League faces £800m blow over TV deal
Cash crisis looms for top flight as Chinese firm ditched Move follows legal row over fees while game was suspended
The Premier League was engulfed by the biggest cash crisis in its history last night after terminating its television deal in China in a move that left it with a potential £800 million-plus coronavirus bill.
The world’s richest league pulled the plug on its £564 million contract with Chinese conglomerate Suning Holdings – its most lucrative overseas deal – following a legal dispute over an unpaid £160 million rights fee during the Covid-19 crisis.
The decision was taken during yesterday’s Premier League shareholders meeting and left officials barely a week to find a replacement broadcast partner or face starting the season without one.
The loss of about £300million – £265 million is said to have been paid up front – came on top of rebates paid to all its rights holders over the three-month suspension of football during the pandemic.
Clubs were told last season those would total £330 million, plus £36 million for every week the campaign went beyond its official end date of July 16.
Coupled with an estimated loss of match-day revenue of £177million and counting, the potential total losses suffered by clubs last night were £800million.
Those losses have already brought severe cost-cutting measures by clubs, including a controversial wave of redundancies, and yesterday’s news would have sparked fears of more to come, particularly as sides have spent millions in the transfer market already this summer.
The Premier League declined to comment last night beyond a terse announcement of the termination of a contract that represented a six per cent slice of its recordbreaking £9.2billion set of television deals for the 2019 to 2022 seasons.
The broadcasting arm of Suning, PPLive Sports International, responded on an official social media account by blaming the Covid-19 crisis for the impasse.
Confirming it had attempted to renegotiate its deal, it said: “Covid-19 has brought many challenges, and it’s especially obvious during broadcasting rights negotiations. After rounds of meetings, PPLive Sports and the Premier League have a disagreement on the price of broadcasting rights. We regret we couldn’t have an agreement with the Premier League.”
That included attempts by the company to secure a three-year extension to its contract to cover the 2022 to 2025 seasons at a more advantageous price.
Premier League clubs had considered negotiating a new payment plan with Suning or terminating the deal last month, before voting for the latter course at yesterday’s meeting.
Suning bought the rights to the previous three-year cycle in November 2016, months after securing a majority stake in Inter Milan that it still holds.
It did so at the peak of Chinese interest in international football, with the Premier League managing to secure a 12-fold increase on its previous contract in the region with Super Sports Media.
But Suning’s ability to fund the deal was called into question even before the pandemic, after it laid off a large number of staff last year following a period in which it spent heavily on rights agreements, including those of Europe’s other major leagues, La Liga, the Bundesliga
and Serie A. The termination of its Premier League contract has also taken place against a backdrop of political tension between Britain and China, including over the future of Hong Kong. The Prime Minister’s decision to block Chinese giant Huawei’s involvement in the UK’s new 5G network over security concerns also soured relations.
The Premier League found itself at the centre of a diplomatic row with China last year after Mesut Ozil spoke out on Instagram against alleged human rights abuses inflicted on the country’s Muslim Uighur population in Xinjiang.
And this summer, Chinese state broadcaster CCTV Sports – allowed by Suning to show some matches – caused a stir by switching its coverage of Liverpool’s 5-3 win over Chelsea to a minor digital channel.
It remained to be seen last night whether CCTV or another broadcaster would be willing or able to step into the void left by Suning and, if so, how much they would be prepared to pay at a time of global financial turmoil.
Kieran Maguire, a football finance expert and lecturer in the subject at the University of Liverpool, said: “It will be a challenge for the Premier League, because if you’re dealing with a Chinese company, normally it is linked directly or indirectly to some form of government approval. If the withdrawal of payment by the present broadcaster was approved by central government then it’s difficult to see how the Premier League is going to negotiate with a new broadcast partner in China.”
It also remained to be seen whether the termination of the Suning deal would end up in court.
Maguire warned that the Premier League could struggle to find a major legal firm prepared to take on a Chinese conglomerate if that meant risking “upsetting” clients based in the country.