February 14, 2018 / 12:48 PM / 6 months ago

Breakingviews - Sky and BT impose unusual austerity on UK soccer

LONDON (Reuters Breakingviews) - Sky and BT are imposing unfamiliar austerity on British soccer. Three years after they agreed to pay 5.1 billion pounds for broadcast rights, the two companies bought the rights to air a similar number of games for 4.5 billion pounds. That suggests a self-destructive bidding war has ended, and will force the Premier League to look to new bidders and international rights to make up the difference. 

BT Sport commentators speak before the English Premier League soccer between Hull City and Newcastle United at the KC Stadium in Hull, northern England January 31, 2015

The soccer organisation that represents teams such as Manchester United said late on Tuesday that it had sold five of its seven packages of UK rights for the three seasons starting in summer 2019. A fifth of games are still on the table. The seller said “multiple” bidders were interested in them, but the Financial Times reported that their reserve price has yet to be met.

The outcome is a good one for Sky and BT, whose 2017 television channel-sharing deal took the heat out of bidding. The broadcaster will pay 199 million pounds less per year and screen two extra games. It can spend the difference on shows such as TV dramas, in which digital rival Netflix invests heavily to win subscribers. BT gets 10 fewer matches per year but has reduced annual payouts by 8 percent, to 295 million pounds. Assuming it doesn’t bid for leftover packages, that will help fund a push for full-fibre broadband.

The losers are the top 20 soccer clubs, which are the Premier League’s shareholders and used soaring broadcast income to spend 1.4 billion pounds on players last summer. Assuming the remaining games, many of which are scheduled in awkward mid-week slots, are sold at a 50 percent discount to the ones that were snapped up, the total auction price per game would be 8.4 million pounds, a fifth less than last time. Had the per-game cost stayed constant, the aggregate difference would be 1.1 billion pounds, or 55 million pounds per club – roughly what Arsenal spent on much-vaunted Gabonese striker Pierre-Emerick Aubameyang. 

Clubs will hope to bridge the gap with international rights deals. Media consultancy Ampere reckons their value could hit 5 billion pounds, compared with roughly 3 billion pounds for the last round starting in 2016. Interest from U.S. technology groups such as Amazon could potentially push the figure higher. But short of an international saviour, English soccer could find itself out of pocket.

Breakingviews

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