Premier League is braced for £675m slump in TV revenue
➤ Deal-makers fear Sky and BT will cut next offer dramatically ➤ Clubs set to feel impact as crisis takes toll on broadcasters
The Premier League is facing a fresh financial blow as broadcasting dealmakers forecast the next domestic TV sell-off could fall by up to £675 million.
A potential 15 per cent dip in one of the most lucrative agreements in world sport has been predicted on the back of £1billion-plus losses for the clubs during Covid-19.
Several top-tier executives – already facing demands to contribute to a bail-out of the English Football League – suspect Sky and BT will trim offers.
The Premier League had already recorded a 10 per cent drop-off in the last domestic cycle and analysts are convinced it will be impossible to generate an increase on the current £4.5billion deal.
Around 200 of the 380 matches are likely to be made available again for the world’s richest domestic competition when the auction opens either in December or early next year. The deal kicks in the season after next.
Experts say valuations peaked in 2016 and, while Sky and BT still consider the league their most valuable offering, Covid-19 has accelerated a gradual fall. Amazon, which bought up matches for the first time last season, is not expected to compete with the big two bidders.
“It’s difficult to see how the Premier League can conjure a situation where it’s more attractive for them to pay more money,” said Julian Aquilina, of Enders Analysis. “Maybe they can keep it flat, but BT always talk of going ‘flat to down’ when they have their calls. I would imagine, realistically, that it’s going down in value because it’s been at such a high.” He declined to put an exact figure on the potential fall, but sources close to talks said “up to 15 per cent is realistic”.
Andrea Radrizzani, the Leeds United owner, said the league could still diversify its offering to digital platforms to increase revenue, but there is no suggestion that the likes of Netflix or Facebook are interested in tabling a bid due to the limits over syndication worldwide.
Sky and BT have enjoyed record levels of viewers during lockdown, but both suffered serious financial damage over the past six months, with the latter increasing its fees by £4 a month. David Kogan, a former media rights adviser to the Premier League during six rounds of domestic rights deals from 1999-2015, said: “The Covid crisis has actually acted as an accelerant of factors within the Premier League that were already evident. It’s going to have a big impact, but I think that impact would have happened anyway only over a longer period of time.”
There have been signs Sky is becoming less aggressive in bidding since the Murdoch sell-off to Comcast. Kogan, however, said it was impossible to put a realistic prediction on the next rights price. “The one certainty in selling rights is you don’t know,” he said.
The Premier League has declined to go into detail over the new deals, but sources close to the league said it was “optimistic” ahead of the next auction.
A host of broadcasters have already warned of potentially difficult times for rights packages. Yousef Al-Obaidly, chief executive of BeIN – the league’s biggest overseas rights-holder, – warned last October that “the endless growth of sports rights is over”, and in certain cases internationally “rights values are going to drop off a cliff ”, as he outlined the damage caused by piracy and changing trends in sport TV consumption. The league faces a complex task trying to modernise its offering. The deal with Amazon this season was understood to have been agreed at a price less than BT was offering because the league wanted to trial a new market.
Covid-19 has hit Sky hard, with second-quarterly revenue falling 12.9 per cent year-on-year and cash flow expected to fall 60 per cent. “Football is still by far and away the most important sport for the broadcasters to have in the UK, particularly with something like the Premier League, which has a much more elevated status than any other competition,” Aquilina said.
“That’s by far and away better protected, but that’s not to say the rights won’t decline in value.”
If the current package remained in place, he expected a decline in the value again, as companies such as Sky and BT “are under pressure to cut their costs. They’re under pressure to cover their costs and they have identified lots of different areas where they can redeploy that capital, like drama programming, and originals”.
Amid turbulence surrounding Covid and a potential bail-out for the EFL, the next domestic rights deal will be a major test for Richard Masters, the Premier League chief executive. He moved quickly to sign up Chinese internet giant Tencent after the league’s previous contract for the region collapsed, but the next domestic cycle will inevitably be measured against the profits achieved by his predecessor, Richard Scudamore.
Falling value: Jordan Henderson with the Premier League trophy