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According to Ampere Analysis, with the auction for the TV rights for Germany’s Bundesliga soon to kick off, the league looks set to become the world’s second most valuable football property, leapfrogging Italy’s Serie A, and closing the gap on the English Premier League.
To date, the value of the German league has lagged far behind the Premier League, but with new rules and the toughest ever line-up of competing bidders, Ampere Analysis predicts a €3.6 billion to €4.4 billion bill for the four-season deal. Sky Germany, which has to-date marketed itself as the ‘all games, all goals broadcaster, will no longer have the monopoly – but the broadcaster remains the favourite to control the majority of the live TV rights.
Here’s the Ampere Analysis take:
We expect the value of the free and pay broadcasting rights for the Bundesliga to reach between €3.6 billion and €4.4 billion for the four-season deal from 2017/18 to 2020/21. If this happens, the German football league will leapfrog other European leagues to become the second most valuable soccer property after the English Premier League.
Satellite pay TV (most recently controlled by Sky Germany) has had the monopoly on Bundesliga TV rights since 2005, but the introduction of the ‘no single buyer’ rule – an attempt to drive value by stimulating price competition – has ended that. Between 10 per cent to 30 per cent of 306 Bundesliga games will be awarded to an alternate buyer.
That new rule means tougher competition for Sky Germany from players including Amazon, Deutsche Telekom, Discovery and Perform Group. In the last round, although Sky was ultimately victorious, its bidding war against Deutsche Telekom in the last auction had a major impact on price.
Our most likely estimate for price is based on the average competitive base rate inflation, suggesting a value for the pay rights of €713 million per season. Adding the free rights would take the value to €950 million a season or €3.8 billion for the four-season deal.
At this level, and based on our programme spend forecasts, Sky could afford to bid for the rights without a significant increase in the proportion of its programming spend assigned to Bundesliga over the course of the contract.
At the upper bound, rights could go even higher. At its peak, inflation on pay TV rights alone has been as high as 94 per cent in Germany, a level that would push the pay TV rights value to €940 million per season. That would take the total bill for pay and free rights to €1.1 billion per season or €4.4 billion for the four-season deal. At these levels, we think it unlikely a new entrant would gain the majority of the rights over Sky.
But even at the lower levels, the auction will see the gap close on the Premier League’s TV rights. The previous auction for the Bundesliga saw the rights sell for €645 million a season. If our forecasts are correct, the new deal will see Bundesliga rise to just under half the Premier League’s current value of €2.1 billion a season.
The billion Euro question for Sky Germany is, what is the value of the Bundesliga?
According to Daniel Gadher, Analyst at Ampere Analysis, this round of bidding for the rights for the Bundesliga is going to be the toughest – and most expensive – to date. “Sky Germany’s slogan ‘All games, all goals’ underlines how the broadcaster has built its brand identity and subscriber base through offering premium content, a key part of which is the German football league. Losing 10 per cent to 30 per cent of the rights is to be expected with the auction’s rule changes, but there’s a high risk of churn and falling revenues if it fails to secure the remaining games. The question is: ‘How much is Sky Germany prepared to pay for the rights, and can it afford to lose?’”