Premier League officials are sounding out broadcasters ahead of an upcoming auction for the TV rights to top-flight football matches in what will be a key test of media spending as their own clients grapple with a cost-of-living crisis.
The roughly £5bn Premier League rights contract for the 2019-22 season with Sky, BT and Amazon has been extended until 2025 during the pandemic, meaning it will be the first competitive domestic auction since 2018.
However, analysts have warned that values could fall as broadcasters come under pressure. The total value of European football media rights has stagnated, according to the Enders analyst.
“When post-COVID inflation is taken into account, we estimate that by 2023-24 real values will be 17% lower than in 2018-19,” they said, noting that “all signs point to a competitive “In line with a tepid consumer market”.
Telecom operators have stopped using football as a draw for broadband packages in recent years, which has dampened the heat in European auctions in recent years, media executives said. Meanwhile, broadcasters in the pay-TV market are under pressure as consumers reconsider increasingly expensive subscriptions and a downturn in the advertising market.
“Obviously in the midst of a cost of living crisis . . . the price of everything is an issue,” admitted Premier League chief executive Richard Masters earlier this month. “It’s up to our broadcast partners to set the price for these subscriptions. We take all of these things into account when we plan the auction.”
Richard Broughton, executive director of consultancy Ampere Analysis, said he did not expect any potential bidders to be “particularly aggressive”.
“I don’t think there’s much incentive for anyone to go all in, especially given their focus on cost containment measures,” he added.
A Premier League club executive is also skeptical about where the value has risen significantly. “I would be happy if we were ahead by 5 percent because this is a slowing rights market,” the person said.
Premier League officials and broadcasters are eyeing the auction of broadcasting rights for Serie A in Italy, which has yet to be finalized despite successive rounds of bidding by broadcasters.
The broadcast chief says the “product” the Premier League wants to sell is more valuable because of strong domestic and global interest in English top-flight football.
Sky said the 2022-23 season is the highest-rated season in history, with more than 8 million viewers on the opening weekend of the season, a record high. The growing global popularity of the Premier League means that, unlike all other European football, it already makes more money from international broadcasts than from the domestic market.
However, many households in the UK and elsewhere are looking to pay less for their TV subscriptions, which could put pressure on bidding.
Sky is one of the few guaranteed bidders given the importance of sports rights to its brand. Analysts say it is almost unthinkable to lose a large number of Premier League games.
“Sky may pay extra just to keep other people out. They need the rights,” the Premier League club executive said.
But Sky’s revenue fell 11.5 percent to $17.9 billion last year, and it has begun cutting jobs amid a slowing advertising market. Sky’s parent company, Comcast, has written down the value of the business by $8.1 billion from $18.1 billion, in part due to “lower projected future cash flows due to macroeconomic conditions within Sky’s portfolio.”
British Telecom (BT) was its main rival in the last auction, but that changed this year after it merged its sports business with that of Warner Bros. Discovery Channel (WBD) to create TNT Sports. British Telecom (BT) is also cutting costs now, with plans to cut as much as 42% of its workforce by the end of the decade.
WBD, which is expected to eventually control TNT’s sports business, is also facing challenges in the streaming market, where investors are demanding profits rather than spending more on expensive content.
Loss-making sports streaming service DAZN, backed by billionaire Leonard Blavatnik, will also be looking to add top-flight England games as Norwegian streaming service Viaplay comes under pressure as it struggles in a crowded market. Executives believe that adding high-end sporting events in the UK will be important for the London-based group, but people close to DAZN say it is unlikely the group will be willing to spend significant sums.
The wild card will be big tech companies like Amazon, which won a small stake in the last auction. Analysts believe the U.S. e-commerce giant may be involved, but will focus, as before, on securing games around key retail dates. Apple has been buying sports rights in the United States to broadcast globally, but it is thought to be unlikely to be interested in expensive individual country rights.
A DAZN spokesperson said: “The UK market is clearly of interest, but only if we can deliver the value and innovation that backers want and the market needs.”
TNT is keen to retain premium sports rights, according to a person close to the company. While it is still wholly owned by BT, it has renewed its rights to the Champions League and other UEFA competitions until 2027. Sky TV declined to comment.
Premier League officials are currently looking at how to organize the auction, which could take place before the end of the year, to encourage greater bidding interest.
Mark Oliver of Oliver & Ohlbaum Associates said the alliance’s strategy needed to “create tension” and split rights into different packages to incentivize broadcasters to compete with each other.
But even so, he thinks prices could be flat or slightly lower. “If they pack it in the right way and get a five to 10 per cent increase, they might get lucky. Sky has learned how to live with a reduction in the Premier League without the Champions League. TNT probably won’t improve bid. Amazon has been an incremental opportunist elsewhere, and DAZN is an unknown opportunist.”
The broadcast chief said the most likely outcome was that the Premier League would try to drive up overall value by allowing more games to be shown, in order to achieve higher absolute prices, but could mask a decline in the value of the price per game. UEFA was able to boost overall revenue from rights auctions last year, partly by increasing the number of games on offer.
This is also the strategy adopted by the English Football League (EFL), which managed to increase broadcast rights prices by 50%, but only by quadrupling the number of games to more than 1,000 games per season. Sky has retained exclusive broadcast rights for the five seasons leading up to the 2028-29 season, at a cost of £895m and a “marketing gain” of £40m.
Broadcasters are banned from showing matches at 3pm on Saturday, so more Premier League games will be moved to Friday, Sunday and Monday. One option is to allow more — even every — non-3 p.m. game to enter the auction for the first time.
The league could increase the number of games from the current 200 to 250-270, which could be broken down into packages of sufficient size for bidders to build their subscription services, one person said.
“Bidders need to see at least a weekly chance of getting a decent package with top competition,” said another.
“They will look at adding more inventory so they can monetize the league,” said another broadcast executive, adding that the Premier League could also review three-year broadcast rights.
Masters told reporters before the start of the new season: “I know people are frustrated because they can’t watch every game. We have gradually included more games into our broadcast rights package. We are now at 200. Obviously, we Looking at our packaging strategy – the number of matches for auction. All those things are being considered.”