SBD/October 12, 2011/Media

Liverpool Will Challenge EPL's International Broadcasting Rights To Seek New Deals

Liverpool wants clubs to have individual control of international broadcast contracts
EPL club Liverpool announced that it "would lead a challenge for overseas TV rights to be sold on a club-by-club basis," according to Andy Hunter of the GUARDIAN. The current broadcasting deal is worth US$5B in total to all EPL clubs for '10-13, but Liverpool Managing Dir Ian Ayre has said that the break-up of the deal is "a debate that has to happen." Liverpool is in favor of the La Liga model that "allows Barcelona and Real Madrid to negotiate individual contracts that dwarf their domestic and European rivals." Hunter notes since the EPL's "foundation in 1992 its success has been largely based on the principle of collective selling." Changing this model "would risk revolt from the smaller clubs who stand to lose the most, and thus threatens the league's very structure." The EPL currently "sells domestic and overseas broadcasting rights collectively and more than doubled international revenue in its last negotiations." It is "expected the next deal will show a similar increase, with overseas rights potentially worth more than domestic for the first time." Hunter notes a new commercial agreement "would require 14 of the Premier League's 20 members to vote in favour." Liverpool insists that its "radical proposals are limited to overseas broadcasting, although success on that front could set a precedent domestically in the long term, and the club plans to raise the issue at the next Premier League meeting" (GUARDIAN, 10/12).

SHAKING THINGS UP: Ayre said, "If you're a Bolton fan in Bolton, then you subscribe to Sky because you want to watch Bolton, and everyone gets that. Likewise, if you're a Liverpool fan from Liverpool, you subscribe. But if you're in Kuala Lumpur there isn't anyone subscribing to (rights holders) Astro or ESPN to watch Bolton -- or if they are, it's a very small number -- whereas the large majority are subscribing because they want to watch Liverpool, Manchester United, Chelsea or Arsenal. So is it right that the international rights are shared equally between all the clubs? Some people will say, 'Well you've got to all be in it to make it happen.' But isn't it really about who people want to watch on that channel?" In London, Ian Herbert notes the EPL "will strongly resist any attempt by its bigger clubs to buck the system of collective bargaining." Chelsea and Arsenal "have been advocates of the Liverpool view in the past." But Ayre's position, which Herbert notes "would not have been put forward without [Fenway Sports Group]'s blessing, reveals the new owners' boldness in trying to shake up Liverpool's commercial fortunes" (London INDEPENDENT, 10/12). Also in London, Ashling O'Connor writes, "Perhaps it is more a reflection of Liverpool’s state of mind that this has come up now." O'Connor: "While they are physically constrained by the limited capacity of Anfield, they have watched [Manchester] United rule the world commercially by dint of a concerted strategy to extract every penny of sponsorship possible out of each individual country." O'Connor notes it is "hard to see other clubs supporting" Liverpool while the league's overseas rights deal "nearly doubles each time the Premier League takes it to market" (LONDON TIMES, 10/12).

IMPACT ON CURRENT BROADCASTERS: In London, Owen Gibson reports most experts "agree that the domestic deal is unlikely to increase much further -- BSkyB and ESPN effectively invest above the market rate at a level they believe maintains the quality of the product on offer." Gibson adds, "It is the huge growth of the Premier League and its teams overseas that will be the engine for future growth" (GUARDIAN, 10/12). Also in London, Dan Sabbagh reports should team rights be sold individually, Sky "could concentrate on buying up a handful of the big clubs and pay less overall by leaving the smaller clubs." That could create an opportunity for other broadcasters "to come and buy up rights held by some smaller teams, but a free to air commercial broadcaster like ITV could only justify paying an absolute maximum of [US$2.4M] a match." With the BBC "cutting back on its sports budget, and given that it has passed on bidding for the FA Cup and England matches, it won't play ball at all" (GUARDIAN, 10/12).

CYCLICAL CHANGE: In London, David Conn wrote it was "only a matter of time before the big clubs would start to challenge this last vestige of sharing, as they did in the 1980s, removing, with the threat of the breakaway they ultimately did anyway, the sharing of gate receipts which had been core to the Football League's competition since it was founded in 1888." Conn: "It is a bitter pill, but not that surprising, that the club which has articulated this appetite is one of the four major clubs owned by American buyers" (GUARDIAN.co.uk, 10/11).
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