SBJ/June 25-July 1, 2012/Opinion

Huge media rights deals not confined to the U.S.

Don’t think the over-indexing on media rights is an exclusively U.S. phenomenon, as one of the top stories covered in our newly launched SBD Global edition was BSkyB and BT combining to pay a record $4.6 billion over three years for live rights to the English Premier League in the U.K.

The deal, a stunning 71 percent increase over the previous agreement, shocked observers. The markets and most financial analysts responded negatively to it. Even EPL Chief Executive Richard Scudamore acknowledged he was surprised at the outcome, telling the London Times, “There was a gasp in the room when the envelopes were opened. I was as surprised as anyone.”

As one sports property after another in the U.S. cashes in on its own media rights deal, the lesson of the EPL deal is that we shouldn’t expect to see a leveling off any time soon. A few other elements stand out to me:

The deal is for three years, unlike the more recent long-term deals that we’ve seen in the U.S., where media companies are trying to lock in their packages to ward off further competition.

BSkyB, which has held EPL rights for more than 20 years, saw far greater competition in the marketplace this go-round, with ESPN and Al Jazeera making a strong run. But in the end, BSkyB paid what it needed to in order to hold these valuable rights — a similar move to what has transpired stateside.

BT, the former British Telecom, is really the story to watch. The company views the rights as a major game-changer for its business. BT is looking to launch a new sports channel in the U.K. and will try to do so on the back of a strong package of EPL games. We’ve all seen businesses built by their association with the NFL — Fox and DirecTV are two that come to mind — and BT is counting on the same lift from the EPL.

ESPN is back on the outside after previously picking up the package held by the former Setanta. It failed to renew that package and, after missing out on its World Cup bid, this marks the second straight major soccer package that ESPN has failed to secure.

A familiar name to many in the sports business reportedly played a key role in the deal. Tony Ball, the former News Corp. executive who was part of the growth Fox Sports in the mid-1990s, is on the BT board and reportedly advised the company on its bidding.

What will the EPL clubs do with the increased revenue? With financial fair play regulation sweeping through the league, Scudamore has called on clubs to be more judicious on player spending. Also, many of the league’s facilities are in serious need of renovation, so watch if clubs invest in more high-end, premium and exclusive experiences for their customers or in technology improvements in-venue.

Expect more big media deals to come. The EPL has a set of global TV and Internet rights left to market, and NASCAR, MLB and a new-look BCS will hit pay dirt in the U.S. I go back to Scudamore, who put it well in assessing the marketplace. After announcing the league’s new riches, he said, “I’ve been five times round this block, and each time people say the bubble has burst.”
It clearly hasn’t.

Abraham D. Madkour can be reached at amadkour@sportsbusinessjournal.com.
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