The collective sale of broadcast rights package and legal implications.

Photo source : Premier League

Before the commencement of the 2019/2020 football season, Amazon acquired the internet broadcast rights of some Premier League matches which will be streamed on Amazon from the 2019/20 season after the US tech giant purchased one of the broadcasting rights packages in a landmark move for the game.

Under the English Premier League, Sky Sports and BT Sport will continue to broadcast games after purchasing rights to 160 matches for almost £4.5bn earlier this year, but they will do so alongside Amazon, who will show 20 matches per season for an initial three-year period.

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This arrangement has not only ensured the satisfaction of diverse customer needs of the viewing population but also ensured the revenue base of the league and the contracting clubs is fortified. 

Photo source : SportOnTheBox

Spanish football was for some years enmeshed in a broadcast controversy that allowed the individual clubs to sell their TV rights. This enthroned some sort of duopoly which ensured that the ‘big two’; Barcelona and Real Madrid amassed a large chunk of the TV money with the other 18 teams lagging far behind.

Admittedly, the commercial brand of the two teams ensured this duopoly inured for a long time. This development ensured the rich clubs in the league became richer while the poor ones became poorer.

To further elaborate on this development, it is reported that Real Madrid and Barcelona between themselves, accumulated TV rights money totaling over 480, 000, 000 Euros for the 2014/2015 season which was shared between the two clubs with the other 18 teams forced to share whatever remained of the TV rights deal.

Undoubtedly, this impacted the purchasing power of the clubs. Protests by other clubs and a paradigm shift to collective sale of broadcast rights birthed the new dispensation which has seen all the teams collectively assign their commercial rights to broadcast deals to the Spanish Football Federation to negotiate on behalf of the teams and share the TV rights money to all participating clubs. This development puts an end, at long last, to a scandal that has besmirched Spanish football for years.

From 2016, individual clubs in the Spanish topflight were no longer permitted to negotiate their own television rights, as Barcelona and Real Madrid have done in the past. The practice meant that in 2017, the two clubs shared around €280 million between them, a figure that represented around a third of the money on offer from the broadcasters.

To put the matter into perspective, under the former system, Atletico Madrid—who finished champions of La Liga in the 2013/2014 season earned €42 million from TV rights.

In contrast, Cardiff City, who were relegated after finishing bottom of the Premier League in England, received a whopping €74.5 million, according to Nick Bidwell of WorldSoccer.com.

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The above scenarios have diverse commercial implications for the participating clubs. Whilst the former model adopted by the Spanish Federation appears to encourage and reward brands, the English model is more egalitarian in outlook and seeks to reward on-field success. Which model has been adopted by the Nigerian league and why?  

Nigeria has adopted a similar collective broadcast sale model that allows the regulators of the league to negotiate on behalf of the teams and sell to the highest bidder. But why does this deal elicit more questions than it has provided answers to the seemingly grey areas of the TV deal despite the promising commercial outlook? Why have the details of the deal been shrouded in secrecy?

Apart from the TV money to be paid by the Chinese broadcast outfit, very little is known about this deal. Was there a public auction and if so, who were the competitors that lost out in that deal or did the LMC simply award the contract to the only available bidder for the TV rights? What should we expect from this deal in the next 5 years? These are posers raised by this deal whose answers will only become clearer when the deal takes full effect.

In the race for contents, the concept of premium and its exclusive exploitation have been key. Combining premium and exclusive offers immediately results in a higher price and, given that it is produced from a dominant position, institutes barriers to competitors. This has undoubtedly led to the intervention of the competition bodies of many countries, which have conditioned the acquisition of rights, limiting their exclusivity and/or the periods of validity of contracts.

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