Premier League football is the hottest property in British television and even the worst economic downturn in decades is unlikely to change that when the next tranche of rights, for 2010-13, go under the hammer shortly.
The deal is vitally important for the league's 20 clubs because it is this cash that currently allocates TV income of £50m per season for the Premier League winners from central funds alone, and £30m even to the club finishing bottom. This finance underpins the clubs' ability to buy good players, pay high wages and maintain the English game's dominance in European club competitions.
The last TV deals, for 2007-10, brought in £1.7bn for domestic live rights, and £2.7bn for all broadcasting rights, £650m of which was from overseas. Even if the domestic value contracts – and that is not certain – expanding value elsewhere can keep overall income high.
Despite the global economic downturn, industry insiders and experts contacted by The Independent – most of whom will be involved in some capacity in the bidding process – believe the Premier League will not suffer a dramatic fall in TV income.
This confidence is based on several factors. Football remains immensely important to pay-TV operators as a means of keeping customers and attracting new ones. It has demonstrated that it pays its way. Simply put, for each pound (or million) spent on rights, Premier League football brings in more via subscriptions, and from large pub and club fees.
There are big areas for international growth, across Asia and Africa but in North America too, where football's popularity continues to expand. Significantly, the rights up for offer cover a three-season period that will not dawn until late summer 2010, a time when even the most pessimistic analysts believe the worst of the recession should be over.
In other words, if broadcasters believe the Premier League will remain a fundamentally strong product – and most do – then there should be no significantly greater risk to bidding for 2010-13 rights now because most of the money will not be due for years.
On the flip side, no business can say with confidence how deep the recession will bite in 2009. And while there are plenty of people who argue that TV subscriptions should remain steady, because cash-strapped families will look to more home-based entertainment, a typical outlay of close to £500 per year on pay-TV could become an expense too many for some.
The Premier League sent out its "Invitation to Tender" documents on Monday and one variable that will determine whether the rights values remain high is whether the serious bidders expand beyond Sky and Setanta, who currently hold two-thirds and a third respectively of the British live rights.
The most likely newcomer in this category is the American Disney-owned broadcasting giant ESPN. A year ago, the company's president, George Bodenheimer, said that Premier League rights were "fabulous property ... we are absolutely interested in it".
ESPN studied the tender document carefully last time, and while an unsuccessful bid remains unconfirmed, the company has been involved in the recent bidding for Bundesliga rights in Germany, although it did not win.
As recently as September, Robert Iger, the chief executive of Disney, said: "I know ESPN will look at the Premier League rights again, both individually and in partnership with others." This has fuelled gossip that ESPN is considering buying Setanta, or at least strengthening a commercial partnership that already exists via Setanta's carriage of ESPN content.
A spokesman for ESPN declined to comment on a takeover but told The Independent yesterday: "We're a serious global sports company that wants to be relevant in local markets too, and we're always interested in rights as long as they fit our business."
Whether now is the right time for ESPN to venture into Premier League football is debatable but it is a major player in the global sports market. It screens iconic NFL Monday Night Football in America, and also broadcasts baseball and basketball. Its interest in football is deepening, with Euro 2008 games a big hit in the United States this summer and rights to the World Cup already sewn up until 2010. ESPN is likely to be a challenger at the very least to win Premier League rights in North America from rivals Fox this time.
Whether ESPN is ready to mount a serious challenge to Sky remains to be seen. But it has two channels available in Britain already: ESPN Classic shows old sport, a lot of it football and not all that old, while the North American Sports Channel, carried on Setanta, shows ice hockey, baseball and basketball among other things. This channel will be rebranded in Britain as ESPN America from 1 February.
In addition to TV stations, ESPN continues to expand its other "digital properties" in sports it knows are popular in Britain. It bought the football website Soccernet and the cricket site Cricinfo in July 2007, the rugby site Scrum a month later and the motorsport site, racinglive.com in August this year.
Internet portals have proved notoriously hard vehicles through which to make money so far, for media firms at least, but if ESPN is snapping them up, prevailing wisdom suggests they could be doing so for a time in the not-too-distant future when they might host live sports content.
The swift pick-up rates for internet-based TV, as evidenced by the BBC's iPlayer and the recent decision by the BBC to make all its television output available live on the web, shows how quickly delivery and consumption habits are changing. It will not be too long before watching TV, including live sport, on laptops, mobile phones and other portable devices is as normal as sitting in front of the box.
The worst-case scenario for the Premier League is that the British rights attract just the same two big bidders as last time, Sky and Setanta. But that pair could not be 100 per cent sure of being the only ones in serious contention, so it would be risky for either bid to be too low. Losing rights that remain central to Sky and Setanta's success would be painful for those companies. The league also retains the option of selling direct to the public – an avenue that will be considered if income threatens to crash.
The best-case scenario for the League is that ESPN decide to take on Sky, perhaps in partnership with Setanta, and that the BBC, ITV or even BT enter the fray too, although that seems unlikely.
In the current climate, the BBC would not want to elicit the inevitable brickbats for spending hundreds of millions of pounds of licence-payers' cash on football. ITV simply may not be able to countenance the expenditure at a time of slumping advertising revenues. BT, or for that matter Virgin Media, would also probably look to a more benign economic climate to put a toe in the water for such high-profile rights in a market that is new to them.
James Pickles, the editor of TV Sports Markets and a close observer of the industry, believes the rights values will actually go up. "Six months ago or so, there seemed to a consensus among analysts that they could rise by as much as 30 per cent. The economic situation will clearly have an impact, but the broadcasters still want and need the rights and if I had to bet on it, I'd think the domestic live rights will still increase around 10 per cent."
That will be music to the ears of club chairmen up and down the country. If it transpires, the league will have negotiated a remarkable path through a potential crisis.
Premier rights: What happened last time
For three seasons, 2007-2010
* Sky paid £1.314bn for four of the six packages. Each package (A, B, E, F) comprised 23 games, with the most expensive a prime choice package of 4pm Sunday games, and the rest a mixture of midweek evenings, bank holidays and Saturdays.
* Setanta paid £392m for two packages, C and D. Each package included 23 games per season, both with "mixture" packages spanning games between Saturday early evening and Monday night.
* The BBC paid £171.6m for highlights for Match of the Day. This was part of £350m total revenue from the highlights/near live/broadband and mobile rights sold in Britain.
* Overseas rights earned £650m.
* Total income: £2.7bn for three years.
The battle for 2010
Who's who in the fight for live rights next time:
The dominant player in the market to date. Won four of six packages of rights last time and will certainly bid competitively again.
The Irish upstart that took a third of the rights last time to stake its claim as a contender. Will bid again, perhaps in joint deal with ESPN.
Disney-owned American giant has gone on record as saying Premier League rights are of interest. A threat to Sky if it actually takes the plunge.
Would dearly love to become the first terrestrial channel to have live Premier League rights but in all probability cannot afford to buy them.
Would also like to buy the rights, as football becomes a major focus for the channel, but economic downturn makes a bid now less likely.
Virgin Media have been touted as bidders in the past but no evidence they will enter this market. About as likely as a rumoured bid from an unnamed Abu Dhabi speculator.Reuse content