The Market, The Deal & The Football League

by | Nov 20, 2018

The pervasiveness of “the market” into our lives can feel all-consuming at times, but there can be little doubt that, once a commodity has been fully commercialised, its value can only truly be reflected in what anybody is prepared to pay for something. As such, the gathering clouds concerning the Football League’s freshly-signed television deal with Sky Sports feel as though they could have been circumnavigated, but also that the current fetishisation of “The Deal” might be clouding some people’s judgement of what could have been achieved by the Football League with regard to its next television contract.

The Football League’s new five-year television deal with Sky certainly seems to have put it on a collision course with the biggest clubs in the Championship. These clubs – reportedly spearheaded by Leeds United, Aston Villa and Derby County – were reported last week to be threatening to break away from the Football League altogether over the contract, and one unnamed club executive told the BBC that the “EFL should not be patting themselves on the back thinking they have won and they should not see this as being done, because in fact, they have just started a war.”

The new contract is worth £595m over five years, an increase of 35% on the current one on a year-by-year basis. In exchange for this, Sky will cover 138 Football League matches (including a minimum of twenty from League One and League Two), all fifteen end of season play-off matches, fifteen League Cup matches, and the semi-finals and final of the EFL Trophy, as well as the right to provide an enhanced red-button service and show twenty additional games in the final two years of the contract, despite the fact that the amount to be paid is a £1m per year drop on the original “stand-still” agreement signed in September 2017.

At least a little extra light has been shone upon the biggest clubs’ anger over the League’s decision to sign this contract, over the last week or so. It has been reported that twenty-one of the twenty-four clubs in the Championship wanted the Football League to ask Sky for more time, or even negotiate a shorter contract and to allow some of the other issues that clubs had with it – the amount of money being paid, the number of times clubs are on TV, the mass streaming of midweek games – to be sorted out. With this bubbling away in the background, however, the nine member Board of the Football League unanimously agreed to the deal, including representatives from three Championship clubs, Reading, Brentford and Bristol City, and it might be considered that this decision was expressly going against the wishes of the clubs that have been at the centre of breakaway rumours of late.

But how does the deal signed by the Football League compare to the fevered money dreams of clubs who most likely consider themselves to be little more than temporary boarders in the League to start with? And how realistic is the likelihood of this breakaway talk actually coming to anything? Well, from the start of next season, Championship clubs will receive £2.95m per season plus appearances from a pot that will increase from £10.8m to £17.7m per season. With the appearance pot increasing in size by 70% and the basic payment increasing by 30%, it could well be argued that the biggest clubs in the Championship are those most likely to benefit the most from the new television deal. And this contract is a 35% increase on the previous one, which ran to 2017.

There are two ways of looking at the length of the contract that has been agreed. On the one hand, the standard “length” of television contracts in recent years has been three years, so yes, a five year contract might be considered quite a long time. On the other, though, whilst this contract is long, it doesn’t feel as though a five year contract is unusually long. Had clubs been tied in for, say, seven years or ten years, their reticence would be a little more understandable. To talk of a five year long television contract as though it’s some form of indentured servitude, however, feels wide of the mark. Indeed, the Football League might well argue that, during a period which seems likely to envelop England in a period of financial turmoil the full extent of which we don’t properly understand yet, signing a lengthy television contract now offers a degree of medium term security that it couldn’t readily turn down.

And then, of course, there is the matter of the number of matches that have been offered for live broadcast and the ongoing arguments over streaming. Sky has secured added content in the form of Championship matches being simultaneously on midweek evenings, and on top of this they can add commentary and graphics to its red-button broadcasts. This, in conjunction with the extra twenty live matches per season to be added from 2022 on, does raise questions. Did the Football League attempt to negotiate a larger payment for a 15% increase in live matches for the last two years of the contract? And if not, why not? There are clear risks to clubs from an increase in the number of matches being shown live or available to be streamed in terms of the effect that might be felt upon attendances, and the Football League will need to have a good reason why these increases weren’t mentioned in association with the annual payment amount being the same over the entirety of the contract in their statement yesterday, if they’re to assuage the anger of Championship clubs.

