The Premier League's overseas television rights income has become the oil that greases the fast‑turning wheels of the self-styled most popular league in the world. When the first TV contract was sealed for the then unimaginable sum of £304m, following the memorable phone call from the Tottenham Hotspur chairman, Sir Alan Sugar, to Sky's Sam Chisholm telling him to blow ITV "out of the water", the overseas element of the deal was so negligible as to go unrecorded. When the most recent contract was signed (for the three seasons to 2012‑13), the overseas number had more than doubled from £625m for the previous three‑year deal to £1.4bn.
Whereas that first Sky deal was toasted with pints of beer in a nondescript Coventry pub, today's global broadcasting executives, from Kansas to Kuala Lumpur and from Accra to Abu Dhabi, raise their glasses to English football's appeal around the world. The tight-knit cabal of executives and advisers who have steered the Premier League's media auctions through choppy regulatory waters over two decades, ensuring regular six‑figure bonuses for themselves and exponential salary growth for players and agents in the process, have expertly driven up the value of those rights. When they sit down early next year to draw up the new tender process for the three years from 2013-14 onwards, the expectation is that overseas revenue could outstrip domestic income (currently £2.1bn) for the first time.
Most experts agree that the domestic deal is unlikely to increase much further – BSkyB and ESPN effectively invest above the market rate at a level they believe maintains the quality of the product on offer. It is the huge growth of the Premier League and its teams overseas that will be the engine for future growth, in audience and revenue terms. That is why Liverpool, whose residual brand value remains second only to Manchester United thanks to their unprecedented success in the 1970s and 1980s, have alighted upon it as the means to turbo‑charge their turnover under Uefa's new financial fair play regime.
Twenty years on from the revolutionary dawn of the Premier League, Liverpool are the first to break cover under signs that the TV rights model which has fuelled the Premier League boom is under renewed pressure from the biggest clubs.
The Premier League is, at heart, a conservative organisation. Some of its executives like to joke that far from the rabid free marketeers their detractors portray them as, theirs is actually a socialist model. Many have concerns about the extent to which the Premier League shares its cash outside the charmed circle of its participants, but it is hard to argue that it is not redistributive among its own.
The Premier League annual handbook points out with pride that the top-earning club (Manchester United with £60.4m) received just over one and a half times as much TV money as the bottom one (Blackpool with £39.1m) last season. In the Premier League's first season, the ratio was almost three to one. In Spain it remains more than 12 to one.
The ratio has contracted as the value of the overseas deal (which is shared equally) has become a bigger part of the overall pie compared to the domestic deal (which has performance- and appearance-related elements). That complex balancing act has been maintained over the years through a combination of cajoling and cash, convincing clubs it is in each of their own best interests to remain part of a collective.
Richard Scudamore's detractors are fond of pointing out that the chief executive's main skill lies in getting broadcasters to write a big cheque every three years. But his real talent has been not only repeatedly increasing that income, but convincing the disparate group of owners and chairmen around his boardroom table that they should all take an equitable share.
Scudamore has regularly had cause to give thanks for the far-sightedness of his predecessor, Rick Parry – later, of course, a Liverpool chief executive – in ensuring any significant change to its rule book required a two-thirds majority. Down the years, this has prevented the top clubs seizing a greater portion of the riches on offer and, conversely, stopped groups of smaller clubs pushing through ill-conceived reform (see various proposals for a two-tier Premier League or play-offs for the final Champions League place).
When Peter Kenyon, then the Manchester United chief executive, was the last to propose clubs sell their own overseas rights amid much talk about what the broadband era could mean for their value, he was slapped down 19-1 by his fellow clubs. Much has changed since 2003, both in terms of the money at stake and the ownership of the clubs. It is unlikely a vote would be quite so clearcut this time around.
As long as the money has kept rolling in, the biggest clubs have bought into the collective ethos. The Glazers, United's owners, were said to be uncertain initially but were convinced of the logic and turned their mind to exploiting peripheral rights and turbo-charging territory-by-territory sponsorship deals.
Scudamore has consistently insisted that the increasingly globalised nature of the league has not caused a shift in principles over collective selling, as Ken Bates, Martin Edwards and Doug Ellis have given way to Roman Abramovich, Malcolm Glazer and Randy Lerner. That resolve will now be tested.
It is hard to overstate just how much of an article of faith the collective nature of the TV deal is for the Premier League. In many ways it is the logic from which all else flows. Were it to break down, and given the rampant growth of overseas TV deals in comparison with the relative stagnation of the domestic market, it would rapidly change the nature of the league and hasten a rift between the haves and have-nots. It could even hasten the advent of the often-mooted European super league.
Scudamore will hold up La Liga as the example of what not to do, pointing to its relative unattractiveness as a result of the dominance of Real Madrid and Barcelona, who sell their own rights directly, compared with their impoverished competition. He will point to the added value of selling the Premier League as a package and play on the fear of the unknown. But Liverpool and others look longingly at the two Spanish giants. With the pressure they will face under Uefa's financial fair play rules to maximise income to balance the books, and the fact that domestic income (from tickets and media rights) appears to have levelled off, the new frontiers to the east and west become the obvious places to look for revenue growth. For Liverpool – with no new stadium on the horizon and ticket prices pitched lower due to geographic reasons – that need is more pressing still.
Add in the parallel task of dealing with the fallout from the European court of justice ruling on the sale of TV rights and Scudamore is facing his toughest challenge to date in herding his disparate group of cats in the same direction.
