Striding into a suite at the five star Landmark Hotel in London, they couldn’t help but look like the cats that got the cream. Last time around Richard Scudamore and the small coterie of advisers who have overseen an explosion in broadcasting income engineered an auction that saw the value of domestic live rights alone rise by 70% to more than £3bn.
Since the then Tottenham Hotspur chairman, Alan Sugar, famously told Sky’s chief Sam Chisholm to blow ITV “out of the water” in a clandestine phone call ahead of the launch of the Premier League, the value of the rights has spiralled from £191m for that initial deal to £5.5bn for the current contract.
No wonder Scudamore and company were smiling. While the industry and the media were speculating on whether Qatar’s BeInSports would enter the fray, a small group of BT executives had been secretly plotting a rival bid around the kitchen table of John Petter, the head of its consumer division.
The bold arrival of BT Sport, part of a strategy by the telecoms giant to stop BSkyB and other rivals eating its lunch in the broadband market, could not have been better timed for the Premier League’s lucky generals.
BeInSports had ultimately decided against a tilt at the competitive UK market, preferring to concentrate on France and the rest of the world, while ESPN had retreated to the US with its tail between its legs.
The outcome could have been more dramatic still. BT is understood to have outbid Sky for most of the seven packages on offer in the first round of bidding. It was only when a spooked Sky vastly upped its offer that it retained 116 live games per season at a cost of £767m per year. BT ended up paying £246m per year for its 38 matches a year under a contract that runs until the end of next season. It was a familiar tale that has underpinned the Premier League boom.
Whatever challenges the wider economy or regulators have thrown at it, the Premier League’s income from broadcasting rights – which has fuelled a commensurate rise in the wage packets of players and agents – has continued to grow and grow. Even at worst, growth has merely levelled out before returning to a steep upward trajectory.
Analysts have given up predicting whether or when the Premier League boom will come to an end. “It’s possible the bubble will never burst. It will just change shape,” speculated one source close to the process.
Given the extent to which the rights to those 154 live matches are of vital strategic importance to both BT and Sky, it is unlikely to happen this time, when battle commences early in the new year around. The Osterley-based pay TV giant has seen off challenges from ITV Digital, Setanta and ESPN down the years, but BT has emerged as its biggest and best funded rival yet.
There is pressure from both broadcasters to further increase the size of the cake from the current 154 live matches. By squeezing in another package of games, the Premier League could look to keep both BT and Sky happy and ensure that both have enough live matches to sustain their respective business models.
But while there may be room for a handful of extra games, the Premier League is mindful that without eating into the Saturday 2.45pm to 5.15pm blackout period there are not many other suitable slots given pressure from fans, police and transport companies.
There has been a strong lobby from broadcasters to introduce a new package of Sunday evening matches but the Premier League is understood to feel it is impractical.
BT Sport’s £897m capture of exclusive Champions League rights from next season has further upped the ante. It has increased Sky’s need to hang onto the lion’s share of Premier League rights and left BT Sport on the horns of a strategic dilemma.
Broadcasting from new purpose built studios on London’s Olympic Park, BT’s entry into the world of sports broadcasting has been solid if unspectacular. Yet it has had the desired effect of boosting new broadband customers and increasing loyalty among existing customers by giving the channels away free. That must change from next season, because it will have to start charging for those Champions League matches to cover the cost.
The big question is whether it will launch another all out assault on Sky’s dominance or settle for being the junior partner. Petter told the Guardian this year that both options were still in play but that the Uefa deal enabled it to make the decision from a position of strength.
From their ever expanding base in west London, Sky are fond of pointing out that they still broadcast all the most watched matches of the year and have not seen BT’s intervention dent their subscription figures.
Following the shock to the system of losing the Champions League, the Sky Sports managing director, Barney Francis, has embarked on a trolley dash of other rights to shore up its position. Meanwhile, other potential bidders for live Premier League football – including Eurosport, now owned by US giant Discovery – are circling.
The Premier League is still expected to go to market early next year despite this week’s curveball of a full Ofcom investigation triggered by a complaint from Virgin Media. The cable giant, which has now bowed out of the tussle for sports rights but broadcasts both Sky Sports and BT Sport, is looking to bring prices down by claiming that more matches should be made available.
That, in turn, has led Ofcom to consider whether all 380 Premier League matches should be shown live on television. That is already the case in Germany and in some of the major US leagues. Some analysts have long argued that the Premier League should follow their lead, allowing broadcasters to sell season ticket packages that would allow fans to follow all of their team’s matches.
But Scudamore, who has seen off a string of regulatory challenges from the European Commission to Portsmouth landlady Karen Murphy, will argue that the Saturday 3pm blackout should remain sacrosanct to protect the lower leagues. And, of course, the Premier League’s sales model.
The innate instinct of the Premier League is to stick with the model that has served them so well and the looming tender is likely to be closely modelled on the last one that divided the 154 live matches into seven packages.
Somewhere down the line it will have to decide whether it might make more sense to sell its rights on a pan-European basis – a trend that News Corporation’s James Murdoch recently forecast – in light of BSkyB’s merger with Sky Deutschland and Sky Italia. But for now, it is likely to be broadly business as usual.
With no timescale on the Ofcom investigation, the Premier League is likely to press ahead with the rights tender as planned. Meanwhile, a parallel Competition Appeals Tribunal process, into the price at which Sky wholesales its sports channels to its competitors, also rumbles on.
Away from the main tussle for live domestic rights there are a host of other subplots. News UK, the media group that has now split off from Rupert Murdoch’s TV and film interests and owns newspapers including The Sun and The Times, must decide whether shelling out on the rights to goal clips in order to attract online subscribers remains a fruitful strategy.
Meanwhile ITV is likely to launch a challenge to the BBC’s rights to the £180m highlights package that forms the basis for a thriving Match of the Day.And the Premier League must decide how to best balance revenue generation and expanding its footprint in an international market that has fuelled recent growth. The US, in particular, will be fertile ground this time around in the overseas auction that will follow the domestic one. Interest in the Premier League has boomed under the current NBC deal.
Underpinning all of this is the ongoing need for the Premier League’s top executives to maintain support for the “collective selling” model that has served them so well.
The system of selling the rights centrally and then distributing the money on a sliding scale according to how many times a team is shown and where they finish - while dividing booming overseas rights income equally between the 20 - has held despite the changing of the guard among owners.
Eleven of the 20 Premier League clubs are now in the hands of overseas owners, with all of the big clubs obsessed with expanding their international income.
And with the pressures of Financial Fair Play, which requires them to boost revenues from broadcasting and commerical deals, there is bound to be pressure once more on the Premier League to let bigger clubs keep a larger share of their international TV income. The issue last came up in 2011 when Liverpool managing director Ian Ayre charged over the top only to find that none of the other big clubs were prepared to follow in publicly challenging the model.
But the only way for the Premier League to keep that debate at bay is to keep delivering ever larger cheques. The revived interest in the idea for a round of competitive fixtures to be played abroad should also be seen in that context.
The rights auction will also provide the backdrop to another familiar tussle - over how the riches are divided.
When the last deal was announced, Scudamore stressed that clubs would have to ensure that not all of their increased television income found its way into the pay packets of players.
Yet conspicuous consumption has largely continued to be the order of the day, while debate over ticket prices continues and the grassroots game remains locked in state of permanent crisis.
But most of those arguments can wait until after the next big reveal in a central London hotel suite. In the meantime, let battle commence.
