Sky TV rights
Unless you live on Neptune, you’ve probably seen in the media that the Premier League football rights are up for grabs again. You’ll also probably be aware that it’s for lots of money and will mean lots of games are switched to silly times.
But apart from that, what exactly is on offer? And what impact, if any, will it have for Newcastle United? Let’s take a look.
What is the new TV deal currently on offer?
It’s for the domestic broadcasting rights to show Premier League football for the three seasons 19/20, 20/21 and 21/22. This is the Premier League’s 9th domestic TV rights auction and there are seven “packages” up for grabs.
Who got what?
Sky gets two more games a season (128), “first picks” of the best fixtures every weekend and a chance to experiment in Saturday primetime with the 4 packages they secured:
- 32 matches on Saturday at 5.30pm (package B)
- 24 matches on Sunday at 2pm and 8 matches on a Saturday at 7.45pm (package C)
- 32 matches on a Sunday at 4.30pm (package D)
- 24 matches on Mondays or Fridays at 8pm and 8 matches on Sundays at 2.30pm (package E)
BT purchased a single package:
- 32 matches on Saturday at 12.30pm (package A)
A further two packages are still to be awarded.
- 20 matches from one Bank Holiday and one midweek fixture programme (package F)
- 20 matches from two midweek fixture programmes (package G)
So Sky are 4-1 up going but purportedly BT are still in for the final unawarded packages so could make a late comeback.
How much did they pay?
Sky will pay £3.6bn while BT will pay £885m. A total of approximately £4.5b. Kerching!
How does that compare to previous deals?
Whilst two packages are still to be awarded, it’s unlikely that the total deal will reach that of the current deal (2016-19). The total paid so far is about £4.5m compared to £5.1m for the 2016-19 deal.
Sky are paying £3.6bn under the terms of the new deal, down about £600m from last time. BT are paying £0.9b, down about £75m although they are screening less games under the new deal.
Will the savings be passed onto Sky viewers?
Well not likely! Sky has said that its savings will go into making more original TV content, such as Fortitude and Riviera. And repeats of Porridge.
Has the bubble burst for Premier League TV broadcasting?
Not really. Whilst the new deal is worth less to the Premier League, it’s still a very attractive product, particularly with NUFC back in the top flight obviously. It will still leave the Premier League as the richest league in the world by some margin. Other bidders, including Amazon, Netflix and Facebook, are beginning to show an interest which is likely to further inflate future prices.
Is there any more broadcasting income that Premier League clubs can expect?
Yes, there’s also the overseas rights to be sold. In the 2015 auction, the Premier League sold the international rights to live football games for about £3.3bn over three years, on top of the £5.1bn it raised from selling the UK rights.
It’s anticipated that the uplift in overseas rights will more than cover any shortfall in the domestic rights.
What does this mean for Newcastle United?
We’re rich! Well, as long as we stay in The Premier League obviously.
What will we receive each season as a result of the new deal?
Difficult to say as much of the revenue is based on number of matches screened, league finish etc. But the table below showing TV income in 16/17 will give an indication. The income in 2019/20 for the new deal will not be too dissimilar. A minimum of £93.5m a season. Not too shabby.
Will this make NUFC more attractive to buy?
Yes. Investors are interested in future discounted cash flows. As long as NUFC are receiving the Premier League TV money and don’t look like being relegated, they will be more attractive to investors. The downside of course is that the club will be more expensive to buy meaning Ashley is likely to receive a larger profit from selling the club.
Doesn’t he deserve to make a profit after the phenomenal success during his tenure?
Will the new TV deal mean more new signings?
Not necessarily. If Ashley still owns the club, it’s likely that the additional TV revenue will go towards repaying his loan or racking up profits.
This was certainly the case for the 6 seasons prior to, and including, the last set of reported accounts (15/16). And we haven’t exactly had a Sheik Mansoor-esque transfer bonanza this season despite the record breaking TV revenue that the club will receive.
I’ve been ranting about this in True Faith for years. I’m convinced that everything Ashley does is aimed at making the club more attractive to sell so he can offload it at a profit. This will just give him more ammunition to demand a higher price.
So on balance, is the TV deal good for Newcastle?
Putting aside that Ashley is unlikely to make much of the TV income available for transfers and that it may mean him walking away with a whopping profit from selling the club, I don’t think the huge TV deals are particularly beneficial for Newcastle, even if they do stay in the Premier. Let me explain why.
Back in 1998, TV income made up only 22% of our total revenue. But because of our match day income and commercial revenue, we had the 5th biggest turnover in the world (even larger than Barcelona’s). Our support and merchandising gave us a massive advantage over other clubs. We’ve now lost that relative advantage as a result of the TV deals (and the club standing still under Ashley).
Most Premier League clubs (other than the top 6) now get the vast majority of their income from TV money. The huge gulf in match day attendances between Newcastle and say Bournemouth does not really disadvantage the south coast club too much as match day income is such a small part of overall income. Our relative advantage is diminishing and will continue to do so.
It would be better for NUFC if Premier League clubs had to rely on their crowds and merchandising for their income. We may then be able to compete with your Watfords in the transfer market. Although with Ashley in charge, that remains to be seen.
ANDREW TROBE – FOLLOW ANDY ON @tfAT1892
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