Monday 19 March 2018

Football's blockbuster needs extras

The technological revolution will have role to play in future TV rights negotiations, says Dion Fanning

Last Tuesday evening, Richard Scudamore, the chief executive of the Premier League, announced that the UK TV rights for Premier League football had been sold for £5.136 billion
Last Tuesday evening, Richard Scudamore, the chief executive of the Premier League, announced that the UK TV rights for Premier League football had been sold for £5.136 billion

Dion Fanning

In 1931, Herbert Chapman, the great manager of Huddersfield Town and Arsenal, reflected on his own career as a footballer. "In my days as a player, football was regarded as a career with a dead end and I remember the hard-luck stories that used to be told of the old-timers who hung about the entrance of the dressing-room on match days, hoping for help. A few years ago, before an away match, one of these old-timers, with hair turned grey, made an appeal to us for assistance and, as has long been the custom, we had a whip round for him. Afterwards, when we were travelling home at night, the tragic plight of the old fellow was discussed and a young player with some imagination remarked, 'Is that the end? Is that what we all come to?'"

Last Tuesday evening, Richard Scudamore, the chief executive of the Premier League, announced that the UK TV rights for Premier League football had been sold for £5.136 billion. "It looks to be a calculation by the TV companies that 'we cannot lose this'," Arsene Wenger said last week.

By the time the overseas rights deals have been completed, the total for broadcast rights is expected to pass £8bn. "Right now," one Premier League club official said last week, "Football has the TV companies by the balls."

For football, the question is how long will they continue to have that grip and if it is a windfall rather than a payment the clubs can expect to receive on an ongoing basis, what will the Premier League do with these extraordinary sums?

In the macho worlds of football and business, there is no backing down, no hesitancy and no expression of doubt.

Sky paid £4.176bn to maintain their control over the Premier League in the UK. They held off the threat from BT but they also may have been concerned about threats as yet relatively unknown. Like many industries, television is being disrupted by technological revolutions. The days when viewers took bundles of TV subscriptions are reaching an end. Sky offers a streaming service and they are in the broadband business - one of the key drivers in this deal - but in the age of Netflix and Apple TV, television companies know that change is coming fast. In a poll in the US last year, one in six people aged between 18 to 34 said they did not watch any original television series on a traditional television set in the past 30 days. Sport is one of the few areas where the live communal viewing experience endures but that may become fractured in the future as well.

Sky have been bullish about their deal. "Sky went in hard to get the result," one Sky executive tweeted. "Yes, paid big. That's what it takes. We can and will absorb it," said its corporate affairs director Graham McWilliam before adding, "blind auctions not for the faint-hearted."

Within Sky there was, according to one source, "relief" that they had managed to hold onto the Premier League but also concern that, having paid so much, there would be cutbacks.

The Premier League clubs don't have to concern themselves with that but the size of the deal has led to legitimate calls for the league to do something meaningful with their money. Politicians in the UK, too, found a handy way of making the news weeks before an election when they also insisted something must be done. Many expect that the clubs will squander the money but that might not be the greatest threat to the future of the Premier League.

The television money has ensured that clubs can become rich without ever having to reach the heights where the great wealth was believed to be found: the Champions League. Once a club avoids relegation, they can be certain that money will flow their way, at least for now.

Last season was the first for the previous spectacular TV deal and Cardiff City, who finished bottom of the league, received more money from the Premier League than Manchester United had for winning the competition the previous year.

Financial Fair Play regulations have also restricted the clubs' ability to spend and the business model that club owners may aspire to follow is Newcastle United whose wage bill has barely been altered since the last TV deal.

"A lot of the middle clubs in the Premier League husband their resources far more impressively than those at the top," says David Bick, chairman of Square1, a sports business consultancy.

Bick believes the FFP regulations need to be tweaked to allow clubs to be able to make a challenge to those above them, otherwise the inequality within the league will continue to grow. "In as short a time as two to three years, it could turn into a boring competition. The reality is that football has become entertainment and if it stops being entertainment then that's a problem."

Many clubs in the Premier League see football as a matter of survival. "A lot of the clubs are fairly rigid in what they will and won't pay footballers," one agent said last week.

