Football on TV is about to change one way or another. But just exactly which way will the giant corporations jump?
With football on TV it is always easy to think that how it is now, is how it has been in the past, and how it will always be in the future.
OK we always get a growth in the number of games each season, and that looks certain to continue after the next round of bidding, and there is a general assumption around that in England at least Sky will get lots, BT Sport will get some, and Match of the Day will plod along its merry way with free to air highlights in the evening.
It will be like that because it has been like that since well… forever. All that changes is the price, right?
Well, yes up to a point. Except the first thing to note is that it is EU rules that mean the Premier League has to sell its packages to two separate companies. Once the UK leaves the EU, that rule might well be deleted from the statute books.
But let’s look back, first of all. The four-year contract to show live football that ITV got in 1988 cost them £44m. It seems ludicrously small now, but it made headlines on the front and back pages of the papers as it was a 400% increase per year on what had been paid before.
All that has changed since then is that the Premier League opted to do a deal with Sky and the contracts agreed between the league and BSkyB (as they were then known) escalated in value. in 1992 and 1997 the contracts were worth £191.5m and £670m respectively. Prices go up – it always happens.
Except… that nothing like that can go on forever. Old timers nod their heads and say “the bubble always bursts in the end” and yes, this time the old timers are right. Eventually it always all goes bang. The only thing we don’t know is when and how.
Basically Sky and BT Sports have had football their own way for quite a while now, but things are changing, and below I set out a list of these changing “things”. In doing this I am not trying to suggest that all these things are going to change at once, but rather these changes will happen, one way or another, some time or another.
1: The price stops going up.
This will happen in the end, because nothing can rise forever, and when it does happen there will be consequences.
First, some clubs that have spent TV money in advance will come unstuck most probably default on the contracts agreed with players for huge sums. If you have ever wondered why more and more players are reaching the ends of their contracts it is because the financial men at the top of clubs that don’t have the wealth of a nation behind them are worried that the TV revenue will suddenly collapse.
Second, it is not impossible that a company that wants to get in on the act will overbid, and never be able to recover its costs. ITV Digital did this and went bust, although they had technical problems as well as having overbid. It can happen.
2: Sky, BT Sport and the BBC suddenly face a new player.
Today you are quite possibly be watching some of your TV in a way that wasn’t available five years ago. If you are using Amazon Prime or Netflix then count yourself in that group. If you watch YouTube videos then you are watching something that wasn’t available 12 years ago.
There is already talk in the industry of Amazon or Netflix bidding against Sky and BT Sport for the domestic rights to football in the UK. If not this time around then certainly next time.
3: The big boys waiting in the shadows
By “big boys” I mean “very big boys”. Google and Apple. Google expands all the time. In 2008 Google created Google Chrome. In 2011 it started selling its own computers (Chromebooks) based on its own operating system at a fraction of the price of a PC or an Apple. They are getting further and further into the market.
Apple is the most profitable company in the world, but it is running out of things to put on its phone. Yes it keeps on issuing new versions, but in the end, once you have connection to the internet and TV channels what do you do next? You need something exclusive to show.
So when we think of Sky and BT Sport working out how much to pay for football, they primarily look at what they paid last time, and how much they have made, plus what they would lose if they didn’t get the contract. And lose it they just might.
And lose it they just might not least because Alphabet which owns Google makes about $20 billion a year. It actually sets aside $2 billion a year to lose on risky ventures that don’t work like driverless cars. But then some of those work and make Alphabet more money. Only Apple can compete.
If Google really wanted to cement its position at the heart of world culture, it would simply blow Sky out of the water in terms of a bid for football and make it free to air on computers. It could also buy a few TV channels on the satellites Sky won’t need any more and put it there if it wanted. But more likely, it will simply launch its own satellites.
And offer to buy NASA along the way.
4. But behind the shadows is something else
If you study media news you will know that Mr Murdoch’s company that owns Sky, also owns 21st Century Fox and he has now agreed a deal to sell assets worth more than $52 billion in stock to Disney as reported by CNBC. Mr Murdoch will retain a small number of assets but many parts of his businesses are included in the deal.
Looking at the deal in its entirety, reportedly it has a total value of in the ball park of a whopping $66.1 billion as Disney will be taking on $13.7 billion of Fox’s net debt.
That gives Mr Murdoch and his family a lot of money. What is he going to do with it?
Here’s something he could do. He could use that money to buy football for another three years. But maybe he won’t. Maybe he wants to set up a gigantic news operation all of his own. Which could mean that Disney, now owning Fox, will itself want to conquer the world and add football to its portfolio totally worldwide. Because you may not have noticed but Disney already also owns… ESPN.
So what actually will happen?
If I knew I’d buy the shares in the right company and then sell them at a profit. But I don’t know. What I am sure about however is that we are going to see a huge shake up in the way football is processed by TV. How it is done now is just one way. There are alternatives.
Personally I would be surprised if neither Amazon nor Google stir themselves and get involved. These two organisations have ambitions the likes of which the world has not seen since Genghis Khan, and I don’t think either will let things rest.
It is, sooner or later, all going to change. There will be winners, and there will be losers. Some very, very big losers. How it effects Arsenal and the other members of the so-called big spending “top 6” of the Premier League like Man United, Man City, Spurs, Liverpool and Everton plus all the other top tier clubs remains to be seen but watch this space as we anticipate more fireworks as there could be even more money coming into the Premier League’s coffers which means even more money to spend on players and player prices going even higher. How long until we see the first billion dollar player?
Read more from the author at Untold Arsenal