It looks huge – a $5.1 deal, 70 per cent up on the previous one. The English Premier League certainly knows how to sell itself.
But amid all the mutterings of how the money won’t filter down to the grass roots and smaller clubs, or Alan Sugar’s lovely image of “prune juice”, here are three reasons why we shouldn’t be surprised.
Sky paid £4.2bn for their match packages. Sounds a lot, until you realise that in 2014, Sky made £7.6bn in revenue, and a profit before tax of £1.1bn. Also, this is a three-year deal, so for Sky it works out as £1.4bn per year. In short – the company can clearly afford it. Assuming that the advertisers are still keen, and the public keep subscribing, it could be a great deal.
Of course, the extra money won’t be squandered, from Sky’s point of view. Every big money transfer to the Premier League adds to the allure, so they aren’t just spending money on a fixed asset – they are spending on future improvements too. If English clubs can outspend Spanish rivals, it’s basically free marketing for Sky.
BT have become a serious football broadcast player. They snapped up the Champion’s League TV rights, and have again bid up for the Premier League. Increased competition over a fixed supply means higher prices, as any economist will tell you.
3) Lessons of the NFL
It has a bigger domestic audience, obviously, but the NFL has done a very good job of squeezing the broadcasters for cash, with an annualised $5bn-plus deal with several broadcasters over eight years. While this is about double what the British broadcasters are paying (after converting dollars into sterling), there is a remarkable similarity in the increase from the previous deal.
The NFL secured a total $3.1bn TV rights deal for the 2006-13 seasons. That then went up to over $5bn for 2014-21. The Premier League had a £3bn deal for 2013-16, and now £5.1bn for 2016-19. It’s a highly similar increase: 62-plus per cent for the NFL, 70 per cent for the Premier League.
Is it such a surprise that sports broadcasters (albeit in different countries for different sports) have upped their valuation of TV rights by the same amount at a similar time?
It would be nice to see more money going to places other than players’ salaries and agents. But in a commercial world, the Premier League deal is less surprising than the wide-eyed coverage from the media who run every news snippet about football that they possibly can.