Wages had increased since the last TV deal but not by staggering amounts, he said. It wasn't something he expected to change.

He spoke of one well-established Premier League club with a rigid pay structure. "They won't pay a centre-half more than 25 grand a week," he said. "This means that no established English centre-back will go to the club and I don't think they'll change."

To people outside football, the sums are staggering and there is often righteous indignation that a contract for £1m a year can be considered miserly.

Others have no doubt what the Premier League should do. The Football Supporters' Federation's campaign to cap away tickets at £20 has gathered momentum since the TV deal was announced.

"I may prove to be hopelessly naive here but there is a real focus on how the Premier League uses its money and I'm optimistic that things will change," Malcolm Clarke, chair of the FSF says.

Within football, there is more hesitation. "Fans want lower prices but then if things are going badly they start shouting at you, 'Get the chequebook out'," says one former Premier League club executive.

Bick would like to see the Premier League adopt something similar to the blackout rule in the US where games can't be shown live if a certain number of tickets haven't been sold 72 hours before kick-off, something which has often resulted in tickets being handed out in schools in the days before a game.

The live audience for Premier League games is getting older and the average age of a fan at a game is now 42. "I often joke that in any other area of the TV industry, extras get paid," Malcolm Clarke says as he considers what football needs to do to keep being young.

Any change needs to be agreed by 14 of the 20 Premier League clubs and what they will collectively do with the money is harder to anticipate. One former Premier League executive spoke of the growing American influence among club owners which has led to a restraint in wages and a willingness to follow FFP. Clubs like Everton and Stoke have frozen season-ticket prices - Stoke have done it for seven years - and there is a feeling that it is something the Premier League can afford to do as ticket sales makes up an ever-decreasing portion of their income.

Yet clubs like Everton and Stoke are already at a disadvantage as their prices must reflect the communities they inhabit. Prices at Arsenal and Chelsea also reflect the world they live in but that is a different world, the London that is already far richer than the rest of the UK and the clubs in that city can charge prices in keeping with that wealth.

Manchester United and Manchester City can compete for different reasons but for the others it will become more difficult and, if it is hard for the mid-table sides, the clubs outside the Premier League are observing an alien super-species.

If clubs believe that this is as good as it gets, they may decide to act prudently. If they believe the good times will last forever, they may behave like Ireland during the Celtic Tiger, buying the footballing equivalent of property in Bulgaria.

If they feel the money is going to run out, they are also unlikely to cut ticket prices, fearing that an important future income stream can't be reduced in case it becomes a more important source of income in the future. It may be an action that is necessary to bring life to the game but it may be even more essential that clubs take other measures to invest in the future.

Bick believes there is one more big domestic TV deal but also thinks that soon the overseas money will outstrip the UK rights. The Premier League may be content with this, expanding even deeper into a world which is bewitched by its football. These worldwide fans may one day visit England and attend a game but that will never be essential for the business model.

It may, however, be essential that the game they watch takes places in a full stadium with engaged supporters. "As soon as the stands are empty, the product isn't saleable," says a former club executive who is hopeful that action will be taken to reduce prices.

Beyond that, the Premier League will need to consider how it evolves. Believing that the bubble will last forever would be to ignore the reality of the technological revolution which is changing everything. It may not be enough to be prudent without some collective planning for the future.

What is certain, too, is that money distorts perception and football is not an industry like any other. It has loyalties that don't exist to the same degree in other businesses. A supporter of Aston Villa is unlikely to decide this weekend that he is now going to support Birmingham City.

The money that has been injected into the game becomes the first stick to beat players and clubs with when things go wrong. Everything is viewed through the prism of the Premier League's great wealth and creates greater anger among fans if their club is struggling.

But the footballers who will live well because of the TV deal are the descendants of those who waited outside grounds hoping for a hand-out. They have rightly prospered in the boom years.

The end for them is not the end it was for their predecessors. What they will come to is not what footballers of previous generations believed was their fate. Their futures are less unsure than they were during the years of exploitation but it doesn't mean that football and television isn't facing a great age of uncertainty.

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