Mexican Standoff

Post 22

26th June 2017

Two months ago I wrote this:

 

I realised that Sky really does offer the true football fan something much superior.

(Post 2, ‘Reach for the Sky’, 22nd April 2017).

I was writing about Sky’s coverage compared to the BBC, but I would say that Sky is substantially superior to BT Sport and ITV as well.

However, with one proviso; I’m ignoring the cost.

I’ve subscribed to Sky since it was a cable service not satellite. Probably since 1989 or 1990. I hate to think how much the amount I pay has risen in the 27 years that have passed since. In many respects the viewing experience has improved since then too; more cameras, better analysis, extra games, etc.

But we all know that the lion’s share of the Sky TV contract money has gone into the pockets of players, agents and all the other people making a living out of football. Without the huge sums we’d still enjoy the Premier League. But £200k players would be paid £50k per week. £30 million transfer fees would cost £10 million. Arguably not that much else would change.

The current TV deals expire in 2019. I wonder how many Clubs are already anticipating a bigger sum for the next contract? But would they be right to do so?

Sky’s 2016-2019 deal cost two-thirds more than its previous (2013-2016) contract. Sky paid £4.2 billion to broadcast 126 PL games a year, at £1.4 billion a season, or £11.1 million per match. Although Sky is a large and profitable organization, these are big numbers. Sky reports total annual revenues of £12 billion, so it’s paying over 10 per cent of its total global income to the Premier League, before it’s even set up a single camera or hired one matchday pundit.

Meanwhile, BT paid £960 million to broadcast 42 games a season, at £320 million a season, or £7.6 million per match. However, BT also outbid Sky by paying £1.2 billion for three seasons of exclusive Champions League and Europa League coverage.

So, what’s happened to their audiences?

Well, average viewing figures on Sky’s sports channels fell 14% over the course of the 2016-2017 season. Those aren’t necessarily all football fans cutting their football viewing times, but it’s inevitable from the figures that Sky is currently paying out considerably more to attract lower football audiences. BT lost 2% of its audience over the same period which doesn’t sound as bad. But BT is losing viewers off a lower base figure. It too is currently paying out considerably more to achieve less.

Back in 1990, the BBC and ITV paid just £3 million a season to broadcast 14 first division (pre-PL) live games. A sum equivalent to what Sky pay today for about 25 minutes of a single match. In that same year, England reached the 1990 World Cup semi-final, Liverpool won the title, Spurs came 3rd, Gary Lineker and John Barnes, Matt Le Tissier and Gazza, all strutted their stuff. Yes, football has improved. A lot. But is it 40 times better?

Sky Go, Now TV and BT’s YouTube channel are growing. So are illegal streaming services. It’s only a question of time before more ‘tailored subscriptions’ take over from the bundled packages of Sky Sports 1-3 etc. The distinction between TV and the internet is increasingly blurred. Why force somebody to watch a low quality, illegal stream when you can offer a high quality, pay-per-view service at a fair price.

But what is that price? Whatever it is, it’s unlikely to keep rising. It will possibly even fall. Premier League Clubs shouldn’t take the future cash flow for granted. It’s doubtful that Sky and BT can earn as much online as they have in the past via TV subscriptions.

This summer, silly prices are being quoted for players. There’s a Mexican Standoff in the transfer market. A £20m player is now labelled a ‘£40m player’ but nothing else has changed except for the TV money currently in Premier League Clubs’ coffers. The prices have gone up. That’s all. A £50,000 per week player wants now £100,000. And his agent sure as hell wants him to push for it. But Sky can’t double the price of my subscription. Surely?

It will be interesting to see how this all plays out.

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