The clubs leading the charge towards a breakaway claim that the Football League has vastly undervalued this contract, but have been shy on the subject of how much they believe they should have been getting. But this is the thing about “The Market.” If the Football League’s television contract was worth what the biggest Championship clubs claim it is, there would presumably have been a bidding war which ended in a higher contract amount. However, the Football League claims that it has “fully tested the current market through our external advisors”, and that this is the value of their product at present. The fetishisation of “The Deal”, however, demands more. Current trends seem to indicate that there are men in very high places indeed who believe that they will receive more favourable terms if they bang their fists down on tables more angrily and demand that those that they are haranguing negotiating with simply accede to their demands.

There’s a problem with this, though. The Championship is not a “premium” product, and everybody knows it. It may well be more entertaining and enjoyable in some respects than the Premier League, but the Premier League simply exists on a different plane in terms of its national and global appeal. The growth of this disparity shouldn’t come as a surprise to anybody. It’s been going on for more than a quarter of a century, after all. At present, the Premier League’s three-year television deal with Sky and BT Sport is worth £4.55bn, with the amount that Amazon paid for their tranche of games having not been publicly disclosed. But these figures reflect the “values” of the contracts on offer, in that they are what the broadcasters are prepared to pay for them. It is understood that Sky’s bid for the Football League’s contract was substantially higher than anybody else’s, and even cynics would have to ask the question of who else would pay hundreds of millions of pounds for it. BT Sport are fully invested in the Premier League, whilst other broadcasters have repeatedly found themselves unable to compete with the depth of Sky’s pockets.

The sense of the Football League having called the potential breakaway clubs’ bluff is further accentuated when we consider what might happen next. In the event that this particular fit of pique was seen through to its logical conclusion, where might things end up? Well, the clubs concerned would earn themselves the last enmity of every other club in the Football League and the organisation itself. In addition to this, it seems likely that they would also incur the wrath of Sky Sports, whose television contract would obviously be substantially devalued by mass resignations by the Football League’s biggest draws. In turn, Sky Sports are long-term partners of the Premier League, and it’s difficult to see the sixteen clubs would be ingratiating themselves in their brave new world by pissing off the media partners of the very league that they all aspire to be in.

The Premier League, already facing pressure from the top as its biggest clubs seek a bigger piece of their television pie, might well be forgiven for looking at the potential PR disaster that a “Premier League 2” could be and saying “no thanks.” Would an increase in television revenues from having two divisions cover the cost of sixteen extra clubs sitting at that particular table? Would smaller Premier League clubs vote for a second division that might strangle their own revenues? This leaves the possibility of a standalone second tier, but there are further questions to be asked about this, as well. How would the breakaway clubs go about achieving this? Sure enough, they’d siphon off much of the money that goes to smaller clubs at present, but who’d be in the market for it? Presumably, exactly who was in the market for the Football League television contract just agreed. They’d have to get a new league past the FA (without whose authorisation it would effectively be a non-starter) and would have to try to rebuild bridges with the Football League and all those clubs who would be furious at them for departing in the first place.

For now, it feels as though the Football League has called the bluff of the “disruptors”, and that the threat of a schism has probably reduced in the immediate future. But it’s important that we understand who we are dealing with, when we talk about the current generation of football club owners. These are turbo-capitalists, and on the whole they didn’t buy into professional football to do anything other than make as big a profit as they could. Leeds United’s Andrea Radrizziani, for example, owns ElevenSports, which has already broken the 3pm blackout this season and clearly thinks of itself as a new broom to sweep aside previous conventions. Indeed, the extent to which supporters can persuade themselves, with the assistance of some professionally written statements and gestures, that club owners with no previous interest in their clubs suddenly love them as much as we do, is almost touching in its naivete. Numerically, though, they’re still in the minority and the Football League’s decision to sign this contract now has pushed the ball back into their court. It’ up to the potential splitters now to decide whether they really want to make that split or not. And this ultimate question is one that “The Market” wouldn’t be able to answer until there’s no point of turning back.