Boom over?

With growing doubts over football's dependence on TV, we asked five people from diverse areas of the game where they thought the relationship was going

Michael Dunford – chief executive, Everton
"I think the general assumption – rightly or wrongly – is that it would be unrealistic for any­one inside football to put hand on heart and say they believe that the prices paid for television rights will continue to keep rising. The general belief is that, in terms of price, we have now peaked – and once you have peaked there is only way to go.

It may well be that, come the end of the current deal in 2004, several clubs will discover that they have over-extended themselves; that’s to say they will have com­mitted money to plans and deals which might not be forthcoming. There is, indeed, an argument which suggests that football in this country has become too dependent upon the revenue generated by television deals. I think it is fair to say that had the current deal not been so generous, many of the leading players within our Premiership would not be earning the sort of salaries they are currently enjoying.

Precisely what will happen if, say, the next big deal isn’t quite as big and as generous as the current one remains to be seen but, who knows, we may be moving close to a situation where the days of the really big wage packets are numbered. It may well be that the much talked-about boom is going to end shortly and if that does happen there could be problems for several clubs. But I do believe that those clubs who followed a strict policy of in-house prudence – like Everton – will not suffer unduly."

Matthew Garrahan – sports business correspondent, Financial Times
"There is little doubt that the Premier League’s recent broadcasting deal, which is set to pay more than £1.6 billion to the 20 member clubs, is not going to be bettered next time round. There are three reasons for this. First, media companies have been for­ced to rethink their attitude towards football. As ITV Digital has shown so far this season, broadcasting hours and hours of football does not guarantee large numbers of viewers. The station’s £315 million con­tract with the Nationwide League is already looking like a costly gamble, and it is unlikely the clubs that play in that league will receive such inflated sums again.

Second, the broadcasting and media market is set to change. The recent raft of broadcasting contracts were inflated by intense competition from the main media groups – BSkyB, ITV and NTL. Granada and Carlton, the main shareholders in ITV Digital, are understood to be consdering closing the business. Such a move would mean less competition for BSkyB and, consequently, lower prices.

Third, larger clubs in the Premier League are keen to retain a greater share of their own rights, rather than sell them as part of a collective bundle, which hap­pened with the most recent deal. Clubs with large glo­bal fanbases like Manchester United stand to make more by selling their own rights – the club is keen to sell its own overseas rights next time – meaning less for the smaller clubs reliant on the League’s collective overseas deal.

All this points to a reduced pot of media money for English clubs, with smaller clubs set to suffer more than their richer counterparts. Wage bills are likely to be cut accordingly – and those clubs that carry on pay­ing salaries to their players which are beyond their means are likely to run into trouble. Other areas will be less affected by smaller payments for media rights. Clubs like Leeds United, who recently announced plans to raise cash via a bond issue, will still be able to borrow money in the debt markets using future in­come from the sale of tickets, rather than media rights, as security.

Whether Champions League and international media rights will be worth less in the future is more difficult to determine. The Football Asssociation made a conscious decision to get its games on the BBC and reach a wider audience, rather than go for more money from a pay-TV company. And while empty seats are common at Champions League matches, the competition is still proving to be a ratings winner.

But the boom in the sale of media rights in English football is certainly over. A lot of money has been thrown at football in this country, and most of it has been spent unwisely. With less money around, clubs will be forced to act more prudently – and stop spending obscene amounts of money on paying decidedly average players – which in the long run is probably not a bad thing."

Dominic Coles – BBC director of sports fights and finance
"Generally, never say never, but there are a num­ber of economic factors which would in­dicate that football and other sports rights have peaked. That’s undoubtedly the case for the Premier League. As for the Nationwide, I just hope the club chairmen have spent wisely as they may not see even a fraction of the £105 million a year ITV and ITV Digital paid last time round, a deal which may well go down as the high tidemark for the cost of sports rights.

If TV reserves and rights payments were to fall, certainly the way in which the BBC would cover foot­ball would not change. However, the num­­ber of mat­ches covered across all television platforms may fall in time. It’s for ITV to predict whether they will get the viewing audience they require by moving to a later time on a Saturday. The 7pm slot was a bold step, partly dri­ven out of necessity to recover some of the £61 million per annum they are paying for the rights (compared to £20 million a year the BBC paid last time round). It’s unlikely they will now recover their investment.

It is entirely possible that pay-per-view football will be abandoned altogether. When those whose whole lives are football – for example, those who work in foot­ball itself, sports media, club officials – choose not to subscribe, there must be over-capacity in the supply of live footballing moments.

Commercially, there’s little doubt the football mar­ket has reached a plateau. It is now the job of club chairmen and their advisers to manage their accounts going forward. Much of the TV revenue has found its way into players’ pockets, which may sound unusually dem-ocratic, even socialist. However, this ongoing cost may well prove unsustainable going forward. Some­thing will have to give."

David Conn – author, The Football Business
"ITV moving The Premiership from 7pm back to late night is very significant. Television prog­rammers mostly play safe and follow the herd, so I think this is a landmark: the end of the idea which grew through the 1990s that football has become mass mar­ket family entertainment. World Cups and Eng­land matches will still be able to close the country down, but I think TV will now regard domestic football as the pro­vince of its traditional audience of enthusiasts.

Of all the signposts to the bursting bubble, I think this is one of clearest. Most informed people are very clear that the current TV deals of around £2 billion over three years for the Premier and Football Leagues will be the last collective deals of this size. ITV’s experience makes that much more likely now. Predictions are haz­ardous, but I think we will see the big clubs making more money though individual TV deals selling to an increasingly international market, and payments to the rest dwindling.

Clubs have tied themselves to long, expensive con­tracts to players, so many are likely to be in desperate financial trouble – some are already. Even in this age of plenty, since 1992 around 20 out of 72 Football League clubs have been in administration. I fear we will look back at this period, around a decade of unsurpassed wealth for football, and come to see that it obscenely enriched a few players, their agents and some club chairmen and was otherwise unforgivably wasted."

Barry Horne – chairman, Professional Footballers Association
"I don’t expect to see football revenue decreasing ar­ound the time of the next TV deal but I think we will see a levelling off. Certainly I don’t think we can expect the sort of quantum leaps in income from television we’ve seen over the past ten years.

If revenues do level off, one would assume that sal­aries will stabilise too, unless clubs are able to find other substantial sources of money. But we’ve got new broadcasting companies involved in covering football now as well as additional forms of media, for example it will be broadcast on the net and people can watch matches on their PCs and phones.

How these new technologies perform will determine in part the level of TV income in the future. Don’t forget the problems BSkyB had initially with viewing figures and perceived quality, but ten years on the excellent coverage has certainly been a factor in the rise in popularity of our game. We may be saying the same thing of the various digital companies and the internet in the future.

In 1996-97 the Premier League had to go to the Of­fice of Fair Trading to win the right to negotiate cen­trally on behalf of all the clubs, which guaranteed a more or less even distribution of TV money. The PFA supported this, thinking it was a way of maintaining the integrity of the league and therefore protecting the interests of the smaller clubs.

That court judgment was for a limited period. The bigger clubs already have their own TV channels and may push for control of the rights to broadcast their own matches in the future. The likes of Leicester and Southampton might receive £24 or £25 million from broadcasting rights through a centrally organised TV deal, but may find it difficult to raise those sort of fig­ures for themselves. Any development that might hin­der fair competition has to be a concern for the game.

Football clubs will have budgeted ahead for at least three years and players’ salaries are a massive part of their budgets. What may be of concern to some clubs is that they may well now be making commitments which extend beyond the next TV deal." 

From WSC 178 December 2001. What was happening this month