- Solicitors For Business
- Solicitors For You
- Armed Forces Claims
- Clinical Negligence
- Court of Protection
- Criminal Defence
- Driving Offences
- Family Law
- Intellectual Property
- Media Law
- Personal Injury
- Personal Immigration Services
- Personal Insolvency
- Professional Regulation and Discipline
- Residential Real Estate
- Wills, Trusts & Estate Planning
- Will Disputes
- About Us
- News & Events
An insight into the Sporting Governance and Commercial Rights issues behind Project Big Picture and a European Premier League22nd October 2020 Sports Law
Stephen has been in–house counsel at Leeds United FC and has advised several English Premiership and Championship Clubs on a range of commercial and regulatory matters. Nick has experience of advising individuals and organisations on high profile Sporting Governance matters.
Together they apply their experience in providing an insightful perspective on how leading clubs are seeking to restructure English Football, the reasons for it and how Project Big Picture has been used as a bargaining tool and stepping stone to a European Premier League.
Democratic voting in football leagues
There is concern amongst the bigger Premier League (PL) and Championship clubs that the democratic one club, one vote principle on key issues relating to the running of the League, with major commercial agreements being dealt with by a Committee, is no longer fit for purpose. The higher profile PL and EFL clubs with the largest followings and who featured most regularly on live games feel that the socialist principles on which broadcast revenue is distributed amongst all 92 clubs means they are unable to gain a proper competitive advantage from their commercial success.
Talk of a breakaway league featuring the top teams in the Championship has long been mooted. Ironically, a European Premier League could be the catalyst that brings about that breakaway league featuring the top teams from the Championship and the remaining teams from the Premier League
Most football observers would consider that the way the current wealth (and other resources) are distributed provides for better financial competitiveness amongst the clubs, leading to greater competition on the pitch. This competition is ultimately seen as the PL’s Unique Selling Point (USP). On any match-day, a club at the bottom can beat a club at the top – it is precisely this unknown and excitement that attracts the fans domestically and around the world.
On the other hand, we live in a world where choice is everything, demand drives customer experience and consumer activity drives revenues. Why should bigger clubs not be allowed to use their fan reach and extensive distribution network (through Big Tech) to monetise their off-field success? Why should they be held back from being commercially competitive, they would argue?
In short the Big Six would argue they are being held back in competing with the top teams in Europe due to the structure of the domestic leagues. Their solution would appear to be to give an ultimatum to either adopt Big Picture or to form a new league with the teams they believe they should be competing against.
Currently broadcast rights agreements are negotiated centrally and the clubs vote equally on these issues.
Although the PL saw the overall value of its broadcast rights climb eight per cent to £9.2 billion for the current 2019 to 2022 cycle, the sales process culminated in a fall in domestic income, which was offset by a 30 per cent rise in the value of overseas contracts. With the pressure of Covid-19 starting to take its toll with huge losses of revenues due to an absence of fans and corporate hospitality from match-days, the PL clubs have had their transfer strategies and club economics thrown into disarray.
There was also the recent news that Chinese broadcaster PPTV failed to pay the first instalment of a £564m TV deal, which has led to the immediate cancellation of the contract by the PL. It is quite understandable therefore that the higher profile clubs should feel they ought to have an enhanced say in how these agreements are negotiated and how the revenue is distributed.
With regard to international broadcast agreements there is an interesting dynamic at play at present. With the lack of spectator access, logically there is a greater demand for sport broadcasts and so a greater potential for broadcast revenue for events that might not otherwise have been broadcast. Instead, broadcasters may argue this dilution devalues their rights and the lack of a live crowd devalues the product to which the rights are secured. It also means scheduled events have to be postponed. An event that may have merited Pay-Per-View (PPV) status may not be regarded as such at present due to the lack of spectacle with the absence of a live crowd.
With fans still not permitted to attend games, recently the PL introduced PPV at £14.95 per match, leaving fans now facing the choice of paying the PPV charge on top of regular subscription fees to access PL games. This has led to wide criticism as being too high and sure enough we will not see the viewing figures because the numbers are so low.
Over-The-Top (OTT) and online streaming Direct-To-Consumer (DTC) has not come in or been wheeled out as quickly as expected. However, it is widely accepted that these platforms are further leading to the Broadcasting Rights being diluted and their value coming down, and quickly! Most worryingly though, as viewing numbers are dropping too, rights acquirers are not investing in the sport itself, the primary product.
Traditional TV broadcasters, such as BBC and Sky Sports were very good at investing in the product, as they would invest below the line, through the promotion of their association with the rights they had acquired in either the PL or other individual sports events. Amazon has taken up a one-off, reportedly multi-million-pound deal for the rights to show Rugby Union’s new International Autumn Nations Cup in November, which coincides with its strategic push to attract new customers before Black Friday and Christmas. There has been little advertising by Amazon to expand the reach of the PL games.
The longer that revenue is not being amassed through the lucrative Chinese TV market (or other overseas markets); this is only going to extend the dark days for all the PL clubs. With Financial Fair Play (and the rearranged form it may reappear in), and generally for good governance, each PL and EFL club needs to know its revenue for the year ahead, and that is far from the case at the moment.
