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If TV football audiences really are in terminal decline, as the figures suggest, then what?

by Tony Attwood

In February 2015 the Premier League announced that it had sold the television rights to its games for a record £5.136bn, 71% above the amount it gained three years before.

Sky paid £4.2bn for five of the seven TV packages while BT Sprout paid £960m for the other two in the record TV rights auction. The deal began in August 2016 and will finish in May 2019.

To give a more clear example of what all this means, after the auction, BT said that its cost equated to £7.6m per game.   Sky said their bill was £11.07m per match.

Straight after the auction the Premier League chief executive Richard Scudamore said the money raised from the auction would be invested by clubs in making improvements to stadiums as well as “youth development and good causes” and said clubs would continue to “put on the best matches that they can”.

In effect as a direct result, the value of players on the transfer market shot up, and prices reached levels hardly imagined before, although the Premier League did say it planned to invest £56m in grassroots projects, including 50 artificial pitches.  That’s about the income from five games – or one weekend’s worth of football.

Here is the historic pathway of TV revenue – and I run it here because it contains a rather interesting event within it.

Period Income Percentage growth
1992-97 £0.191bn
1997-01 £0.67bn 351%
2001-04 £1.2bn 79%
2004-07 £1.024bn -15%
2007-10 £1.706bn 66%
2010-13 £1.773bn 4%
2013-63 £3.018bn 70%
2016-19 £5.136bn 70%

Following the last round of bidding Ofcom started to investigate whether there is enough competition in the way in which the broadcast rights to Premier League matches are sold, following a complaint by Virgin Media in November.  It then published its findings basically saying it had better things to do with its time than look at the way football was organised on TV.  Nothing changed.

So if it is all going to stay the same let us take a look at the figures, and the oddities within.

There was a huge leap in prices bid between the first and second bidding round (the 351% rise). The rise in fact was even greater but I’ve ignored the fact that the first period covered five years and the second four.  This is balanced to some degree by the fact that in each period the number of games on TV went up.

After that first increase there were all sorts of oddities.  A second massive rise (79%) followed by an actual decline of 15% then another huge rise, then a tiny rise, and two more huge rises.

Which shouts out one message – the situation is unstable.  It is a bit like the Stock Market which rises and rises and rises, and so people pour more money into the market, nodding when seeing the “market can go up and down” warnings, and then crying their eyes out when suddenly it corrects itself and goes down.

The fact is football is always run on a “whatever has just happened is what will always happen” basis.  You can see that with Arsenal – one bad match and the team is rubbish and everyone should go.

But two rises of 70% after such previous instability means something has to give soon, and the signs that this will happen have appeared in a Bloomberg report that says that only Chelsea are now drawing more viewers this year, while the audiences for matches involving Tottenham Hotspur, Liverpool, Arsenal, Manchester City, and Manchester United matches have all shrunk.   Which means subscribers are starting to unsubscribe and advertising revenue is down.

In fact the average live TV audience halfway through the season is down 11% of the first half of the season.

What really makes this bad news for Sky and BT is that they are committed to paying the income for another two and a half years.  If this decline continues then by 2019 they will be haemorrhaging cash because advertising rates are organised very close to the actual event.  Only sponsors commit to paying fixed rates way ahead – and even then, some have rates related to audience size.

And there is worse.  Compared with the 2010-11 season, Premier League TV audiences are down 22% per game this year.  And this in a season when no one is quite sure which way the league is going to go. Indeed in the Telegraph today eight of their esteemed pundits give their opinion on how the top six will finish, and everyone seems to come up with a different idea.

Worse again, the decline in watching big games is happening elsewhere.  The NFL’s average audience up to first week of November 2016 was down 14% on the same period the year before.  

Part of the problem is put down to the drift away from live TV in general, so suddenly live football has become an oddity.  Part of it is that football on TV is no longer unusual – we expect it to be there all the time.  Also it is now so easy to get an illegal live feed that people simply don’t need the sports channels any more.

And it is just possible that part of the problem is that there is a perception that there is something wrong with what TV gives its audience.   This might be a realisation that the way the games are described really isn’t quite what is going on (a topic we’ve covered many times).  It might be a perception that there is something wrong with the football and its refereeing.  Or maybe people are just fed up with the lack of real insight and knowledge of the people paid to comment.

While it is quite true that the ranting of Paul Merson against the appointment of a foreigner as manager of Hull was not during a live match, the nationalistic anti-foreigner rave which he shared with Phil Thompson which had no facts to back it up was one rage too many for some.  While such ravings might attract some right wing racial purists, it is not that attractive to quite a few others, and such an approach might not be doing the station much good.

