The latest broadcasting rights deal signed by the Premier League has set a new benchmark and widened the gap between English clubs and their continental peers. After the successful negotiations between La Liga and broadcasters, attention will now be on the Bundesliga’s upcoming deal and its ability to capitalize on the recent success of German football.
The sale of broadcasting rights has been a key revenue generator for football clubs for the past few decades. The recent convergence of the telecommunications and broadcasting industries has changed the media landscape, increasing competition and fragmenting viewer numbers across several broadcasting channels. Consequently, media outlets are prepared to bid higher than ever for exclusive football broadcasting rights.
In this article, the KPMG Football Benchmark team aims to analyze the price evolution seen in domestic broadcasting rights across the top divisions of the European ‘big-five’, namely the English Premier League, Spanish La Liga, Italian Serie A, the Bundesliga and French Ligue 1.
In 2016 the Bundesliga will sign a new broadcasting agreement for the 2017-21 period, from which German clubs expect a significant increase. Whilst Germany’s population and GDP per capita are the highest among the five countries under review, the current deal (2014-17), averaging EUR 628 million per season and EUR 2.1 million per game, proves that Bundesliga does not seem to be able to capitalize on the huge economic power of the German market. Besides the lower penetration of pay-TV in comparison to other nations, the lack of competition among media firms has been repeatedly pointed out as the reason for the low revenues achieved. Therefore, for the upcoming deal, German competition authorities are revising the possibility of introducing a ‘no single buyer rule’, a common practice in other big leagues to avoid a situation where a unique player can acquire all packages for live-matches.
Across the water, and thanks to the deal signed at the beginning of 2015, the Premier League has reinforced its leading position in terms of domestic broadcasting revenues. The competition between Sky and British Telecom has led to a remarkable sum being offered, close to EUR 2.4 billion per season for the 2016-19 period. However, the figures are even more impressive if analyzed on a price per game basis. Unlike the other leagues in scope, domestically, the Premier League goes for quality over quantity by only selling the right to broadcast 168 matches out of a total of 380 matches played each season. With the new deal, this translates to a jump from EUR 8.4 million (2013-16) to EUR 14 million per game (or EUR 21.7 cent per inhabitant per game). In future, any modification over the Saturday 3pm ‘blackout rule’ (no matches can be aired between 2.45pm and 5.15pm), traditionally aimed at avoiding an attendance drop at lower league matches, may impact both the total fee and the rights price tag per game.
Whilst, comparatively, the largest absolute increase in broadcasting revenues was recently registered by the Premier league, La Liga has experienced the most relevant regulatory changes in recent years. Until last season, Spanish clubs were allowed to sell their broadcasting rights individually, leaving smaller clubs with little bargaining power. Although the Royal Decree enforcing the collective bargaining of broadcasting rights will come into effect only from the 2016/2017 season, the clubs have agreed to proceed in advance with a joint negotiation for the on-going season, for which a total sum of EUR 600 million has already been allocated. Although some packages offered for the 2016-19 period are yet to be awarded, the most attractive lots have already been sold for EUR 983 million per season. These packages include the exclusive broadcasting rights to 342 league matches (Spanish law guarantees at least one game per matchday on public TV), this all amounting to EUR 2.9 million per game. Viewed in terms of the Spanish population, the deal would equate to EUR 6.2 cents per inhabitant per game, a result which is not only above all other competitions except for the Premier League, but it is also impressive for a country with the lowest population and GDP per capita among the ‘big five’ leagues.
The most recent deal for domestic broadcasting rights signed by Serie A dates back in 2014, when negotiations for the 2015-18 period were concluded at EUR 945 million per season, an increase of approximately EUR 100 million on the previous agreement. Although this figure is not far from the recent deal closed by La Liga, the lower price per game (2.5 million) and per inhabitant (EUR 4.1 cents) shows that there is likely further growth potential on the Italian market. The next negotiation for the 2018-21 period will be crucial in determining whether Italian clubs, whose income has traditionally been heavily driven by broadcasting revenues, will be able to keep up with the recent growth of other leagues.
The latest agreement in France’s Ligue 1 for domestic broadcasting rights will come into effect at the beginning of the 2016-17 season. The deal (2016-2020), signed in 2014, represents a 20% increase on the previous contract, and it was initially received with optimisim by clubs. However, at EUR 1.97 million, Ligue 1 remains fifth out of five in terms of average broadcasting price per game, even though France has a larger population and a higher GDP per capita than Italy and Spain. Furthermore, after the record-breaking sums achieved by other leading leagues, various stakeholders are suggesting that the recently accepted fee should have been higher.
At the current growth rate, brodcasting revenues are now cementing themselves as the most significant source of revenue for football clubs in most markets. Income from media outlets ensure the international competitiveness of big clubs and, to a certain extent, help to improve the financial position of smaller ones. However, despite the booming price of domestic broadcasting rights across Europe, the difference in revenue among the leading European leagues and the Premier League has widened significantly. Although the quality of Premier League live product is still considered above the average of the other ‘big five’ leagues, such a gap does not seem to be fully justified by the macro-economic indicators of the markets assessed in our analysis.
In Germany, where a new deal will soon be negotiated, any increased level of competitiveness and a higher penetration of pay TV might help to close the gap between the Bundesliga and the Premier League. Considering population sizes (Germany 81.2 vs England 64.8 million), GDP per capita (EUR 44,130 vs 42,748) and quality of product on the pitch, the difference in broadcasting revenues currently existing between the two leagues is hardly justifiable. It can be argued that football broadcasting rights spending across Europe’s ‘big five’ is very far from being balanced.
The Football Benchmark Team of KPMG Sports Practice can undertake further analysis of football industry data for you. The subject matter experts within the group can also assist stakeholders to assess and interpret the potential impact on their organisations suggested by the results of particular pieces of research and to identify reasons why a specific trend is being observed or to assess potential solutions and future scenarios.