Analysts said that Sky Sports customers "would be hit with a staggering" £10 ($15) per month increase in their subscription rates, or £120 ($185) a year, to pay for the new £5B ($7.7B) Premier League deals if the broadcaster "passed on the full cost to their ‘football viewers,’" according to Nick Harris of the London DAILY MAIL. While industry experts "do not expect the price hikes to be quite that extreme in the immediate future, there is a broad consensus Sky customers will pay an initial rise" of around £4 ($6) per month, or £48 ($74) per year, to help Sky "meet the rights cost."
Even Sky insiders "privately acknowledge that some of the cost will be passed on to customers." The annual extra spend of £632M ($975M) every year "will be partially offset" by Sky no longer paying around £130M ($200M) a year for Champions League rights from next season, which they it to BT Sport. Enders Analysis' Toby Syfret: "Sky have made it clear they will do what they can to absorb the extra cost. But it’s a bloody big sum to recover." Sources claim BT Sport "always intended to give the impression they would bid huge sums -- in order to force Sky to pay more, and then increase costs." City Index Chief Market Strategist Joshua Raymond "agrees." He said, "Sky has paid 83 percent more than it did last time for a similar range of match slots. Sky has been duped into over-paying significantly and its now likely that its subscribers will have to absorb at least some of the additional cost as a result" (DAILY MAIL, 2/14).
KNOCK-ON EFFECT: In London, Adam Hathaway reported Football’s megabucks deal with Sky "is likely to have a knock-on effect on rugby with broadcasters unwilling to get into another bidding war over Premiership games."
BT Sport "currently screen domestic rugby and show games most Friday nights."
Rugby gets £38M ($59M) a year from BT -- "peanuts compared to the football cash" -- but Sky is understood "to be unwilling to bid for Premiership games when the current contract expires" (DAILY MIRROR, 2/15).
GRASSROOTS COMPLAINTS: Also in London, Roger Blitz reported a 70% increase for those '16-19 rights should give each of the 20 Premier League clubs £100M-£150M ($154M-$231M) a year in broadcast income.
From those below the 20 clubs that own the Premier League "there was the resounding complaint: what about us?"
Football League clubs "bemoaned the widening gulf with the Premier League; fans demanded reductions in ticket prices; community clubs said facilities were shoddy; ex-players complained about the shortage of qualified coaches."
Former U.K. Sports Minister Richard Caborn: "We are third-rate at the development of grassroots and semi-pros compared to what you’ve got in any major European country." The EPL put £56M into grassroots projects last season.
But it is not enough, said John Whittingdale, who chairs the select committee of culture, media and sport.
He said, "The Premier League does have a huge amount of money and some goes into places thoroughly worthy and deserving. But a lot of it goes to causes that are not" (FINANCIAL TIMES, 2/13).
SHOW THEM THE MONEY: In London, Mance, Garrahan & Blitz reported the EPL's agreement "represents a windfall for clubs -- and their players -- but raises questions about the sustainability of such prices." Some commentators wondered in '10 "if the value of global sports rights might have peaked." Deloitte said that since then the value of top-tier events "has increased by one-third" to $28B. Deloitte partner Austin Houlihan: "Is the bubble going to burst? We see no sign of it. The trend of the past 20 years suggests that it won’t."
The boom in sports rights "reflects fundamental shifts in the TV industry." Viewers are watching programs on demand, skipping the ads. Live sport "is therefore crucial for advertisers," particularly in the U.S. The other major shift -- more evident in Europe -- "is competition between pay-TV companies and telecoms groups." Sky and BT both sell TV and broadband packages to consumers, and "will soon add mobile phone contracts." Sports programming "is a loss-leader for those other products."
The bidders "also have deeper pockets." BT, which makes substantial profits on broadband, "can pay more for sport content than Sky’s previous rivals for the Premier League rights -- Setanta and ESPN." Other European telecom groups "have yet to be as aggressive as BT," although Spain’s Telefónica and Germany’s Deutsche Telekom "have shown interest in sports content."
In the short term, investors "may ask if sports rights are overpriced." But Sky shares fell just 2% after the deal was announced and the company "argues that viewers will pay more" (FT, 2/13).
BRITISH REIGN: REUTERS' Michael Hann reported Arsenal Manager Arsene Wenger said that the EPL's TV deal "will enable English clubs to dominate European football once again." He said, "It makes the clubs in a bigger, stronger financial position all over Europe. It will contribute to get the best players all over the world to come to England. The movement of the players is always linked with the economical and financial power in the countries." West Ham United Manager Sam Allardyce "meanwhile defended the Premier League from criticism that not enough of the cash was being passed on to grassroots football." Allardyce:
"Fingers have been pointed at the Premier League and their commitment to grassroots football but, over the present deal, they are donating £56 million ($86M) a year to exactly that cause. Let's not forget that provision for grassroots sport is principally a government responsibility -- rather than an obligation for the Premier League" (REUTERS, 2/13).
