The Premier League is considering a strategic shift in its broadcast auction process, a move that could potentially attract international bidders and revive the annual domestic screening fees that have recently stagnated.
The league currently sells its domestic broadcast rights in three-year cycles, a frequency that some broadcasters find too frequent. The rights to televise football games are bought by broadcasters from the PL after outbidding rivals for packages of scheduled games. Currently, Sky Sports, TNT Sports and Amazon hold these rights. However, other potential bidders with deep pockets, such as Apple, are emerging on the scene.
In the last season, UK broadcasting rights accounted for 54% of Premier League club revenues, with the remainder coming from commercial sponsorships and match day ticket sales. However, the annual domestic PL broadcast fees have flatlined following a decade of growth.
The potential of international bidders
The Premier League is looking to international bidders from the US, Europe and Asia to reinvigorate the growth of these fees. For instance, NBC paid £2.1bn in 2021 for six years of US rights, a significant increase from what it paid in 2015. According to sports finance expert Dan Plumley of Sheffield Hallam University, overseas rights have grown from almost nothing to around a tenth of the total today.
In response to the stagnating revenues, the PL plans to extend the length of these contracts from three to four years. This move is expected to increase the league’s take to £6.5-£7bn compared with around £5bn for three-year contracts. The next auction cycle is set to begin soon.
However, the Premier League must balance its profit motive with the risk of regulation. The UK government has proposed an independent football watchdog, which could potentially impact the league's revenue strategies. As a result, the PL may increase its revenue sharing with lower league clubs to forestall tighter oversight.
The implication of the changes
Critics argue that changing the terms of TV rights contracts reduces comparability and could potentially obscure sharp price rises used to finance higher wages for elite players. However, the Premier League is likely to navigate these challenges strategically, given the potential benefits of the proposed changes.
The PL's proposed changes to its broadcast auction process could potentially attract more international bidders and revive annual domestic screening fees. However, the league must carefully balance its profit motives with the risk of regulation and the potential implications for lower league clubs.
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