The European soccer season is underway again but as clubs resume continental competition, some of the most significant action will be taking place off the field. The Premier League will be looking to drive home its financial advantage as it deals again with broadcasters but at least one other league is trying to mount a challenge to that supremacy.
Its clubs may have struggled in the early fixtures of this season’s Uefa Champions League and Europa League, but there is little doubt that the Premier League has set the standard when it comes to financial power. English soccer’s elite clubs have become the richest in the world and they owe much of it to the enormous success of the league’s broadcast rights operation.
In February the Premier League signed new domestic television deals with broadcast partners Sky Sports and BT Sport for a combined UK£5.134 billion for three years until the end of the 2018/19 season. That was a stunning uplift on the UK£4.18 billion contracts currently in effect, whose impact on Premier League finances was evident in the record UK£870 million outlay clubs were able to find to spend on fees in the recent summer transfer window.
If that result was in part attributable to the intense competition between BT and Sky in the ‘triple-play’ telephony, broadband and pay-TV space, the renewal the league struck with NBC for its US broadcast rights gave evidence of the international appeal of US soccer. NBC spent a reported US$1 billion on a six-year renewal of a partnership that has delighted executives there since it began in 2013. Premier League soccer has met expectations as high-class ballast for the NBC Sports Network and a Saturday morning proposition for the main network, delivering a youthful, aspirational and cosmopolitan audience prized by advertisers.
As the Premier League goes to market elsewhere around the world for its next cycle of rights, which will kick in for the 2016/17 season, it looks likely that it will be building on its already formidable lead. Now, as it prepares to switch to a ‘clean’ brand in 2016 when Barclays’ title sponsorship deal expires, it is building for the future.
The architect of much of that success, Richard Scudamore, has moved from the position of chief executive to a newly created role of executive chairman. Following the resignation of Nic Coward as general secretary there has been a further reshuffle, with Richard Masters promoted from director of sales and marketing to managing director, Paul Molnar becoming director of broadcasting and Bill Bush becoming executive director with responsibility for strategy policy and corporate affairs. Tellingly, Molnar will now be expected to work closely with Scudamore on the domestic TV rights business. Scudamore had previously undertaken that operation solely with the assistance of external lawyers.
The Premier League is unusual among Europe’s so-called ‘Big Five’ leagues in that respect. Germany’s Bundesliga spins off its commercial operations to the DFL Sports Enterprises subsidiary, headed by managing director Jörg Daubitzer. Its responsibilities include broadcast rights sales as well as sponsorship, licensing and digital media, while it has an office in Singapore as well as Germany.
In Italy and France, international rights have been sold to agencies for distribution. MP & Silva retained its deal with Serie A in October 2014 in a three-year agreement worth a reported €185 million per season until 2018. France’s LFP, meanwhile, signed over the international rights to one of its domestic broadcast partners, Qatar’s BeIN Media Group, in a renewed six-year deal in June 2014. The Al Jazeera-owned broadcaster will pay the LFP €80 million a year for the chance to market the rights to games in the top tier of French club soccer from 2018 to 2024.
One league, however, has changed its model more profoundly in a bid to pursue the Premier League.
On the first Saturday of June, Barcelona became champions of Europe for the fifth time. It was their fourth Uefa Champions League title since 2006. Their great historical enemies, Real Madrid, had won the competition 12 months earlier, beating their own local rivals Atlético Madrid to take their tenth European crown.
Between them, Real and Barça have also amassed an enviable array of the world’s best players. One of those two has provided the international game’s leading player every season since the Fifa World Player of the Year Award was combined with France Football’s Ballon D’Or in 2010 – although, admittedly, those players have been either Cristiano Ronaldo or Lionel Messi. Nevertheless, that pair are also joined by the likes of Uruguay’s Luis Suárez and Brazilian idol Neymar in Catalonia, and Gareth Bale, the world’s most expensive player, in the capital. When the two teams meet in El Clásico, it is a global television event.
The problem for Spanish soccer is that those two giants dominate in a manner that has become unhealthy for the rest of the league, even if Sevilla were able to take a second consecutive Europa League title in May. On the field, they have established a dual stranglehold on the national title that has been broken only once – by Atlético Madrid in 2014 – since 2004. Off it, their financial power has become completely impossible for other clubs to match.
According to the Deloitte Money League – which has measured the broadcast, sponsorship and matchday income of leading soccer teams every year for the past two decades – Real Madrid are the richest club in the world, earning €549.5 million from their footballing activities in 2014/15. Barcelona are fourth in the list, taking €484.6 million. Atlético Madrid, with €169.9 million, are 15th. No other Spanish club make the top 30.
There are disparities, of course, in every national league. Manchester United, the world’s second richest club, made over €100 million more in 2013/14 than that year’s English champions, the handsomely backed Manchester City. The €487.5 million made by German champions Bayern Munich, meanwhile, can be set against the €261.5 million brought in by the Bundesliga’s other leading financial power, Borussia Dortmund. It is in Spain, however, that the problem has long been most pronounced.
Real Madrid and Barcelona are both major international brands in their own right, and produce the requisite sponsorship income to match. Both can also fill large stadiums – the 85,454-capacity Santiago Bernabéu in Real’s case, and the 99,354-seater Camp Nou in Barcelona. The two clubs are engaged in projects to modernise those grounds in the coming years.
