Global TV deals set to take Premier League rights over $13bn

AP News
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Posted: Feb 11, 2015 8:08 PM
Global TV deals set to take Premier League rights over $13bn

LONDON (AP) — The English Premier League's television rights windfalls may soar over $13 billion once the 2016-19 international sales are completed this year. And with 11 of this season's 20 clubs already under foreign ownership, the world's richest soccer league expects the new deals will make its clubs even better propositions for would-be investors.

"Reducing losses and making clubs more sustainable clearly is an important use of that money," Premier League chief executive Richard Scudamore said. "That does make clubs more attractive to investors."

Many investors are enticed by the distribution of domestic television cash: half is split equally, a quarter based on finish in the standings and a quarter based on number of television appearances. International television revenue is split equally between clubs. That ensured last season's bottom team, Cardiff, collected $95 million, and was ranked with the other 19 Premier League teams in the top 40 moneymakers in world football by accountancy firm Deloitte. Champion Manchester City, which is owned by Abu Dhabi's Sheikh Mansour, earned $147 million in broadcast revenue.

The 70-percent leap in domestic rights to $8 billion for the three seasons starting in 2016-17 could see the bottom-placed finishers earn $140 million in broadcast revenue, followed by potentially a similar amount in parachute payments for four years after relegation from the topflight. The champions could rake in more than $200 million.

This is a stark contrast with Spain, where Real Madrid and Barcelona dominate and the smaller clubs are trying to get La Liga to sell all broadcast rights in the manner of the English top competition.

"You will see a continued interest in English football being an important part of an investment strategy globally," said sports lawyer Trevor Watkins of Pinsent Masons, pointing to its appeal to United States and Middle East investors.

Scudamore does sound a note of caution.

"It's a pretty risky investment unless you are purchasing a club that can pretty much guarantee its Premier League status," Scudamore said.

The broadcasters believe pumping money into the Premier League is less of a risk.

Sky and BT on Tuesday agreed to pay 5.136 billion pounds ($7.8 billion) to continue showing games live in Britain. On top of that the BBC is paying 204 million pounds ($311 million) to show highlights from 2016-19, and the British mobile and digital deal is still to come.

Globally, competition among broadcasters is likely to be as intense. For the 2013-16 overseas rights, the league generated around 2.5 billion pounds of its 5.5 billion pounds of broadcast revenue from overseas. Media analyst Claire Enders expects that figure to rise by around 30 percent — to 3.25 billion pounds ($5 billion) — which would see the league's overall broadcast revenue top $13 billion.

"The Premier League is going to take on the characteristic of a loss leader for many broadcasters," Enders said. "But the element of live coverage is ever-more important."

While the Premier League TV deals are the biggest in soccer, they are eclipsed by the National Football League in the U.S. The NFL's current contracts bringing in about $7 billion a year through 2022. Scudamore accepts "it might be a very, very long time" to overtake the NFL.

But interest in soccer is soaring in the United States.

Manchester United is listed on the New York Stock Exchange, where shares in the 20-time English champions had risen by around seven percent since Tuesday's rights announcement to $17.36 at lunchtime Wednesday.

The league also reported season-on-season television audience growth in the U.S. of 114 percent in 2013-14 in the first year of NBC's $250-million three-season deal. A U.S. Premier League record 1.41 million viewers watched Arsenal play Manchester United in November.

"We are very proud of our partnership with the Premier League," NBC said in a statement to The Associated Press. "We look forward to discussing future rights with them later this year."

But Murdoch's U.S. network, Fox, which held the American rights before NBC bought them, wants to show games again.

"English Premier League offers an intense level of competition, and includes many of the world's most renowned clubs, which we've been fortunate to televise in the past, and we're interested in doing so again," Fox spokesman Lou D'Ermilio said in an email.

League executives hope to complete the 2016-19 rights sales by December.

"For the last six months we have been meeting with various international broadcasters," Scudamore said.

In Britain, there was concern that the new deal could lead to soaring player wages, while there are calls for fans to pay less for tickets and for club staff to receive more than the minimum wage.

"We'll have a sensible discussion with clubs about some of the responsibilities that clubs know they have in terms of what to do with this money," Scudamore said. "We are not centralist to the point where we prescribe what they spend on player wages, transfer fees."

Beyond maximizing the value of broadcasting rights, Scudamore notes: "The strategic priority is to put on a show that is attractive enough to keep the stadiums full."

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AP Sports Writer Ronald Blum in New York contributed to this report.

Rob Harris can be followed at www.twitter.com/RobHarris