six 23-game packages altogether.
Thus Sky's schedule of games will increase from 92 to 115 per season in each of the three years from 2010 to 2013 inclusive. Sky paid £1.623bn for its rights, or £4.7m per game on average, a similar per game fee to what it paid last time. Setanta, which currently has two packages, won just one package this time, Package D, which comprises mainly Saturday games at 5.15pm.
The Ireland-based broadcaster paid £159m for those rights. With 69 games over three years, that equates to a relative bargain of £2.3m per game, or less than half what Sky has paid, but similar to what it paid last time.
The Disney-owned American sports giant ESPN was also involved in the auction, albeit unsuccessfully. ESPN took the unusual step last night of confirming it had been a losing bidder.
A spokesman said: "We can confirm that we did bid for Premier League rights and we are therefore disappointed in the outcome. But we were pleased to be at the table and we would like to congratulate Sky and Setanta." The pecking order of winners and losers among the broadcasters will take a while to fathom. Sky has increased its stranglehold on the game, but has paid top dollar. This shows football remains central to Sky's business model.
What is doubtful is how seriously ESPN contested the bidding process. With Setanta able to snap up Package D for just £159m, ESPN cannot have tried too hard.
It seems possible that Sky went all out for all six packages, knowing that under EU law it could only win a maximum of five. And it is plausible that Setanta and ESPN, both less bullish than Sky in the credit crunch, bid relatively low, believing Sky would probably win four packages, and five at most because of the EU constraints.
And Setanta therefore won its package almost by default because its lowish bid was higher than ESPN's lowish bid. While Setanta has saved itself more than £200m in outlay compared to the £392m it spent for two packages last time, it must have concerns about keeping viewers with just a sixth of the live League games – as opposed to a third – in its portfolio from 2010.
On the flip side, Setanta now has England matches, the FA Cup, top-level golf, big-name boxing and other content to attract subscribers. Having built a decent customer base, it will be hopeful of maintaining it.
The Premier League's chief executive, Richard Scudamore, said: "The Barclays Premier League is a fantastic competition. The continued investment in playing talent and facilities made by the clubs is largely down to the revenue generated through the sale of our broadcast rights.
"The live UK rights are the largest contribution to the revenues we distribute centrally to the clubs and this deal gives them the stability to plan and invest in the most important aspect of our business – the football – everything else flows from that."
If many people are still scratching their heads about how the Premier League has bucked the recession, a simplistic analysis of the numbers might shed a little light on how it achieved it. In short: football is good business for Sky.
Of Sky's nine million-plus customers, around five million of them pay for sport content including football, with "sports viewers", for want of a better term, putting some £2.5bn in Sky's coffers each year, albeit for more than just football.
In addition, pubs and clubs pay huge sums collectively to Sky for licences to show Sky games. Estimates vary from £216m to £367.5m or more per year, depending on who you listen to.
Crudely speaking, sports-related business earns Sky approaching £3bn a year. And Sky will now pay £541m a year for the Premier League. Do the maths.
In the money: Breaking down a bonanza for English game's top clubs
*Premier League live British TV rights 2010-13: who got what, and how much (all packages 23 matches)?
BSkyB (paid £1.623bn) won rights to: Package A: 23 matches shown at 16:00 on Sundays
Package B: 23 matches shown at 13:30 on Sundays
Package C: Minimum of 12 matches at 20:00 on Monday, the rest either at 13:30 on Sunday or 17:15 on Saturday or other times
Package E: 23 matches shown at 1245 on Saturdays
Package F: Seven to 13 matches on midweek evenings/bank holidays, 10 to 16 at 12:45 on Saturday and 16:00 on Sundays
Setanta (paid £159m) won rights to: Package D: Minimum of 18 matches at 17:15 on Saturday, the rest either at 13:30 on Sunday, 20:00 on Monday or other times
Total 2010-13 income from live British rights: £1.782bn.
*Current deal (2007-2010): Sky won packages A, B, E and F for £1.314bn total, and Setanta won packages C and D for £392m combined, for a total of £1.706bn.
*The rise and rise of the Premier League: How TV rights values have increased
1992-1997: BSkyB, 60 games/season, £190m – deal value, £633,000/game
1997-2001: BSkyB, 60 games, £670m, £2.79m/game
2001-2004: BSkyB, 110 games, £1.2bn, £3.64m/game
2004-2007: BSkyB, 138 games, £1.024bn, £2.47m/game
2007-2010: BSkyB and Setanta, 138 games, £1.706bn, £4.12m/game
2010-2013: BSkyB/Setanta 138 games, £1.782bn, £4.3m/game
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