Money still biggest prize in Premier League

Broadcasters and regulators are shaping up to redraw the commercial landscape of English soccer when broadcast rights come up for renewal in 2007. Richard Gillis reports on the battle off the pitchas the Premiership kicks off

Rio Ferdinand held out for €170,000 a week. Shaun Wright-Phillips, a very good prospect, is sold for €30 million. The Chelsea shirt is valued at €71 million in a five year deal by Korean electronics firm Samsung .

Make no mistake, money is still the biggest story in English football. Players fill their boots and club owners grow fat from their investment in the game. But change is in the air and events behind the scenes over the next year may mark the end of the gold rush.

The Premiership's commercial power has been arguably its most enduring feature since its inception in 1992. The numbers are staggering. Last autumn, BSkyB paid €1.58 billion for exclusive live rights until 2007, with the BBC adding €150 million for the highlights package which forms the content of Match of the Day. This was a slight increase on the previous contract, at a time when the value of sports rights generally was in decline.

In addition, the international rights to the Premier League, to broadcasters outside the UK, were sold for €416 million over three years, running to the end of the 2006/07 season. This was up from £255 million for the previous three-year period. Significantly, $175 million (€139 million) of this came from one deal, with Asian satellite broadcaster ESPN Star Sports. Barclays pay €82 million for the right to sponsor the Premiership until 2007.

Then there's mobile sponsorship - a new three-year deal with Hutchison-backed 3G mobile network 3, and Vodafone UK is delivering a further €143 million over three seasons.

At the heart of the Premiership's success is the way it has been packaged for sale as a product for television, with the rights to all games sold collectively by the FA Premier League. Since 1992, Rupert Murdoch's Sky Television has paid top dollar for exclusive rights to show live games.

However, for some time, the European Commission has been unhappy with pay-TV's grip on live soccer across Europe. And so when the rights to the Premiership were last up for sale, the regulators sought to introduce greater competition into the market by making BSkyB auction off six to eight top live games. This strategy came unstuck because none of the UK's free-to-air broadcasters were willing to pay the asking price - even though the commission and Sky had agreed a reserve price deemed competitive.

This hitch is unlikely to deter the EU commissioners from pursuing the matter further. Although it can do nothing for the duration of the current contract, commission spokeswoman Amanda Torres has warned that "change from 2007 is essential, [From that time] no single broadcaster will be able to acquire all of the rights".

This is a threat the FA Premier League is taking very seriously, as any leak from Sky's monopoly would lower the value of the rights considerably.

Also, it seems that other pay-TV and free-to-air broadcasters sniff the chance to get their hands on some live Premiership action. For example, it is no coincidence that Irish pay channel Setanta has reinforced its management team with Trevor East, a sports rights expert poached from Sky's crack negotiation team - a handy insider to have in your corner come renewal time. Setanta is keen to build on its portfolio of Premiership and Scottish Premier League games.

It is likely that some compromise will be reached between the football lobby and the European legislators. Some tough talking will take place in the corridors of Brussels over the next year.

The management team at the Premier League, led by chief executive Richard Scudamore, are acutely aware that an attempt to ignore the demands for a break-up of the Sky monopoly could aggravate the situation. This would result in the EU pursuing a more extreme endgame in which individual clubs negotiate their own TV rights with broadcasters, as is the case in Italy and Spain.

Were this to happen, it would mark the biggest change in the way football is financed since the creation of the Premiership.

One group with much to gain from an open TV rights' market are the big clubs such as Manchester United and Chelsea. For example, having paid €1.15 billion for Manchester United, Malcolm Glazer is seeking ways to make back his investment.

Roman Abramovich has invested about €500 million in Chelsea since buying the club in 2002. Chief executive Peter Kenyon has stated he wants Chelsea to stand on its own two feet and break even by 2010. Given the club made a €126 million loss last year that is quite a statement. The club paid a whopping €165 million in wages, 77 per cent of the club's annual income. Football finance experts say this will require the club to make €70 million profit every year for the next five years.

By comparison, Italian and Spanish teams negotiate their own TV deals. Serie A side AC Milan's total income from television was €134.4 million last year, according to accountants Deloitte. This compares favourably with Manchester United's take from the Premier League television deal. In 2003/04 TV money from the domestic broadcast agreement brought in €51.1 million to the club.

Few observers doubt that United and Chelsea would increase their media rights income given a free hand. However, opponents to this open market model cite the further polarisation between big and smaller clubs as an inevitable outcome.

In Italy 60 per cent of all television money goes to three teams: Juventus and the two Milan clubs, AC and Inter. In Spain, there is an even greater disparity between Real Madrid and Barcelona and the rest of the clubs in La Liga.

Such a fundamental change is a distinct possibility according to Jean-Paul de la Fuente, a TV rights specialist who advises Manchester United and the influential G-14 group of top European clubs on their television strategy.

"People forget that the Premier League itself was a change in the world as we knew it, as was the Champions League. It would be foolish to suggest major change won't happen again," he says.

For a sneak preview of life on the open market, fans would do well to look at the disparity in the value of club jersey sponsorships, which are negotiated individually by each club.

Chelsea recently sold its shirt for a record €14.5 million a year, to Samsung. Vodafone pays €12 million for the red shirt of Manchester United. Compare this with lowly West Bromwich Albion, final day survivors of last season. The Albion shirt brings in just €503,000 a year.

A game of two halves certainly. And nothing better illustrates the gulf better than the end-of-season bunfight that is the Coca-Cola Championship play-offs, where this year West Ham earned the third promotion place to the Premiership by beating Preston. This match has evolved into the most valuable game in world soccer, worth €50 million in increased revenue to the winning team.

It is clear that as clubs prepare for the start of the new campaign, off the field at least there is all to play for.