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 Daily Telegraph - Business - - Sport - By Tom Mor­gan and Ben Rumsby

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

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