Currently the Premier League clubs vote on such key commercial arrangements democratically as do clubs in the EFL. The other extreme would be each club negotiating their own deals to broadcast their own games. That would require the teams who agree to that principle forming a breakaway league that could create its own new constitution though that was the catalyst to the creation of the PL in the first place. If not enough domestic clubs are on board this would inevitably hasten the creation of a European or World super league.
There will be an inevitable war of attrition if the big clubs wish to have a say in such commercial matters proportionate with their value to such contracts. If the other clubs wish to maintain the one club, one vote system on the basis all clubs in the league are of equal standing regardless of their value to the matters at hand this could be seen as stifling competition and commercial activity.
Sponsors and other stakeholders will be assessing the value of the rights they receive from the live broadcasts compared to a live sold out audience within the venues. The broadcast coverage along with social media campaigns is even more important at present in providing added value to those sponsors.
Project Big Picture (PBP)
The big clubs behind this initiative will have backed themselves with data regarding viewing figures and independent analysis as to their value to the overall value of key commercial contracts being negotiated on behalf of all clubs in the PL and EFL.
It is understandable that clubs who have a greater contribution to make to the overall value of rights agreements may have an issue with a one club, one vote system that determines how revenue is distributed and particularly whether that revenue should be shared more evenly between EFL clubs and clubs outside ‘the big six’. Whilst it is easy to argue those big six clubs are acting with self-interest it can just as easily be argued the current structure is anti-competitive if it keeps the handbrake on the bigger clubs commercial revenue.
Manchester United for example may argue that if their broadcast revenues reflected their value to the commercial agreements they would have been able to have been more active in the last transfer window whilst other clubs would have had less capability to secure their targets.
PBP was an attempt at a power grab and a move towards a breakaway league in disguise. Something that comes and goes every couple of years since the late 1990s. This is just the latest version of it and it will go away for now but will come back in due course. This version was particularly ill conceived and purely an attempt to expose the current lack of leadership within the game both domestically and globally!
PBP was ultimately voted against by the PL (apparently unanimously) and has probably set the bigger 6/8 PL clubs who were driving this initiative back a bit. It reflects the current demise of broadcasting rights/ revenues and it might only be a short time until a more constructive breakaway with proper financial benefits for everyone are offered to the lower level PL clubs and separately the EFL and their clubs.
European Premier League (or World Club Cup)
With Big Tech and Fan Reach the light at the end of the tunnel, the big PL clubs want to push through their matches to their fans, and why should they not be allowed? When they spent time and money developing their fan base, the club brand and commercial revenue streams, why should they be told, at a time when there desperately need to balance their decreasing incomings with their stagnant outgoings, that they cannot utilise the commercial opportunities that exist.
A recent proposal spearhead by FIFA and JP Morgan to replace the Champions League with a new formatted European Premier League is another example of the power that the big clubs are trying to wield. This time FIFA are undermining UEFA it is unlikely to get off the ground for similar reasons to PBP but it just shows the desperation that the big clubs are constantly thinking of new ways to maintain their status quo.
There is now a massive power struggle but football like many sports is self-governed with the governing bodies created by the stakeholders rather than by the state. On that basis government intervention may seem to be inappropriate unless in the context of anti-competitive practices. Power stems from the constitution but ultimately it lies with the stakeholders.
The PL Clubs offered £50m to EFL Leagues 1 & 2 and was rejected because it was a mixture of a one-off £20m grant and a £30m loan – that’s only £1m per PL club – when the PL clubs have spent over £1bn in the recent transfer market. It has been concluded that this amount of assistance is grosslhy short of the full amount need to protect the smaller leagues and clubs from going bust.
Gary Neville (led by David Bernstein - a former Chairman of The FA) has called for an Independent Regulator to be formed. There has however also been considerable commentary that football has been very successful in resurrecting its activity in the midst of a pandemic, and government intervention to protect the “people’s sport” could be counter-productive.
There are other governing structures available and it can be argued that in the United States their franchise model coupled with their draft policies ensure that no one team achieves overall long lasting dominance and that that preserves the overall value of the NBA, NFL etc and their global broadcast agreements. The EFL and PL would argue the same principles apply here and indeed the EFL has attempted to apply many of the NFL’s principles to the structure of it’s league. The football fan would say that this does not follow the traditional roots of the game and should not be endorsed.
The governing bodies and stakeholders did a fantastic job in coming together to put selfish priorities to one side to resurrect professional football and enable the leagues to resume and achieve a certain level of cohesion between the domestic leagues, European competition and International matches. Clearly that unity of purpose and sense of everyone being in it together is dissipating. The inevitable consequence of the rich getting richer and the poorer getting poorer is the extinction of the grass roots game and the loss of a good many clubs whose identity is tied to its local community as well as the unemployment of a significant number of pro and semi-pro players.
Perhaps the perception has been warped by the current inability to attend games as spectators. The evaporation of the lower levels of the game would mean that when fans are able to attend they would lose the ability to support a local team in the flesh but rather their experience will be that of supporting a European Premier League team with their only interaction being live PPV broadcasts and social media. Football fans in Bury may as well all decide to be Real Madrid fans as they would have as much chance of seeing Real Madrid as they would a local team. They may also however all decide that the PlayStation or Xbox Football experience is just as rewarding, and ultimately the lifeblood will be drawn out of the game.