Inside Football: Premiership watches as Leeds reach for Sky

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The Independent Online
THE SHAREHOLDERS of Leeds United will be influencing more than just the future direction of their own football company when they vote next Monday on whether to accept BSkyB's offer of pounds 13.8m for a nine per cent stake in the club.

Peter Ridsdale, the Leeds chairman, explained yesterday that the deal was being proposed as part of the club's strategy on future negotiations for television rights. In particular, Ridsdale and Leeds believe Premiership clubs will be able to sell some TV rights individually when the current collective Premiership deal with BSkyB expires in two years' time.

The proposed deal, which is being examined by the Office of Fair Trading, would make BSkyB sole agent for the sale of Leeds' TV rights after 2001. The official notice of Monday's meeting specifically envisages individual selling, saying that BSkyB would act as Leeds' agent for the sale of "Premier League... media rights... for five years from the date those rights are available for exploitation."

Explaining the proposals yesterday, Ridsdale became the first Premiership chairman to state publicly his preferred structure for the forthcoming TV deal in 2001. He is adamant the 20 Premiership clubs should still sell rights collectively, for perhaps 60 "prime matches", similar to the current pounds 743m deal with BSkyB and the BBC, but unlike now, he says he will look for clubs to strike their own individual deals for their other matches.

"I support totally the Premiership staying together to do a collective deal," he said. "Any breakaway would undermine the future of English football. But residual rights, to matches not covered by the collective deal, I would wish to revert to the clubs to exploit."

Ridsdale's open declaration, signalling a future direction supported privately by senior television and Premiership sources, explains Leeds' motives for the proposed deal and throws light on BSkyB's strategy. The emergence of digital TV has raised the stakes yet again for football, the most certain bringer of viewers in a multi-channel age. Well-placed television sources say the next collective deal, even if only for 60 matches, should bring the Premiership pounds 300m-400m a year, with BSkyB, ONdigital and NTL the only companies with the clout to compete. Leeds, preparing to sell their own rights, have opted for a media partner to help them do so. For BSkyB, the acquisition would give them direct involvement in football outside the collective deal.

With Premier League rules stipulating that no party owning 10 per cent of a club can own shares in another, nine per cent holdings - as taken by Granada in Liverpool in July for pounds 22m - allow broadcasters to own stakes in a number of clubs. BSkyB will have to reduce its 11 per cent shareholding in Manchester United, and is believed to have held talks with several other clubs, including Chelsea and Aston Villa.

The detailed terms of the proposed Leeds deal are that for a total pounds 13.8m, BSkyB will acquire a 9.1 per cent stake, place a director on the Leeds board, and act as the club's sole agent for exploitation of media rights for five years, earning 30 per cent of any extra revenue it brings to Leeds. The deal has been criticised as too cheap by some commentators, but Ridsdale refutes that, pointing to BSkyB's position as not only the UK's sole broadcaster of live Premiership football, but as part of Rupert Murdoch's worldwide NewsCorp empire.

"BSkyB gives us a global reach," he says. "They can take Leeds to China on the Star Network, and to the United States on Fox. We can build supporter bases there, sell merchandise to them and thereby earn more revenue for our shareholders."

Initial speculation that shareholders would reject the deal look likely to be unfounded; Ridsdale is believed to have the support of Leeds' four largest shareholders, all blue chip City institutions. Rumours of opposition from a former Leeds chairman, Chris Akers, who headed the 1996 takeover of the club by the media company Caspian, were scotched yesterday, with Akers expressing support for the deal.

However, Ridsdale's exposition of the deal's advantages does little to dispel impressions of a conflict of interests, which scream between the lines. As with the mooted Manchester United takeover, blocked following April's Monopolies and Mergers Commission report, it raises obvious suspicions that having a director on a club board will give BSkyB inside information on the clubs' approach to the 2001 negotiation, and could influence the vote. Secondly, the agency deal proposes that BSkyB could act as both seller and buyer of Leeds' TV rights.

The OFT confirmed yesterday it is actively examining this deal and Granada's with Liverpool. "This may qualify for investigation," said a spokesman, "as it involves a director on the club board and a stake by a broadcaster. We have asked for, and are currently awaiting, more information."

Ridsdale and BSkyB believe they have built in sufficient safeguards; BSkyB's Leeds director will not be entitled to attend or vote at board meetings at which the Premiership's collective deal is discussed. And Leeds can veto any deal BSkyB looks to strike as their agent, which, the parties argue, means BSkyB has to get Leeds the best deal, even when negotiating TV rights with itself. However, the MMC report into Manchester United rejected assurances given then that BSkyB, as owner of the club, could separate itself from negotiations for the Premiership's collective TV rights. And this deal comes at a sensitive time for broadcasting, where competitiveness is being watched both by the OFT and the European Commission. BSkyB has written into the Leeds deal that they can cancel completely if the OFT initiates "any form of investigation".

If it goes through, the deal will represent the next stage of Leeds' commercial transformation, begun with Caspian's 1996 pounds 16.5m takeover. Fans then were outraged at the pounds 5.5m taken each by directors Leslie Silver, Bill Fotherby and Peter Gilman, and cynical about Caspian, an obscure London-based company whose main assets then were the rights to the Wombles and Paddington Bear.

Akers' dry financial manner and grand plans met Yorkshire scepticism, and the soubriquet "Graspian", coined by the Square Ball fanzine. Peter Ridsdale, a lifelong Leeds fan, has a more winning manner and steadier executive hands, but the plans do originate in Akers' blueprint, including the media deal and planned redevelopment of land Leeds own around Elland Road into a multi-purpose arena, hotel, conference and leisure complex. Akers, who now runs the Sports Internet Group, owners of Carling Opta and the website provider Planet Football, expressed support for the BSkyB deal yesterday.

"I am very pleased Leeds are enjoying success," he said. "These are moves I was committed to, and I feel this is our strategy coming to fruition."

As ever, the stew of high finance, covetous broadcasters and hovering regulators beg the question of what all this actually means for the game of football and its clubs. Both the MMC and July's judgment against the OFT, allowing collective selling by the Premier League, said it was against the public interest for the gulf between large and small clubs to grow too wide, and said football should redistribute its money. As yet, however, there appears to be no move by football's governing bodies to respond, and to move to balance the commercial opportunities of 2001 with a wider package of redistribution.

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