Advanced Television

Analyst: Media rights “crucial” for ESL

April 20, 2021

By Colin Mann

Who buys the media rights and how much they pay is crucial to the proposed breakaway European Super League (ESL), according to Tim Westcott, Senior Principal Analyst, Channels & Programming at advisory firm Omdia.

In assessing the implications of the ESL broadly and the implications for broadcasters, rights holders and consumers in particular, he says a key question is who the media partner or partners will be. “Silvio Berlusconi was usually linked with rumours of breakaway leagues back when he owned AC Milan, while Rupert Murdoch’s Sky was instrumental in the foundation of the Premier League, he notes. “Given the importance of broadcasting (which accounted for around 85 per cent of UEFA’s revenues in 2018/19 and more like 100 per cent now), who buys the media rights and how much they pay is crucial,” he asserts.

“As seen in the recent German and Italy rights auctions, pay-TV broadcasters are no longer as keen to splash out on rights as they used to be, and streaming service DAZN has denied Italian press reports that it is on board with the new super league. Clearly, the big clubs are eyeing increased returns from growing markets like Asia and North America, but Europe will of course provide the bulk of its revenues,” he advises.

“Is there a US partner like Disney, NBC or Discovery waiting in the wings, looking for premium sports content to drive their D2C services into more European homes? Or would the clubs launch their own channel? It seems unlikely the European anti-trust regulators would like that idea much and neither, it seems, would the UK,” he concludes.

Detailed analysis from Omdia suggests:

  • The new league, a midweek competition, could launch as early as August 2021, with 20 clubs participating in two groups of 10, playing home and away. The top three in each group will qualify for quarter finals, with those placed fourth and fifth playing off for another spot.
  • Twelve founding clubs have been announced. Three are from Spain – Atletico Madrid, Barcelona and Real Madrid; three from Italy – AC Milan, Inter Milan, Juventus; and six from England: Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, and Tottenham Hotspur. Three more founding clubs are anticipated.
  • A women’s league will be launched ‘as soon as practicable’ after the start of the men’s competition.
  • All participating clubs will continue to take part in national leagues.
  • Founding clubs will receive €3.5 billion to support infrastructure investment plans and to ‘offset the impact of the COVID pandemic’. The US investment bank JP Morgan confirmed today that it is backing the new league.
  • The new competition will provide ‘significantly greater economic growth and support’ for the European game and will continue to make solidarity payments to smaller clubs which will rise in line with league revenues.
  • Florentino Perez, Real Madrid president, will be the first chairman of the Super League, with Andrea Agnelli, chairman of Juventus, and Joel Glazer, co-chairman of Manchester United, acting as vice-chairmen.

According to Omdia, behind the proposal is a long-standing dissatisfaction on the part of the big clubs about their share of revenues from club competitions. Arsenal, Liverpool and Manchester United have US owners who believe that, in comparison to NBA and NFL franchises, European football clubs are undervalued. While the new league would not totally do away with relegation, the 15 founder members would, it seems, be ring-fenced against it and taking a revenue hit due to poor performance on the field.

Reports suggest the 12 founders already committed will receive a welcome bonus worth between €200 million and €300 million ($240-360 million). This compares to the €130m last year’s winners Bayern Munich received – a sum that is of course not guaranteed. The league is being underwritten by the US investment bank JP Morgan, which is prepared to commit €3.25 billion in debt to get things underway.

The clubs’ argument is that their larger support base, better infrastructure, brand value and social media presence mean that they are justified in expecting a larger share of the revenue pie. The timing of the announcement – just as UEFA was poised to unveil a new format for the Champions League, with a 36-team league replacing the current 32-team group stage and each team playing ten matches – could mean this is a negotiating tactic to gain more control over European competitions. However, the Super League plans are too well-formed for this theory is completely credible.

Last year, the six leading English clubs tried to get their peers to agree to Project Big Picture, which would give them more say in the division of Premier League spoils. However, that proposal met with fierce resistance from other clubs and was shot down in flames. The English clubs are trying again, this time with backing from the big Italian and Spanish clubs – but not, so far, the French or Germans.

Among the reactions was a joint statement from UEFA, which would stand to lose most from the Super League which is in direct competition with the Champions League, and the English, Italian and Spanish football leagues and federations. Their statement said that they would remain united in their bid to stop the project, which they branded as ‘cynical’.

A statement from FIFA expressed slightly milder ‘disapproval’ at a closed European breakaway league outside international football structures. However in January, FIFA warned that any club or player involved in a breakaway competition would not be allowed to take part in FIFA competitions or those of its confederations – including UEFA.

Political, regulatory and legal challenges could also throw a spanner into the works. France’s President Emmanuel Macron and British prime minister Boris Johnson both yesterday said they would support football authorities in opposing the league.

“It must be said that football is a business, and has been for many years, with the burden of swollen salary costs passed onto to fans with increasing ticket prices and subscription fees for pay-TV services,” says Westcott. “Governments have largely let things lie (there has been no sign of an enquiry into fans and football promised by the Johnson government) while financial controls on clubs have been patchy.”

“There are, of course, many unanswered questions about the league, the most important being which other eight clubs would be making up the numbers. If none of the big German clubs or France’s PSG joins, the Super League will not be able to claim it features the best of the best. Juventus are in fourth place in Serie A and Liverpool, Tottenham and Arsenal are all sitting outside Champions League qualification spots in the Premier League,” he notes.

Super League Founding Clubs – ownership

Arsenal England Kroenke Sports & Entertainment (US)
Chelsea England Roman Abramovich (Israel/Russia)
Liverpool England Fenway Sports Group (US)
Manchester City England Abu Dhabi United Group (UAE)
Manchester United England Glazer Family (US)
Tottenham Hotspur England ENIC (UK/Bahamas)
AC Milan Italy Elliott Management (US)
Inter Milan Italy Suning Holding Group (China)
Juventus Italy Agnelli family
Athetico Madrid Spain Miguel Gil Marin, Idan Ofer
FC Barcelona Spain Supporters
Real Madrid Spain Supporters

Source: Omdia


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