The Sky's The Limit

The Premier League have reached an agreement with the EU regarding the future selling of Television Rights for their matches. Previously opposed to the clubs consolidating the rights under The Premier League banner, the EU have agreed to allow the status quo to remain with regard to collective bargaining. The main change has come through the bundling of packages and how this will be administered.

For future deals, there will be six packages up for grabs. However, no one broadcaster will be able to bid for more than five of those packages, effectively ending BSkyB's monopoly on live domestic league football. This takes effect from season 2007/08. Both EU and Premier League officials are claiming that this is good for supporters. In some respects one can see where they are coming from, destroying at the swipe of a pen the necessity to purchase one of Sky's Premium packages or visiting the pub to view live matches.

In the last bidding round of the current deal, NTL/Telewest was one such company trying to break Sky's monopoly. On that occasion they formulated a joint bid with ITV although they still failed to win the Gold Package they were attempting to purchase. They were not interested in one of the minor packages so Sky retained full broadcasting rights. With the removal of Sky from one of the bids, the Premier League are now in an awkward position. They will have to spread the matches between the Big 4 - Arsenal, Chelsea, Liverpool and Manchester United - across all six packages to make them attractive for broadcasters to bid for. If they do not, then either Sky will be allowed to make an exceptional bid or these matches go by the wayside and are reduced to Highlights only. And this may not be a bad thing as there is a strong argument for there being too much Live Football when considering all of the domestic cup competitions and Champions League games that are available to watch.

There is a real threat of the complete marginalisation of Live Football. BSkyB will not drop their price to the subscribers to compensate for the reduction in matches that they will show; their argument being that it is one component of a Sports Package being purchased not purely a Football subscription. The nightmare scenario is that Sky win three packages and NTL win the remainder. For the sake of argument I will assume that the Rights for 100 games are up for grabs. This means that Sky Subscribers have the opportunity to view up to 50 games with the other 50 on cable. Given that nobody in their right mind would have Sky and Cable in their house at the same time, the potential television for these matches will be reduced by between one third and one half due to the lower Subscription take up on Cable - I know that our neighbourhood cannot have cable due to covenants placed on the area when the houses were built. Given that I only subscribe to Sky Sports to watch the football, serious consideration will have to be given as to whether or not we continue with this once the Rights are sold. I suspect that NTL will continue to entice one of the Terrestrial Channels into their bid in order to make it more attractive to the Footballing Authorities otherwise they will be faced with viewing figures that nearly plumb the depths that ITV News achieved when they showed a Champions League match involving Newcastle several years ago. The total who watched that game is a UK record as it was officially recorded as zero.

The real winners in this will be the Terrestrial Channels who will once again be able to strike a deal with their Satellite competitors to form joint bids. It is not unrealistic to expect them to deliver an audience of several million in the UK for say, Chelsea v Manchester United, whereas at best Sky will deliver 800,000 whilst NTL will contribute a quarter of that figure. And therein lies the rub of the Sky Monopoly. Whereas they cannot compete in audience terms with the BBC / ITV channels, they can give Channels Four and Five a serious run for their money. Additionally, they have upped the ante with regard to matchday coverage from camera angles through to analysis - Andy Gray has no peer in the UK - to the extent that the improvements on the BBC and ITV are still made to look shambolic. The assumption has to be that Sky will no longer have the incentive to invest in this technology in the future.

But how will any joint ventures between the cable and terrestrial companies work? Given that it is extremely unlikely that two companies will broadcast the same match - there would be little or no incentive to subscribe to cable if it can be watched for free - then the assumption has to be that the majority of "big matches" will need to be shown on terrestrial television unless of course, the package deal will be purely for highlights to be on free to air. Which then begs the question as to how exactly have supporters benefitted?

One other aspect of the EU deal is that the Premier League cartel prevents the Big Four from exploiting their revenue potential. Whilst Italian and Spanish clubs have been able to benefit hugely from selling their Rights individually, English teams cannot do so and thus Revenue shortfalls have to be drawn in from other sources, i.e. Ticket Prices. Whilst a Juve fan can watch their team for less than a tenner, you can barely even get into the car park at an English Non-League ground for that amount. Surely a better deal with the EU would be for the clubs to be allowed to negotiate their own broadcasting deals and have conditions placed upon those deals that allow the clubs to take a maximum of 50% of the Revenue increase (the current deal being the benchmark) each season to operating revenues for use on player purchases, etc., and for the remainder it should be mandatory for clubs to split this revenue increase equally between Capital Investment in the Stadia and reducing Ticket Prices. Now there is a more equitable solution for supporters.

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