Broadcasting revenue landscape – big money in the “big five” leagues

06.08.2019

Although broadcasting issues do not make the news on a daily basis, they have become the heart and soul of football today – for global audiences broadcast is the technology that allows them to follow the game without boundaries, while for football clubs it has become a vital revenue source in their operations. In this article, the KPMG Football Benchmark team looks at the broadcasting rights landscape of Europe’s five biggest championships.

The amount clubs cash in from broadcasting varies to a great extent. There are big differences between the leagues – as the EPL boast the most lucrative TV rights deals, its clubs can also register higher revenues compared to other leagues' clubs. West Bromwich Albion, for example, who finished last in the 2017/18 season, saw broadcasting revenue that would have made them the 5th top broadcasting earner in LaLiga in that season, meaning that in Spain only Real Madrid, Barcelona, Atletico Madrid and Sevilla were able to collect more from broadcasting.

The differences are also remarkable between top and smaller clubs of the same championship. That difference is smaller in England, due to a more equal distribution system: in the 2017/18 season top broadcasting earners Liverpool made more than twice the amount taken in by Stoke, who collected the lowest TV revenues in that year. That gap is significantly bigger in Spain (Real Madrid cashing in six times more than Leganés), and even bigger in Italy (Juventus collecting almost 10 times more than Crotone) in the same year.

On the other hand, considering the proportion of TV rights revenues in a club’s total operating revenue mix, we can see that smaller clubs are more dependent on that revenue stream than bigger clubs – a case in point is Spanish side Eibar, who recorded an astonishing 90% dependence on broadcasting revenues in 2017/18. Understandably, smaller clubs have limited chances for lucrative sponsorship deals, high matchday or commercial income, or for participation in international tournaments, which, in turn, could positively affect all those revenue sources, beyond the core income from UEFA.

The following chart shows the top and the bottom broadcasting revenue earners in three major leagues, and the share of their TV rights in their total revenues.
 


 

English Premier League sets the benchmark

Distribution of broadcasting revenues was the key issue and motivation behind the formation of the Premier League itself in the early 1990s. Earlier, TV rights’ income was distributed across the domestic leagues, whereas top clubs wanted to form an elite league, which could sell its own rights and share income only among member clubs.

Since 1992, when the breakaway Premier League’s inaugural season started, EPL’s TV rights’ revenues grew at an astonishing pace. The total income from domestic and international TV rights for the first cycle (GBP 254 million in 1992-1997) had grown 10 times by the 5th cycle (GBP 2.4 billion in 2007-2010). The latest (2016-2019) period ended with a total income of GBP 8.5 billion, and the league will cash in GBP 9.2 billion in the new 3-year cycle (2019-2022).

While overall income is rising, the value of domestic rights for the upcoming three EPL seasons has dropped from GBP 5.4 billion to 5 billion, despite 32 more matches being sold than in the previous period (200 vs 168). According to analysts, the decrease is rather a correction in the market, due to an inflated growth in the past several years. On the other hand, international broadcasting revenues for the 2019-2022 cycle should see an almost 35% growth (from GBP 3.1 billion in the previous broadcasting period to 4.2 billion).

In the new 3-year domestic TV deal Sky Sports will broadcast 128 live matches and BT Sport will show the rest: 52 matches. For the first time, an internet streaming service will also be joining in – Amazon Prime will live-stream two full rounds of fixtures (20 matches a season) in December online. Also, this will be the first season in England, when an entire round of matches will be broadcast live domestically. Amazon’s move is considered a major step in transforming the broadcasting landscape – it broke the traditional duopoly of Sky and BT on EPL rights.

Distributions of international TV rights have also changed. The English Premier League is the most-watched sports league in the world, followed in over 200 countries by TV audiences of some 4.7 billion people. To serve them, the Premier League runs a dedicated 's production arm, operated by IMG Productions, producing all content for its international television partners.

Overseas revenues had been shared equally among the EPL clubs since 1992, when that income was negligible. However, as football has become a global entertainment product, the significance of international TV rights has become evident. As a consequence, the “big six” clubs have recently been demanding a greater share of the income, claiming that they are the drawing card for global audiences. According to a compromise among the 20 EPL clubs a year ago, from 2019-20, the current level of revenue from overseas TV rights sales (GBP 3.3 bn) will still be shared equally, while any increase on top of that will be distributed according to their league position in the given season.

