Kieran Maguire is a Lecturer in Economics, Finance and Accounting at the University of Liverpool’s Management School
“Fans will have been surprised that BT Sport, only three months after commencing broadcasting, have won the rights to broadcast all Champions League and Europa Cup matches starting in 2015, for a sum in the region of £900 million, which is twice the current amount paid to UEFA. As always there are winners and losers in a deal such as this, so let’s take a look at the parties involved.
They have a lot of hours to fill on their channels, and this deal, along with the Premier League rights they currently have, and the FA Cup starting in a year, makes them a more attractive proposition to subscribers. Whether this is enough to attract fans who currently have Sky Sports away from Sky is another matter. Pricing will be the key here, I don’t think BT can afford to increase its prices significantly. BT are desperate to prevent Sky and other broadband suppliers taking their customers, and early evidence suggests that BT’s sport based strategy may be successful. Whilst the sum seems ridiculously high, BT can easily afford it, as it makes about £2 billion of profit each year. So the chances of BT doing a Setanta or ITV Digital, and becoming insolvent after overreaching itself by paying for the TV rights, are minimal.
Sky and ITV
For Sky this is an annoyance, rather than a devastating blow. They still have the vast majority of the Premier League rights, along with those of the Football League, F1 and Cricket, so this is an attractive overall package, although it costs a minimum of £480 a year due to Sky’s complex pricing strategy. For ITV things are far worse, the broadcaster desperately needs to have shows that attract male viewers from an advertising perspective. Football delivers this in abundance, as can be seen by the blanket alcohol and gambling adverts that take place during advertising slots when football is shown.
Fans: Winners and losers
Those fans who want to see everything will be unhappy, as unless they have BT Broadband as well as Sky TV, it is likely to cost them more money each month (BT Sport currently charge £12 a month for non BT Broadband customers). However, they do now have the prospect of switching from Sky to BT, seeing less Premier League games, but still being able to view British clubs in Europe, saving themselves over £300 a year in doing so. Fans who would rather pay nothing (or cannot afford to do so), will suffer most of all. This is further evidence of football distancing itself from the original section of society that the sport was set up to entertain.
They must be pinching themselves as the money keeps rolling in. However, the gap between the haves and the have-nots, even in the Premier League, will be wider than before after the announcement of this deal. Chelsea earned about £50 million from winning the Premier League in 2012, this potential windfall will be increased as a result of the new TV money, so the fight to finish in the top four will be more intense than ever, in a season where it is difficult to identify a standout team on the pitch, and there are six realistic contenders for the top four spots. Failure to qualify for a Champions League position, in the Financial Fair Play environment in which clubs must now comply, could have serious consequences.”