Premier League auction: not ripe for GAFAN disruption

20 May 2018

The overall scale of the GAFAN digital media giants may be huge, but the cost of becoming a major player in Premier League (PL) football remains utterly disproportionate to the current scale and ambitions of their video businesses in the UK.

Furthermore, the main package PL rights are live-only, UKonly, and of limited breadth of appeal, making a poor strategic fit for any of the digital players.

The cheaper minor packages, near-live and clips rights may be a better fit, but bidding on these will not move the needle in terms of the £1.7 billion per year main PL auction rights costs.

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BT and Sky’s content cross-wholesaling deal much reduces their risks of losing packages in the upcoming Premier League auction, with most of the strategic platform value of exclusive sports rights now wiped out.

The PL auction structure offers more games but less value, with the two smaller packages particularly unattractive, which cleverly nudges BT to retain a more expensive package, and thus most of its spending, if it wishes to downsize.

While demand from all potential rights buyers appears weak, paying less money to retain the same position will be challenging for the incumbents Sky and BT given high minimum package prices, with courage necessary to force these minimums to be reassessed

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The latest auction of live televised Premier League rights has exceeded all expectations as the next three-year package commencing with the 2016/17 football season will cost £5,136 million, 70% up on the current £3,018 million

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BT and Sky’s content cross-wholesaling deal much reduces their risks of losing packages in the upcoming Premier League auction, with most of the strategic platform value of exclusive sports rights now wiped out.

The PL auction structure offers more games but less value, with the two smaller packages particularly unattractive, which cleverly nudges BT to retain a more expensive package, and thus most of its spending, if it wishes to downsize.

While demand from all potential rights buyers appears weak, paying less money to retain the same position will be challenging for the incumbents Sky and BT given high minimum package prices, with courage necessary to force these minimums to be reassessed

Access report
Premier League: winner's curse
25 October 2017

The Premier league (PL) will be hoping for another huge increase in rights payments in the upcoming auction for the three seasons starting 2019/20.

Aggressive competition between BT Sport and Sky has led to hyperinflation of most premium sports rights. Sport now accounts for two thirds of multichannel content spend, but only 8% of its viewing.

BT’s current financial position makes it difficult to justify expansion or further hyperinflation of its PL rights portfolio, but it cannot withdraw completely.

Access report
Football auction to end all auctions
11 February 2015

The latest auction of live televised Premier League rights has exceeded all expectations as the next three-year package commencing with the 2016/17 football season will cost £5,136 million, 70% up on the current £3,018 million

By shouldering much the greater cost increase of 83%, Sky has held on to five out of seven packages, including the most prized Super Sunday; however, the latest auction results underline the continuing core importance of PL football in spite of all the recent multi-product diversification and investment in non-sport content

Though still the smaller of the two parties with just two packages, there is much to satisfy BT in the results. Its cost increase was an easily-affordable 30%, which will make Ofcom's VULA test more manageable given upcoming European Champions League payments. At the same time, the pressure on Sky's profitability has increased

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