English Premier League Set to Become World's Second Richest Sports League

 

TV Sports Markets updated me with this post and I thought you should read it too. Since most Nigerian football followers are adherent fans of EPL.  TV Sports Markets Editor Frank Dunne looks at the league’s chances of enjoying a bumper pay day:

It isn’t about crystal-ball gazing; here are a number of factors which point to the league enjoying a favorable outcome when it opens the envelopes containing the bids from broadcasters today.

1. Sky cannot afford to lose

Sky cannot afford to have fewer matches and worse picks than it has now. The financials released on Wednesday for Sky plc (the merged UK, German and Italian operations) show a company in rude health. But from next season, BT will have all Champions League and Europe League games. If the Telco can also boast the most and/or best Premier League games from 2016-17, there is a real risk of large-scale ‘churn’ of customers from Sky to BT.

 Pay-TV platforms like Sky offer a range of content for the whole family and increasingly do so as part of a good-value bundle with phone and internet services. But try taking top football out of the equation. Sky has never had to, and it is not an experiment that it will want to be faced with now.

2. BT has come too far to turn back

Having come this far and invested this heavily, BT will not want to start dialing back the BT Sport roll-out by low-balling the Premier League. It would make nonsense of their audacious smash-and-grab of the Champions League rights.

 ‘Ofcom’ putting a squeeze on the margins BT makes on providing access to its network for rivals, and the Telco’s $19bn acquisition of mobile carrier EE, might be good reasons for it to spend more prudently on sports rights. But content will remain a differentiator, and for a UK-facing media business there is no better content than the Premier League.

 

The consensus is that BT will settle for something similar to what it has now. I doubt that Sky will be making that assumption.

3. Trick or treat?

I think Discovery/Eurosport will bid. The question is whether it will be a real bid or a symbolic gesture.

Much has been made of the fact that Eurosport was prepared to put down a bid of $525m over three years for Serie A rights in Italy. However, the bid was $125m per season below the league’s reserve price. The broadcaster would have known it was not going to win the rights. The bid was a statement of intent, a message to Serie A saying: ‘We are here and we are serious.’

I think the UK is of greater importance to Discovery than Italy and that any bid will be a real one. It’s all very well being in the mix to build relationships with rights-holders, but there are only so many symbolic gestures you can make before people stop taking you seriously.

However, for a standalone channel business up against two increasingly converged media companies, the economics probably don’t add up to them unseating the incumbents for one of the bigger packages of rights.   

4. Hands full

I don’t think beIN Media Group will bid this time – not due to limits on financial resources but the pressure on human ones. The company has its hands full trying to expand into Spain, Turkey and parts of Asia, as well as running what are still fledgling pay-TV operations in France, the US, Australia and Southeast Asia.

The great thing for the league is that none of the other bidders can be certain that the Qatari broadcaster will not bid, and will have had their game theorists modeling at least one scenario predicated on beIN being in. 

5. Auction-room frenzy

There could also be an intangible influence on the process beyond what can be expressed on a spread sheet: auction-room frenzy can kick in, with its potent mixture of paranoia and machismo, especially if bids go to a second or third round.

For the management teams involved, the elation of winning these things can provide a massive morale boost which feeds the wider company mood, while the despair of losing them can envelop staff in a gloom which doesn’t lift until the next monster deal is won.

It’s about people as much as numbers, and there are some sore losers out there. Whatever happens, the Premier League will not be one of them.

6. Already a winner

The league will almost certainly become the second richest sports league in the world in terms of media-rights income, behind American football’s NFL, from the 2016-17 season.

The Premier League currently earns about $2.97bn per season from all media rights, just behind US baseball’s MLB, which earns an average of about $3.07bn per season, according to the TVSM Global Report 2015. The NFL will stay way out in front on about $6.5bn per season.

Conservative analyst estimates for the increase in the value of the Premier League’s domestic rights are about 15 per cent. That would mean a jump from the current $1.53bn per season to about $1.76bn per season.

The most bullish estimates foresee an increase for the Premier League domestic live rights of 60-80 per cent, the top end of which would be worth $2.76bn per season – or $8.28bn across the cycle.

Even if the value of the league’s international rights remained flat, at about $1.23bn per season, the league will break the $3bn-per-season barrier. But it is likely that the value of international rights will also rise.

The league has already brought in a 13.5-per-cent increase for its highlights rights, with the BBC paying $328m over three seasons. Rights for near-live matches and digital clips will be sold at a later date.