English Premier League Is Big Winner From $7.7 Billion Television Rights Auction

As a football pundit might say, the 70% increase announced by the Premier League in the value of its U.K. TV rights "is déjà vu all over again," according to Roger Blitz of the FINANCIAL TIMES. It "is the same percentage increase that the league announced three years ago, the last time the rights were auctioned." At that time, EPL CEO Richard Scudamore "had to contend with much moral outrage at the amount of money coming into its clubs and being paid to its players." Now that Sky and BT, the broadcast incumbents, have agreed to increase the size of their cheques from £3B ($4.5B) to £5.1B ($7.7B), he "is again having to manage the howls of indignation." Scudamore said, "It would be much easier to PR a 25 percent increase. But if you had your house and went to sell it tomorrow, you’d probably want to sell it for as much as someone wants to pay for it." The reality is that Scudamore "is the shop steward to the league’s 20 club chairmen." He has some influence -- for example, "he has been able to cajole them to introduce some limited spending controls and contribute more to grassroots funding -- but they will largely do as they wish." If previous rights increases are a guide, that "will mean spending more on players in transfers and wages" (FT, 2/11). In London, Owen Gibson wrote BT Consumer CEO John Petter, who oversaw the company’s successful bid for a slice of the record-breaking £5.1B auction for Premier League TV rights, "has claimed the deal vindicated its bidding strategy and its original decision to enter the sports broadcasting market." Petter: "You can spend so much time thinking about the tactics that you can lose sight of the fundamentals and what matters. What matters is what my customers want and what they’re prepared to pay. That’s why we’re so happy and this is a good result for us" (GUARDIAN, 2/11).

NATURAL SELECTION: In London, Rory Smith opined there "is a natural process to follow whenever the Premier League announces its latest blockbuster television rights deal." First, "we must all wonder whether this is all faintly obscene." Then "we must decry the fact that it does not seem to relate to cheaper tickets for fans." Next, "we must complain it does not lead to greater investment in the grass roots of the game, which now seem to stretch all the way to the Sky Bet Championship." We "must demand an increase in the solidarity payments to the Football League, suggest it is time for the Premier League to give something back to the nation that supports it." And then, finally, "we raise the dreaded prospect of yet further inflation on player wages, to whatever arbitrary point we have subconsciously decided is the point of no return." These "are all valid issues." But, then "we must pause, at this point, and acknowledge that we are all complicit in this." We "are all guilty of wanting our teams to sign bigger and better players, if they are already in the Premier League, or of getting promoted to the Premier League so they can take part in the cash-soaked carnival if they are not." You "may loathe the prospect" of the first ever £500,000 ($761,000)-a-week player, "but it becomes altogether less disgusting if it’s your club paying that to Cristiano Ronaldo" (LONDON TIMES, 2/11). Also in London, Owen Gibson wrote "perpetually under pressure" to redistribute more of the Premier League’s TV billions to what it likes to call “good causes” (and what others might call the rest of football), Scudamore "makes the not entirely unreasonable point that without investing huge sums in the best players and facilities there would be less of everything to go round." Scudamore said, "We can’t be clearer. Unless the show is a good show, with the best talent and played in decent stadia with full crowds, then it isn’t a show you can sell." In "pure revenue raising terms Scudamore and his small cabal of lawyers and rights experts, who are responsible for an auction structure that has become a licence to print money, deserve the backslapping reception they will receive from the 20 clubs for vastly increasing their income once again." Media analysts and City experts "have stopped asking when this particular bubble is going to burst and started speculating on whether it will defy economic wisdom by continuing to inflate" (GUARDIAN, 2/11).

