Confused about who shows what on TV? You will be if the Office of Fair Trading wins its case against the Premier League. Steve Greenfield and Guy Osborn explain the issues.
The most important match of the season for the armchair football fan is not a top-of-the-table clash in the Spanish League or Serie A, or one of the endless run of Old Firm games, but is being played in the Restrictive Practices Court in London. It kicked off on January 12th and is expected to last several months.
On the offensive is the Office of Fair Trading, acting to defend the public interest against the Premier League, while sitting in the wings are the clubs and the media moguls. At stake are the control and distribution of broadcasting rights and whether it is against the public interest to have games put together and sold as a package.
Sport, and particularly football, has been used as the vehicle to sell BSkyB, which has achieved a remarkable turnaround in its fortunes. Losses of £47 million in 1992 were steadily turned into profits; of £62 million in the first year of Premier League action, rising to £374 million in 1997. The move towards digitalisation means there is more space to fill, so this process is unlikely to be reversed.
Indeed, as more companies move into the market and cable television proliferates, there will be an increasing demand for live sport. It is the radical upturn in football’s fortunes over the past seven or eight years that has led to the vast sums being ploughed in for television rights, and the original figure of £305 million in 1992 for five years of Premier League television rights now looks like very small beer.
Given that live televised football is here to stay, the argument has switched to who will show it and how the considerable spoils will be divided among the clubs. Clubs in the Premier League have always sold the games en bloc to the bidder of their collective choice and this is at the heart of the legal argument: is this banding together of individual rights that are owned by each club contrary to the public interest?
The OFT’s case is that there is a massive market for televising football, and that the public would be better served by allowing the clubs to negotiate their own rights to screen matches individually rather than via a governing body. Their argument, that only 60 of a possible 360 matches in the Premier League are screened each season and that there is therefore a huge unfulfilled market, has been strongly refuted by the Premier League. The defence is based on the fact that this level of football is a “brand” which the League can be responsible for, and that without this negotiating body to look after everyone’s interests, the game as a whole will become less prosperous.
The Premier League arranged for a number of high-profile witnesses to add weight to their arguments, with even Sports Minister Tony Banks claiming at the launch of another Task Force report that, “If the court was to find against the football authorities and broadcasters, that would have profound implications, damaging implications, for the whole structure of football in this country.” The report he was launching included a proposal for all Premier League clubs to give five per cent of their future TV money to fund grassroots football.
No doubt many fans will care less about who owns the rights than about the cost of delivering matches to the screen. If the OFT is successful and the court rules that the contract is contrary to the public interest, then all rights will revert to the clubs to be sold individually. In essence, there will be 20 sellers of home games – and clearly some are worth far more than others.
This outcome will undoubtedly lead to the wealthier clubs obtaining a greater share of the broadcasting pie. This is at the heart of the attempt by BSkyB to buy Manchester United. At present, if the OFT case goes against the Premier League, BSkyB would be left with nothing. With ownership of Manchester United they would still have the most valuable individual rights, though these would only appeal to a relatively small section of the total viewing public.
One argument put forward at the time of the BSkyB bid for Manchester United was that the offer considerably undervalued the company if the television rights were unbundled. A free market could ultimately mean a fragmentation of deals, with different broadcasters having different club games, a phenomenon that has already happened to some extent with European games and the two domestic cup competitions.
In theory, if the OFT wins, different companies could be offering games between different teams at the same time. It remains to be seen whether any attempts to restrict times and the number of games would be lawful. Inevitably there would have to be some level of co-ordination and agreement – after all, you need two teams to play.
The link between the OFT case and the proposed take over of Manchester United is fundamental and the Premier League would have strengthened its position if it had adopted a more critical stance to that deal. However, even a win for the Premier League is only likely to usher in further attempts to erode collective bargaining.
Whatever happens, the companies that own clubs are going to demand more in future for the broadcasting rights they own and a win for the Premier League would only defer this until 2001 when the next deal is due for negotiation. The question would be whether the Premier League could sustain a challenge to the collective agreement from the big clubs. With plans afoot for further European and possibly world club competitions, the major clubs may not be tied to national leagues for much longer and moves will have to be made to accommodate them.
Giving them more control over a valuable asset such as TV rights would be one way. In this scenario, all the OFT case does is speed up the process. The case is due to trudge through the courts for several more months, but may be settled by some form of compromise long before then. Whatever the outcome, it is likely that this will only be one of a series of shots to be fired by big clubs as they move towards maximising their commercial potential.
From WSC 145 March 1999. What was happening this month