Big Six power is like a cartel and chasm will keep growing
So now we have a figure put on the increase in Premier League international broadcast deals: £1.1billion. Speaking at a conference last week, Richard Masters, the interim chief executive, confirmed there should be a 30 per cent rise in the rights for the next three seasons to 2022, meaning the value will go up from £3.1billion to £4.2billion. Happy days.
And what a relief for the Premier League and its 20 clubs, especially when there has been a drop in the value of UK domestic rights by around £400million (though they are still worth about £5billion) for the same period. That has led to informed debate that the domestic rights have not only peaked but are going down the other side of that vertiginous hill.
It means that, on balance, the rights are still going up – a rise of
almost eight per cent, with the overseas increase compensating for the drop in domestic rights. And those overseas rights need to keep going up because, according to Claire Enders, of Enders Analysis, there will be a 20 per cent drop in the figure the likes of Sky and BT Sport are willing to pay when the next round of negotiations arrive.
The Premier League knew this would happen. In an interview with The Daily Telegraph three years ago the then chief executive, Richard Scudamore, claimed the League was “nowhere near” saturation point but only because there were so many overseas markets – India and China, in particular – to exploit.
The prediction was that the overseas rights would grow and, within a decade, outstrip the value of the domestic rights, and that appears to be happening even more quickly. It also needed to happen to keep the clubs or, rather, the so-called “Big Six” of Manchester City, Liverpool, Chelsea, Tottenham Hotspur, Arsenal and Manchester United happy and on board.
But at what price? What also happened last year, in one of Scudamore’s last acts before he stepped down, is hugely significant and bears out predictions that the financial gap between the Big Six and the rest of the Premier League will get bigger and bigger. The power of the Big Six is growing to an unprecedented, cartel-like level.
A new agreement was struck which changed the formula for how the overseas money is distributed. The Big Six will get a bigger piece of the pie. Up until now it has been shared equally. For example, this year Huddersfield Town earned the same as Manchester City from international TV rights:
£43.2 million.
With the domestic rights the money was always divided part equally, part according to where a team finished, and part according to how many times they are shown on TV, which naturally favoured the Big Six. So City earned £151million overall and Huddersfield £96.6million, with the biggest difference made up by the merit money – the gap between finishing first and 20th. In that regard, City earnt £38.4million and Huddersfield £1.9million.
That is changing. The international rights will soon no longer be shared equally, as in every previous deal, so where a team finish in the league will become a factor – capped at 1.8 times more than the lowestearning club. The gap will grow and grow. Over a three-year cycle it will equate to another £90million for the champions.
The argument from the Big Six is that, with overseas rights even more than domestic rights, they drive the interest in the Premier League, and clearly they have a point. Asian audiences do not get up early to watch Huddersfield or Fulham, but are enthralled by Liverpool or Tottenham.
That is indisputable, but it is also against the essence of the Premier League, whose distribution model, already skewed towards the Big Six, at least has had a greater element of democracy than other leagues – and that competitiveness has been its biggest selling point: the notion that anyone can beat anyone on their day.
Those days are already few and with such huge increases in the value of the overseas rights, and the change in how that money is distributed, they are going to become rarer. The chances of any team breaking into the top six, without catastrophic failure by one of the big boys, is remote.
The Premier League will become increasingly