By Tony Attwood
The chief executive of BT has said that the endless price rises for the cost of TV sports rights must come to an end, and he has suggested that the place that this decline should begin is with the Champions League – for which TV bidding has just opened.
It is a bit of a bizarre statement given that it was BT’s bidding which put the cost of Premier League matches up by 70% in the last couple of rounds of Premier League bidding for live games, but logic and TV bidding for football have never sat side by side.
But as always with such statements, what was most interesting was what BT’s top man did not say. He did not, for example mention the dramatic decline in ratings for football on TV that has been found this season.
Some figures have suggested that some of BT Sport’s Champions League figures have been down by as much as 40%. Curiously a similar sort of decline is also being seen in the USA for their major sports coverage.
There are always explanations and excuses, as everyone tries to work out if what has been seen is short term or long term. Seasonal factors, one‑off issues… they are all cited. The weather, the rise and small of teams with smaller world wide fan bases, the relegation of Newcastle whose games traditionally get a decent audience… it goes on and on.
But the point is also that getting streams from non-legit sources has become easier and easier and so the question of whether one wants to pay a subscription for stuff you can get for free is becoming more central.
And let us just assume for a minute that the number of people watching on Sky and BT goes down, for whatever the reason. And maybe the number of people watching around the world goes down too. What then?
Well, first the broadcasters will offer far less money for the rights for matches. That will mean, quite simply, the money coming into the clubs each year takes a huge dip. The stadia will still be full, so that income stream will continue, and the oil and gas exploiters who fund clubs such as Manchester City and Chelsea will still be there. But one revenue stream will have got a lot smaller.
Several things will then happen. First, Financial Fair Play will suddenly become a factor again because although owners can make up the shortfall, that income will not be counted as earned income as the money from media rights is. So the clubs will have to reign in their spending.
Second a lot of the smaller clubs, for whom the media rights is a major part of their income, will suddenly find their finances screwed.
Take Burnley for example. This season they will earn about £170 million from media rights, which give them an income greater than Ajax, and most of the clubs in La Liga, the Bundesliga and Serie A. In short, in a trice, Burnley have become one of the 30 richest across the continent.
Now Burnley have been clever thus far, in that they have used the money earned of late to clear all their debts. But it is also a fact that they are guaranteed this money each year they are in the Premier League, and so the temptation is there to spend this money and try and stay in the Premier League. They, like everyone, are spending it on transfer fees, and on salaries.
Although, because it is simplistic for the media to do this, most of the “debate” (I use the word lightly and not in its dictionary definition) about football is about spending money on transfers, much of the money spent on players comes from salaries. J. Vardy, a player at Leicester, for example gets around £4 a year. Mesut Ozil is reckoned to be on £7 million a year.
Now these players are going to be on these salaries, even if the money from Sky and BT plus the overseas rights, collapses. Worse, because no one will have much spare cash any more, if the amount paid for TV games goes right down, the re-sale value of the players will collapse. A player who cost £30m and who is still playing at the same level, might be worth just £10m.
Worse still, moving on players will be hard. Consider a player who is getting £5m a year at the moment when TV deals collapse. The club want to move the player on to reduce their cost base, but suddenly find they can’t. The player won’t want to move to accept a lower salary. The middle ranking clubs won’t be able to afford the top salary now the broadcast money has gone.
All of which means the player refuses to accept a transfer which would entail him getting a lower salary, as he is perfectly entitled to do. No one wants to buy him, so his contract runs down. At the end of the contract the player walks away on a free. This means that his salary can probably be maintained at his next club because he is not costing anything in a transfer fee (so the money set aside for the transfer just moves into his salary).
The net result of all this is that clubs sitting on players valued at maybe £30m today, and with salaries of £5 million a year will find that ultimately they can recoup none of that transfer money, while the players, by moving on a free, can keep their salaries high.
Suddenly the whole transfer market as we know it, collapses. Smaller clubs that were dependent on the fire sale of a few players if time got tough, find they can’t sell the players, and basically run out of money.
Will it happen? Maybe, maybe not, but it shows what a knife edge football finance is based on. For an industry to get itself in the position where its whole financial future is dependent on another unrelated industry and a rapidly evolving technology over which it has no control is bizarre to say the least.
The only survivors will be the clubs that have a habit of developing their own players and those with good reserves which they have not thrown around during the “spend some ****ing money” years.
Arsenal History Books on Kindle
The novel “Making the Arsenal” by Tony Attwood which describes the events of 1910, which created the modern Arsenal FC, is now available for the first time on Kindle. Full details are here.
Also available on Kindle, “Woolwich Arsenal: the club that changed football” the only comprehensive history of the rise of Arsenal as a league club, and the attempts to destroy the club, from within and without. For full details please see here.
The latest from the Arsenal History Society
We are currently 90% of the way through the most detailed review of Arsenal in the 1930s (the era that made Arsenal into one of the greatest teams) ever written. The latest articles are
- Arsenal in the summer: 1938. The Nazi salute; the world record signing.
- Arsenal players in the 1937/38 title winning side, and comparisons with earlier seasons
- April/May 1938: from no titles to five in one decade – and the most amazing title of them all.
The Arsenal History Society publishes numerous series of articles exploring different aspects of Arsenal’s history. You can find an index to all the series to date on the Society’s web site