Premier League's clever play nets $8.4 billion for football rights

The Premier League said the deal represented a 4% increase in the value of live rights. In real terms, though, the value has fallen since the 2015 auction, when the amount bid for live broadcast rights jumped 70%.

By Matthew Brooker

In football terms, the Premier League’s sale of the rights to broadcast the top UK division’s games for four years for £6.7 billion ($8.4 billion) is more of a 1-0 win eked out through solid strategy and disciplined execution than a jaw-dropping 5-0 display of sporting superiority. It’s a good result nonetheless.

Under the deal announced by the league Monday, Comcast Corp.’s Sky Sports will remain the dominant live broadcaster after successfully bidding for four of the five packages on offer. TNT Sports, a joint venture between Warner Bros Discovery Inc. and BT Group Plc, took the fifth. The outcome reduces the number of live broadcasters to two from three, with Amazon.com Inc. dropping out. DAZN, a streaming service backed by billionaire Len Blavatnik that had expressed ambitions to screen Premier League matches, didn’t secure any rights. The BBC retained its position as the broadcaster of free-to-air highlights.

The headline figure far surpasses the £4.6 billion value (for live rights alone) of the existing contract, which ends in 2025. That helps to reinforce the English game’s status as the world’s richest soccer league and one of the world’s most lucrative sports franchises. The optics of a successful auction were essential for a sport that has attracted vast amounts of investment capital, from the US to Saudi Arabia, over the past decade or so, partly on expectations of sustained revenue growth. At a minimum, this result allays concern that the Premier League money carousel may be at risk of faltering.

The amount raised is less impressive on closer inspection. A record sale was almost inevitable given that the league increased the number of matches available for live screening to 270 from 200 per season, and extended the length of the deal to four years from three. The Premier League said the deal represented a 4 per cent increase in the value of live rights. In real terms, though, the value has fallen since the 2015 auction, when the amount bid for live broadcast rights jumped 70 per cent.

It could easily have been worse. This was the first time that the Premier League had sold domestic rights competitively since 2018, with the government giving it dispensation to roll over the previous contract during the extreme conditions of the pandemic. This sale faced a challenging economic backdrop: Inflation has surged, a cost-of-living crisis is weighing on customers’ ability to pay higher subscription fees, and the competitive dynamics of the marketplace have arguably deteriorated. Rights sales elsewhere in Europe offered a warning: In France, a first round of bidding didn’t yield a single acceptable offer, while the contract for Italy’s Serie A, held by DAZN and Sky, reset at a lower annual value.

The UK league’s success in avoiding such an outcome owed much to astute auction design. It shrank the number of live packages on offer to five from seven, with antitrust rules preventing any single bidder from buying more than four. The structure looked pitched to entice Sky into bidding for four batches, as transpired. Sky and the Premier League have been symbiotic in each other’s growth and the Rupert Murdoch-founded broadcaster would have been loath to see its dominance eroded. It has reason to be satisfied with the result, as does TNT. DAZN, meanwhile, won't get another chance to enter the market for several years, with the current deal locking in revenues until 2029.

Next time around, the terrain may be much more uncertain. Technology is driving a revolution in sports viewing, and the ability of legacy broadcasters to retain their hold as the dominant channel of delivery is in question. Some of the eye-popping valuations for Premier League clubs, such as the £6 billion sought by the Glazer family for Manchester United Plc, are at least partly underpinned by expectations of being able to monetize these teams’ global fan bases. That might at some point mean clubs streaming matches directly to individuals, perhaps offering immersive in-stadium experiences through virtual reality. The path to that future may not be clear, but if there are new revenue streams to be unlocked, the chances are that it will happen eventually.

In sport, it’s best to savor your victories while you can. As all football tacticians know, the game never stays still for long.