But now let’s consider what might happen next.

Supposing at the next round of bidding it is quite clear that the drop in audience and advertising revenue has continued across three years.  Then the bids put in are going to drop.

At this moment clubs will find themselves packed with players for whom they paid £50m+ as the base cost of a jobbing defender, with all on salaries of far in excess of £100,000 a week.   Those players will suddenly become worth far, far less on the transfer market, and because they won’t willingly accept a drop in their income, they will become unsaleable.

That doesn’t mean this will happen, only that it might.  Some clubs will ignore such a possibility and keep buying – right up to the moment that TV confirms it is paying far, far less for matches, and so risk collapse.  Others will keep on, trusting that their owner will bail them out no matter what.  And some will keep going even though they have no escape route, because they know nothing else, and then will suddenly hit the wall.

If I am still here reporting football in two and a half years time, I think it might be an interesting story that is unfolding.


Art3

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16 comments to If TV football audiences really are in terminal decline, as the figures suggest, then what?

  • Luscious lisa

    An interesting analysis. But I think the critical measure is the number of subscribers to pay tv, rather than the number who watch the games. With Netflix and prime, and 140 free to air channels, exclusive live sports coverage is about the only ace in the pack for sky and BT. There really is not much point in having pay tv unless you want to watch live sports.
    If the link between subscriber acquisition / retention and live soccer coverage becomes broken in the uk, then the the tv companies will have to do a major rethink.
    I don’t have the numbers on acquisitions and detentions, but there is a sense there is a ceiling on subscriber numbers once you’ve signed up everyone who is happy to pay for live sport. Possibly, in the uk we have reached that point. If you cannot retain those subscribers, tv deals with fall rapidly imo.

  • Nonny

    Anyone who studied Economies or Statistics up to University level will always tell you that this kind of growth is unsustainable. However improved sponsorship and marketing might cause a buffer such that it might help to steady the ship rather than have a negative growth.

    Just wondering, how does the TV sites know the amount of people watching an event because it’s clearly not from the number of subscribers. I ask because you always get things like “70 million TV audience watched world cup finals or 35 million viewers watched Olympic 100m finals”

    I ask because I pay monthly subscription for a whole lot of channels, some of which I never ever watch. How is the calculation made?

  • jim smith

    Listen to Arsenal games on the radio, watch the highlights later that day, and then watch the whole 90 minutes free on Arsenal player the next day.

  • Norman14

    Nonny:

    Surveys, TV companies spent a packet on subscriber surveys, to see what they are watching.

    Past experience (ITV Digital) shows that clubs shouldn’t rely on TV money, which can be removed at the drop of a hat. When ITV Digital went under in 2002, a LOT of lower league clubs were dropped right in it, because they had spent on “future” income, which then failed to materialise.

    Quite a few clubs were facing winding up orders by HMRC, due to their failure to pay outstanding taxes.

    What amazes me at the moment, is the number of clubs, including those in the premier League, who are gambling their futures on TV money which has not yet been paid. Clubs like WBA, normally one associated with prudent ownership, seems suddenly awash with cash for transfers. Do they have those assets, or are they pinning their hopes on future TV payments.

    We need to bear in mind that ITV Digital went under largely because the Football League refused to give them more time to cough up their annual payment. The FL’s greed sent ITV Digital bust, and many member clubs to the edge of extinction.

    I currently pay for both Sky Sports and BT Sprout. I won’t be held to ransom though – there is a limit to what I’ll pay.

    I bet I’m not alone.

  • Goonermikey

    Seeing games ruined week after week by shoddy refereeing doesn’t help but my personal belief is that it has nothing to do with the game itself. It’s the idea that the only way to enjoy a game is to switch of the inane, biased nonsense and ill-formed rubbish of the idiots that are employed to both present and comment upon the game.

    At the end of the day if TV companies really believe that people like, Savage, the Neville brothers, Lawrenson, Ferdinand, Carragher, Owen, MacManaman, Shearer, Claridge, Jenas etc., etc actually have something of value to contribute then it’s no wonder they are committing broadcasting suicide. They employ people who generally have the same number of brain cells as the number on the back of the shirt they wore prior to retirement. So why would anybody with a brain listen to them.

    I used to hate watching away games in the pub when you couldn’t hear. Nowadays I ask if they can turn up the volume on the jukebox! I have suggested to the BBC that if they are really confident about the standard of their commentators and pundits, why not allow people to vote on the ‘red button’? What have they got to lose? However, they clearly think they know better than the viewer what the viewer wants. Chickens are on their way home to roost I’m afraid.