The fundamental reason for their financial dominance, however, has been their ability to bring in huge income through their own television deals. Until earlier this year, La Liga was the only major domestic league in Europe that still allowed its clubs to go to market for TV rights individually.
The Premier League, conversely, has withstood enormous pressure from its members in years past to break from its model of near financial parity in television income, in which the highest-earning club takes just 1.57 times as much as the lowest earner. Its reward has been a competition and a brand with which broadcasters want to be involved.
For the LFP, which operates Spanish soccer’s top two divisions, the collectivisation of rights sales has been a long-term target. The set-up which had been in existence has created twin problems. One is the competitive disparity that Real and Barça’s financial pre-eminence has created. The other is that without a collective proposition to sell, the Spanish top flight has not blossomed into an international brand in the same way as the Premier League has.
The clamour for a collective model had been met by a din of objection from the top two clubs but towards the end of last season, finally, there came a breakthrough. The LFP managed to agree terms on a framework that would establish a new distribution ratio for a three-year domestic TV rights package, whereby half of the money granted to clubs from rights sales would be handed out according to league positions over the last five years, while the other half will be distributed evenly. In effect, this enshrined some commercial advantage for Real and Barcelona – both in the top two for most of that period – and acknowledged their contribution to the profile and popularity of the league, all while moving towards a more equitable system.
Unusually, and in keeping with the manner in which a deal had needed to be forced through, the arrangement was made law under royal decree at the start of May. Even then, however, there were objections. The national soccer association, RFEF, were unhappy with the seven per cent cut on offer for relegated teams and organisations other than clubs from the top two divisions. It supported a strike by the players’ union, the AFE, which briefly threatened to halt the last two rounds of the Spanish league season and the Copa del Rey final.
That strike, however, was ruled unlawful by the Spanish High Court and the season ended as normal. The LFP, meanwhile, proceeded with its first ever rights sale process under the new model, bringing it forward from a planned start date in 2016. In mid-July this bore fruit in the shape of a €600 million, one-year deal with Telefónica – a marginal increase on the previous deal, but one which will see money shared more evenly. Vodafone and Orange subsequently picked up access to the pay-TV portion of rights from Telefónica in accordance with Spanish competition regulations which bar exclusivity in the premium broadcast sector.
In the past couple of years, with negotiations over collectivisation ongoing, the LFP has also taken significant steps to address the league’s lack of brand coherence, at least relative to the Premier League. The first was a radical change in how the league was pitched to international broadcasters. In 2013/14, the LFP began staggering league fixtures in Spain across the weekend, meaning that there would always be matches played at prime time in key territories across the world. Crucially, viewers in those countries would not just be served up a regular diet of Real Madrid and Barcelona, meaning that clubs further down the top flight would also be given exposure.
In concert with that came greater efforts to take clubs to play in front of fans in those overseas markets. The LFP World Challenge project, involving teams other than Real Madrid and Barcelona, began in early 2014. It pairs pre, post and mid-season friendlies in countries around the world with trade missions, and is backed by the Marca España national branding project and the public trade and investment corporation ICEX. In July, beer brand Mahou San Miguel became the lead sponsor of the tour, which has made stops in 11 countries in 2015 alone.
This has been accompanied by other grassroots activities. In August, for example, the LFP entered into a partnership with US Club Soccer, an organisation which aids in the development of soccer clubs across the United States. The league will provide its training curriculum, reciprocal coaching education seminars and create elite player training opportunities in Spain for the body’s 500,000 members.
In 2015, the campaign to establish the league properly as an international property has taken on another dimension. Earlier this year, working with international rights marketing partner Mediapro, the LFP established La Liga as the public-facing brand for the league, assuming the name by which it has long been popularly known. That has come ahead of the latest round of international rights sales which, while barely beginning to make up ground financially on the Premier League, has at least broadened the competition’s reach in foreign markets.
The Mediapro strategy has generally been to sell deals on three-year terms in Europe and established markets, and five-year terms elsewhere – taking it to the end of its own contract with the LFP. It opened the tender process for its new cycle to 2018 or 2020 in June and has since had a busy summer. Over a dozen deals were confirmed in the Spanish close season, taking in scores of territories worldwide.
Among the most significant was a five-year renewal with state broadcaster CCTV in China, where the league also secured intriguing deals with online streaming service PPTV and with the Suning Corporation, which will show La Liga games live in its electronics and homeware stores in 300 cities across the country. Those tie in with a new ‘long-term’ partnership between the LFP and the Chinese government, as well as sponsorship deals in the country with the likes of Snow Beer.
In the UK, Sky Sports retained its long-held coverage of La Liga with a new three-year deal – despite local reports which had insisted rival BT Sport was about to add Spanish soccer to its new wealth of European output. ESPN took the rights in Spanish-speaking South America, while Digicel will show matches in 25 countries across the Caribbean. MP & Silva tied up an eclectic deal to distribute rights across Scandinavia and in Finland, Albania, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia and Montenegro, Serbia, Slovenia and Japan.
In Belgium, La Liga will help launch the new Eleven Sports Network set up by MP & Silva co-founder Andrea Radrizzani. OTE took the rights in Greece for another three years, while agreements were also signed with Fox Sports in Italy and Sport1 in the Netherlands.
As numerous as these partnerships are it is likely that they will be blown out of the water, in financial terms, by those signed by the Premier League in the months ahead. Nevertheless, they are evidence of a strategy that could one day lift La Liga’s rank and file to the same level as their equivalents in England, and clear of the European pack.