Sport Comment: BT and Sky TV wars boost English sides in Euro competition

Concerns that main effect will be to polarise Premier League are misguided, argues Soccernomics author in our exclusive article

BT SPORT’S mammoth bid for Champions League and Europa League rights in Britain is more than double the amount paid in the previous round – Sky and ITV paid a combined sum of around £135m per season, the BT payment will be just under £300m – and a large chunk of that money will go to the four English clubs that qualify for the Champions League.

Some are already worried that this will further tilt the balance of power toward to the big clubs, who from next season will be protected from sugar daddies by European Financial Fair Play rules.

However, this has to be taken with the even larger growth in value of the Premier League rights, which now generate around £1.7bn a season from domestic and overseas markets.

While there will be some increased advantage for the clubs that qualify for the Champions League, it will not be that large. English clubs, however, should gain a competitive edge against European teams. Half of the money paid by BT will go into the “market pool” reserved for English clubs.

But, Premier League clubs have also agreed their own version of Financial Fair Play intended to limit spending on players. Some owners would rather pocket the profit than invest in an even more glamorous team.

Sky has been one of the most successful businesses in Britain for the last 20 years, and most people associate that success with football. To get people to pay to watch TV they needed to control the most attractive content, and if possible make it more attractive. That, they would claim, is exactly what they did to the Premier League.

As Sky’s stranglehold over premium sports has grown, rivals have repeatedly attempted to undermine their stronghold in football.

It is more than a decade now since the ITV Digital debacle, which was based on the shaky premise that Championship football would be enough to compete head on with Sky. More recently Setanta attempted to wrest control from Sky by buying up Premier League games. Both ventures eventually went bust.

Now BT is attempting to challenge Sky by taking both Premier League and now the Champions League rights. This is perhaps the most serious threat yet. BT has the financial power, and range of products (the triple play of telephony, broadband internet and pay TV) to compete credibly for subscribers, and now they have the content. But beating Sky will take more than that – the presentation will have to be innovative, unlike previous pretenders. Viewers can expect to see a lot of fancy gimmicks coming from both sides, which might be no bad thing, and probably a price war to go with it.

Assuming BT puts up a good fight, the most likely outcome is that they end up merging their services, once they have burnt enough money trying to push each other out of the market.

Stefan Szymanski PhD is Professor of Sport Management, University of Michigan, co-author of the New York Times best-seller Soccernomics and contributor to the consultancy and blog of the same name: www.soccernomics-agency.com/

HOW IT WORKS

Why does BT Sport paying European football chiefs £900m for Champions League rights affect English sides?

Clubs receive a payment just for taking part, the size of which depends on the percentage of total TV rights derived from their country. In 2011/12, £144m or 16 per cent came from England. From 2015 that amount will be £299m. It is predicted English teams will earn £14m, or more than £40m in total.