  • jim smith

    One fine day you will be able to buy a subscription to watch all the Arsenal games live, and just the Arsenal games. Or just another club if you really want. Why pay for all sorts of channels, games, etc you never watch ?

  • jim smith

    Sky do now tv by the day, by the week, etc. So not a huge jump to pay just for games you want to see, with all PL games available live. So you pay just to watch your team.

  • para

    Goonermikey
    Fully agree, and they are mucking up the broadcast of football by silly and selective editing, which i do not see in most Europe TV where you usually get to see everything.

    Arsenal is building up it’s media business just in case it goes all awry and away from TV companies.

    Maybe watch and pay per game will be here sooner than we think.

    It must be sad for some people to not function unless they have some kind of agenda to work from/to.

  • Luscious Lisa

    Jim Smith

    Interesting point.
    What price would an Arsenal pay to view game need to be before a soccer fan would opt for pay per view rather than an annual pay per view contract? Kindle book downloads might be instructive. If a PPV game were 99p/cents, then i can easily see a fan downloading almost without limit, say 100 events per year. That would generate more revenue than an annual sky subscription. Just wondering

  • WalterBroeckx

    In Belgium they give all the matches of the (rubbish) Jupiler League live on the paying Sports channel. I got that TV channel as they also have the rights for PL matches to see The Arsenal live. Never watch the Jupiler League.

  • Norman14

    Jim Smith/Para

    Interesting points. However, it would have to be a Premier League arrangement, and they wouldn’t want to give up the massive amounts from Sky/BT.

    Individual clubs would only be able to show home games otherwise.

    Currently, it’s £27.50 a month for Sky Sports (package) plus a tenner for multi room, and £27.99 for BT Sport. So, £65.49 in total. For 12 months, but only 9 months viewing!

    The problem would be the loss of other sports, if we swapped Sky and BT for a club channel.

    On reflection though, I’d be happy to pay a fiver a match to Arsenal for as many games as they could legally broadcast. That would be a lot of money globally, I’d say – probably more than they get from the current TV deals.

  • Gooner S

    Two years ago I lost my job and stripped back my expenses. Thankfully things are better now but recently I really thought about adding back Sky Sports and decided against it. In retrospect I wasn’t watching as much to justify the fees I was paying anyway. Lastly, I’m not going to pay for two subscriptions so the footballing powers need to think carefully about that. Then there is how people watch TV now. It’s much more discretionary and if you look at the price points of Amazon and Netflix, for TV and movies, versus Sky they are lower. This drives expectations in other markets to be cheaper.

  • Andy Mack

    I think most sensible people thought the amounts Sky/BTS paid out was too much and I expect it to drop a little at the next renewal even if the viewing numbers remained the same. They’ve pretty much saturated the UK market and now the numbers will leach away gently for various reasons from ‘everyone is broke’ through to ‘Less pubs to watch the games in’. But the reduction of viewers is much greater than that, so there must be something else.
    Personally I think the refs trying to make the games more entertaining is turning it into a bit of a circus, so I’m much less likely to watch games we’re not involved in.
    I share some tickets with a few friends so I rarely get to more than 6 games a season unfortunately (but that’s life…), so when I watch on TV it’s usually in a pub or on-line and in both cases I try not to listen to the commentators and for a few years now I rarely listen to the Pre/HT/Post game pundits who talk drivel. A few years back I did catch Gary Neville and he seemed to make sense, so I started listening to him but Carragher then joined them and started to make really stupid comments, which started Gary making equally dumb comments, so the pundits are back to being a ‘sound off’ time if possible for me.
    So IMO the combination of the ‘PMGO and Sky/BTS’ package is trying to manufacture a ‘Drama’ product rather than letting the drama of the game itself come through, and that gets up peoples noses. If I wanted to watch manufactured drama I’d watch reality TV and the Soaps, but I don’t.

    I think the real growth of viewers in the future is from the international marker, where more people in Africa, Asia etc are getting TVs and a set of lesser known commentators that have less of an agenda to sell to the viewers… But we can only wait and see…

  • jim smith

    Think next step could be full 90 minutes on Arsenal player at the end of the game, rather than waiting to the following day.

  • Andy Mack

    jim smith, I’d expect there to be some rules about not showing games on any thing until some hours (24?) after the game finishes, so Sky/BTS have some domestic exclusivity.

  • jim smith

    At the moment, yes. But that could change in future. Or maybe 10.00 pm rather than midnight as at present.
    Match of the day used to be one match, say 50 minutes, hence the title.
    Now it’s every match, but just very short clips.
    Arguably not in direct competition with individual club channels showing full 90 minutes.
    Sky and BT are mainly interested in live games, although they also show longer highlights.

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