Why £564m deal was scrapped – and what it means for clubs

The Daily Telegraph - Business - - Sport Football - By Ben Rumsby

The dras­tic step was taken amid a le­gal dis­pute with rights-holder Sun­ing Hold­ings over an un­paid £160 mil­lion in­stal­ment of its £564mil­lion TV deal. The fee was due in March but Sun­ing with­held it due to the coro­n­avirus cri­sis. It then tried to rene­go­ti­ate bet­ter terms, in­clud­ing ask­ing for a three­year ex­ten­sion. The Premier League re­fused and pulled the plug.

Sun­ing Hold­ings Group is a con­glom­er­ate that is the third-largest em­ployer in the Chi­nese pri­vate sec­tor. Its pri­mary busi­nesses in­clude re­tail, real es­tate and fi­nan­cial ser­vices. But it also has a sports arm and in 2016 it ac­quired a ma­jor­ity stake in In­ter Mi­lan, which it holds to this day. It won the rights to the Premier League for the 201922 sea­sons months later and also bought those to La Liga, the Bun­desliga and Serie A.

That is cer­tainly the po­si­tion of both par­ties and it would ap­pear to stack up, given that Sun­ing laid off a large num­ber of staff last year to cut costs. But the ter­mi­na­tion of the con­tract has also taken place against a back­drop of po­lit­i­cal ten­sion between Bri­tain and China and there have long been vig­or­ously de­nied sus­pi­cions of state in­flu­ence in Chi­nese con­glom­er­ates.

Very. It was its big­gest overseas deal in the world’s most pop­u­lous coun­try, worth 12 times more than the pre­vi­ous con­tract. It ac­counted for 6 per cent of its record £9.2bil­lion set of TV deals for the 2019-22 sea­sons. It be­came even more cru­cial in the wake of the pan­demic, which had al­ready cost the league and its clubs mil­lions. The Premier League will be des­per­ate to limit the dam­age by strik­ing an­other deal that gets as close as pos­si­ble to that with Sun­ing. Oth­er­wise, the wave of cost-cut­ting and re­dun­dan­cies could con­tinue.

Po­ten­tially. Some clubs have still spent big this sum­mer and if Lionel Messi ends up join­ing Manch­ester City, some may won­der what all the fuss was about. But any loss of a fig­ure that works out in dou­ble fig­ures of mil­lions per club could see each of them bring in one fewer player than planned. Al­ter­na­tively, they could gam­ble on the league quickly se­cur­ing an­other deal in China.

Sun­ing sub-li­censed some matches to Chi­nese state broad­caster CCTV. So, in the­ory, it could step in. But how much it or an­other com­pany would be pre­pared to pay for Premier League football at this time re­mains to be seen. Un­less there is a bid­ding war, it is hard to see some­one of­fer­ing any­where near the £188 mil­lion a year Sun­ing orig­i­nally signed up to. There were no in­di­ca­tions last night the Premier League had any­one in the wings.

That has al­ways been the ul­ti­mate fear of those who stand to make mil­lions out of the league, which is not im­mune to the im­pact of Covid-19. It and its clubs have weathered the cri­sis bet­ter than many busi­nesses but it is hard to see it se­cur­ing the kind of in­creases in rights fees it en­joyed ev­ery three years be­fore the pan­demic struck. The true scale of the dam­age will soon be­come clear.

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