The GBP 4.2 billion overseas broadcast rights revenue for the 2019-2022 cycle is 46 % of the total broadcasting revenue. As international revenues are set to grow, in the next distribution cycle (2022-2025) the EPL is likely to see its overseas broadcasting income surpass its domestic rights for the first time.


But matching the EPL is not easy

The English Premier League’s financial supremacy is largely due to its success in securing lucrative broadcasting deals since its formation. The EPL has always sold its media rights collectively, enjoying stronger bargaining power, and also on a “no single buyer” basis, creating a competitive environment. Interestingly, major peer leagues followed suit, but with quite a delay: La Liga clubs sold their rights individually and switched to the collective model only in 2015; the German Bundesliga introduced the no-single buyer rule, initiated by the German competition watchdog, only ahead of the 2017/18 to 2020/21 cycle. The EPL’s equal distribution principle, which benefits smaller clubs, has also become common among the major leagues in the past several years.

The Premier League is by far the most successful football league in selling domestic TV rights. The income they can realize from broadcasting on a single match is almost triple what the major leagues can achieve.




The EPL’s dominance is also palpable on the international media market. If we compare the latest contracted international TV rights revenues per season, the EPL is the only championship to cash in more than EUR 1 billion in a season (EUR 1.582 billion), followed by LaLiga (EUR 897 million), Serie A (371 million), Bundesliga (EUR 240 million) and Ligue 1, with only EUR 80 million.


The Spanish LaLiga is also entering into a new 3-year broadcasting cycle in 2019-20, with Spanish telecommunications giant Telefonica outbidding its main rival Mediapro for the majority of broadcast rights. The deal is expected to raise EUR 3.4 billion in revenues, an almost 30 % rise, compared to the previous TV rights cycle. League president Javier Tebas expressed his intention to shrink the financial gap between LaLiga and England’s Premier League: he expects the two leagues to be practically equal within 10 years.

At the same time, La Liga begins a new 5-year deal with Mediapro on its international rights. The deal extension will bring LaLiga an additional EUR 4.485 billion in revenue, also a marking a 30 % increase on the previous 3-season cycle.


The German Bundesliga’s current 4-year broadcast rights deals, which started in the 2017/18 season, are to secure revenues of EUR 4.6 billion, an 85% growth compared to the previous cycle. Matches are broadcast live on Sky Germany (263 matches), Eurosport (40) and ZDF (3), while streaming platform DAZN holds highlight rights.

Although a new cycle is still two seasons away, Bundesliga CEO Christian Seifert questioned the “no-single buyer” rule, as he believes the possibility of monopoly on football fixtures could better help to increase revenues. In the meantime, DAZN signalled its interest in adding live games to its current portfolio in the next cycle.

While Bundesliga’s domestic TV rights revenues grow spectacularly, current international deals bring in only EUR 720 million (240 million per season), the second lowest amount per season after the French Ligue 1.  


Italy’s Serie A is starting the second year of their current (2018-2021) cycle. Satellite broadcaster Sky Italia is showing 266 live matches, streaming platform DAZN broadcasts 114 games, while national TV channel RAI is televising only highlights. Sky and DAZN (owned by UK-based Perform Group) outbid Italy’s biggest commercial broadcaster Mediaset.

The value of domestic rights decreased in the current cycle by 9% compared to the previous one, from EUR 3.2 to 2.92 billion – a painful turn, especially as Italian clubs are traditionally heavily dependent on broadcasting revenues. In the meantime, revenues from international rights more than doubled in the current season.


France’s Ligue 1 is entering the last season of their current 4-year (2016-20) domestic cycle, while most deals for the next 4-year period (2020-24) have already been settled.  Spanish group Mediapro won the main "lots" auctioned, with BeIN Sports securing the remaining packages. In contrast, Canal +, which had traditionally been the broadcaster of the French championship since 1984, have not been awarded any lot.

Contracts for the upcoming four seasons guarantee a massive, 59 % growth in revenues (from EUR 2.9 billion to 4.6 billion). However, Ligue 1 remains the least attractive among the “big five” leagues overseas, as the international TV rights revenues are almost 20 times smaller than those of the Premier League.