SUCCESS STORY: The BBC reported the Premier League is "a success story" but not a charity, Scudamore has said following criticism of its £5.1B TV deal. Leading politicians "have called for more money from the sale of domestic TV rights to be put into grassroots football and reducing ticket prices." Scudamore said, "We're not set up for charitable purposes. We are set up to be the best football competition." Sports Minister Helen Grant described the Premier League as "a great British success story" but said the TV deal should bring "increased benefits to clubs lower down the football pyramid." She also called for further investment in facilities and supporters "who are the bedrock of the clubs they follow." Scudamore claimed that attendances "were the best since 1949-50 and defended the huge salaries that some of the game's stars earn." Scudamore: "Just like in the film industry or pop industry, or any talent industry, the talent gets paid a disproportionately high amount compared to other people in the business" (BBC, 2/11). The GUARDIAN reported asked whether clubs should react to the 70% rise in income by increasing the wages of their lowest-paid employees -- with Chelsea the only Premier League club to commit to paying the living wage -- Scudamore said, “At the end of the day there’s a thing called the living wage but there’s also a minimum wage, and politicians do have the power to up that minimum wage. That’s entirely for the politicians to do, that’s not for us to do.” Asked whether it made him uncomfortable to see clubs paying some players “half-a-million pounds a week” while other members of staff earned below the living wage, Scudamore said, “No, it doesn’t make me uncomfortable." Asked whether clubs should also use the new money to reduce ticket prices because of their status as “staggeringly wealthy” organizations, Scudamore answered, "Staggeringly wealthy in what sense? Not all of them make profits." Tottenham Labour MP David Lammy, who has campaigned for clubs to pay the living wage of £9.15 ($14) an hour in London and £7.85 ($12) outside, was also highly critical of Scudamore, saying, "He should not just feel uncomfortable, he should feel ashamed. This is conscious greed, plain and simple" (GUARDIAN, 2/11). REUTERS' Mike Collett wrote U.K. Government Business Secretary Vince Cable said Premier League clubs should pay at least the "living wage" if they could afford it, which is higher than the legal minimum wage. He said, "There is a lot of money in the sport. You are getting extraordinarily well-paid players. The ordinary fans and ordinary workers around the ground should expect some of the money to come through to them." Shadow Minister for London Sadiq Khan also said Scudamore's remarks were "disgraceful" and that clubs should pay the living wage so their lowest-paid staff get a salary "that allows them to put food on the table and pay the rent" (REUTERS, 2/11).

SCOTLAND'S SHARE: STV reported a senior figure on the Scottish Professional Football League board believes that a percentage of the deal "should come to Scotland." Alloa Athletic's Mike Mulraney insists that "as the Scots pay in to the pot as subscribers, Scottish football deserves to benefit" from the deal. He said, "We’ve got to look at what these broadcast deals are and make a decision in Scottish football if we are being treated appropriately. Ten percent of the funding for these contracts comes out of Scotland and if you look at BT and Sky, those are commercial contracts and you can understand that we've got to negotiate commercially." Mulraney's sentiments "have been echoed" by former Aberdeen and Everton CEO Keith Wyness. Wyness: "I think the whole rise and success of Sky’s coverage of the Premier League in England has probably been one of the biggest influences, affecting the demise of the Scottish game over the last ten years or so" (STV, 2/11).

'PRUNE JUICE EFFECT': The BBC reported Former Tottenham Chair Lord Sugar believes that the record deal "will damage the England team." He said that young English players will be "starved" of games as clubs buy expensive foreign talent with the extra money. Sugar: "We don't have a chance of winning the World Cup again." But Sugar said the money would "go in one end and go out the other" on transfer fees, player wages and paying agents -- what he calls the "prune juice effect." Sugar: "In a way, it's positive for the teams, but I think it's pretty negative for the future of international football for England" (BBC, 2/11).

A CLOSER LOOK: BBC Sport looked at "the changing picture for TV viewers and what the record rights package could mean for consumers." How can £10.2M ($15.5M) per game "be good value for money?" The only answer to that question "is because both Sky and BT believe it is." There "are three reasons why these figures are so high." The first "is competition." There was interest from Discovery and that interest "has pushed BT and Sky to bid more in order to keep the rights." The second reason "is about choice." Sky has about 10.5 million subscribers. The bidding for the Premier League rights "is about much more than sport." It "is about being able to attract customers to buy broadband, landline and mobile packages alongside a comprehensive TV offering." The third reason "is the product itself, the Premier League." The audience "tells rights holders it is as absorbing and interesting as ever." What "does this mean for viewers?" If the Premier League clubs, players, agents and sports car dealers are the big winners from this auction, "the one potential loser is the viewer." These huge sums of money "must be covered and over the course of the next two or three years it would be a surprise if the price of TV packages do not rise to cover some of these costs." Will the money "roll down to grassroots and the Football League?" Sugar, who was involved in the first Premier League TV rights deal in '92, said, "The more money that is given to clubs, the more money will end up being spent on players." This issue "is one of the most emotive." The Premier League "was very quick to say it will invest" £168M ($256M) in "facilities and good causes" and build 152 artificial, all-weather 3G pitches. It "will also point to the huge tax revenue from players' wages and argue that more than a sixth of its overall income is distributed beyond the 20 clubs." But "the reality for Football League clubs and below is that only around 5% of the Premier League's income filters down to grassroots" (BBC, 2/11).

WHAT ABOUT THE FANS? In London, Sam Wallace wrote it "is the biggest television deal in the history of world sport for the Premier League" but, for match-going football fans in the English game, the contract will mean one thing above all: "that ticket prices must at last come down." They "are not alone" in that belief, which "was also the reaction of some of the biggest names in broadcasting." Chief among them was Sky pundit Gary Neville, a man even Scudamore "will find impossible to ignore," who tweeted that he wanted “sensible ticket pricing and grassroots football to benefit as much as possible from this deal" (INDEPENDENT, 2/10).