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The Law, Economics, and Technology of the Broadcasting Sector

In early 2015 reports of the sale of the rights to broadcast matches in the English Premier League were accompanied by shock and awe. The rights for the period 2016—19 had been sold for a total of just over ?5 billion. This amounted to roughly ?10 million for each match to be shown live over the three seasons covered by the deal. This was literally front page news.[1] [2]

The sum seemed huge. It was widely reported to be in excess of the seller’s expectations. And it was a price that was a great deal larger than the Premier League had been able to command in previous rights sales. ?3 billion was the price charged for

2013— 16, amounting to roughly ?6.6 million per game; ?1.8 billion for 2010—13; ?1.7 billion for 2007—10.5 The English Premier League was created in 1992 and its first television deal, covering five seasons up to 1997, involved receipt of what now appears to be a relatively meagre ?191 million. The price of televised football, especially televised live football, paid by broadcasters, most prominently today SKY Sports and BT Sport, and therefore by their consumers has increased by a rate that far outstrips the general rate of inflation, to the enormous glee of those who provide the product—most of all, football clubs and their players. Richard Scudamore, Chief Executive of the English Premier League, was reported as ruling out the possibility that higher prices for consumers would be the result of the spectacular deal struck early in 2015, relying on the intensity of competition in the market as a restraint on broadcasters’ freedom of action.[3] This was either complacent or disingenuous. The very next month SKY, which had acquired the lion’s share of the broadcasting rights on offer by paying over ?4 billion, announced a price rise in its package that includes live Premier League matches which, moreover, was effective in April instead of September, the month it which had previously made its normal annual adjustment to subscription prices.[4] The demand for top-level sport is both strong and durable. As a headline that was better informed or at least more honest than Mr Scudamore captured it, ‘As Long As Viewers are Sofa-bound and Spending, the Broadcasters will Shell Out’.[5]

And this glittering cascade of income spills over beyond domestic sales alone. In

2014— 15 the English Premier League earned more than twice as much as any other football League in the world as a result of its deal with SKY and BT to show matches in the United Kingdom, but it was able to add ?1.1 billion per season to its overall revenues thanks to sales to the rest of the world for the three-year period beginning in 2016, a figure which far exceeds the international sales of any sports league—not simply any football League—in the world.[6] In late 2016 it was announced that a new deal had been struck between the Premier League and a Chinese broadcaster worth ?190 million a year—eleven times greater than the existing deal.[7] [8] The English Premier League is hugely popular all over the world and rights to broadcast matches are priced accordingly. It is only twenty years since it was breathlessly reported that rights to show live games outside the United Kingdom ‘earns the Premier League around ?8 million a year’ but that insiders predict a new deal ‘will be worth close to ?25 million’.n This now seems a quaint and distant world. The Premier League’s income from the sale of broadcasting rights places it at the top of football’s global League table. This is of course only part of the fast-developing story: most of the leading clubs in English football are now owned by interests from outside the United Kingdom.

The English Premier League is an extraordinarily successful export business.

The English football clubs that are known today across the world began to emerge in the second half of the nineteenth century as sport began to become the subject of centralized organization and rule-making. Notts County, formed in 1862, is the world’s oldest football club currently playing at a professional level. The twelve clubs that participated in the first ever officially organized English football league season in 1888—89 were all based in the Midlands or the North of the country. Some, such as Aston Villa and the champions in that first season Preston North End, were adding football in the winter to existing commitments to the game of cricket in the summer. However, several of the great football clubs of England that dominated the early years of the competition grew out of the heat and grime of the Industrial Revolution. Manchester United first drew breath in 1902 as the successor to Newton Heath, formed in 1878 by workers on the Lancashire and Yorkshire Railway. The early years of Stoke City, one of the twelve founding clubs, were also shaped by railway apprentices. Manchester City joined the league in 1892 as Ardwick before adopting their current name two years later, and they grew out of the dark industrial heartland of Gorton in East Manchester. City moved across the city to Moss Side in 1923 where they stayed, playing at Maine Road, until 2003, but when they took occupation of their current home, then known as the Commonwealth Stadium and now as the Etihad, they were returning to their roots in East Manchester. Manchester City was formed to allow workers in the area to enjoy recreation and in part also to improve their health. And they, together with other clubs born in the later nineteenth century, grew alongside industries that sent goods, services, and know-how round the world, the driving force of the industrialization of the planet at the height of the British Empire.

Most of the leading English football clubs are still located today more or less exactly where they began their life in distant Victorian times. But the heavy industry from which they drew their energy and their workers is largely vanished. England is no longer home to the factories that manufactured goods that were sold throughout the world. But it is the football clubs themselves that have taken over exactly that role. Football, not turbines or steel or huge ocean-going ships, is now in demand. What was working-class relief from hard manual labour has itself become a hugely successful export product^2

The broadcasting sector is central to this evolution. Whereas goods were once shipped across vast distances to eager export markets, today services flash from one side of the world to another in an instant. Football is prominent: the jewels include not only the English Premier League, but also the Champions League, and, once every four years, the World Cup. Formula 1 motor racing is highly prized, so too the Olympic Games. Vastly increased sums of money now flow into sport, and there is a higher quantity and quality of televised sport. It was announced that in 2014 the England and Wales Cricket Board had seen an increase in its annual revenues of 42 per cent (to ?174.7 million), this was ‘largely the result of selling the broadcast rights for England’s test matches against India to ESPNStar for about $100m’.[9] [10] [11] [12] American football commands the highest prices of all for a domestic market, but it is less international in its appeal. Broadcasters compete to buy rights to show these spectacular events in the certain knowledge that they acquire a means to secure large numbers of paying viewers and consequently lucrative opportunities to attract sponsors and advertisers. Sport is a ‘battering ramV4 acquiring rights to show popular sports events is a quick and dramatic way for a new supplier to establish a presence in a market. Equally for incumbents, buying prized sports rights is an effective way to consolidate existing advantage and exclude fresh competition. Media companies may go so far as to invest in clubs in order to strengthen their position in the market.15 Most of all, broadcasters want to acquire exclusive rights to broadcast the most popular events to viewers: this is what attracts the keen fan.

The market is savagely competitive and wildly volatile. The four themes that animate the narrative provided in this chapter—deregulation, technological advance, commodification, and juridification—operate in concert. Thirty years ago there was little competition or choice in broadcasting markets. There were only a small number of television channels. All were terrestrial and free-to-air. The consumer of televised football in England could expect to watch only a small number of matches ‘live’ each season. Rights were sold to the BBC or ITV: they did not compete with each other. Presentation was grotesquely dull. Deregulation of the broadcasting sector allied to the astonishing technological changes that have transformed the range of methods to provide broadcasting services has led to an explosion in the number of companies on the demand-side of the market willing to buy rights from those who organize sporting events. In one of the first ever cases dealing with the intersection of EU law and the broadcasting sector, Sacchi, the Court rejected the submissions of the Italian and German governments that radio and television were organized as a form of public service and so should not be subjected to free movement law.[13] [14] [15] This had some analogies with the similarly fruitless attempts to deny the economic context of sport in Walrave and Koch, which was decided only a few months laterd7 But no one would even begin to make an argument of this type about the deregulated and ferociously competitive broadcasting market of today. Public broadcasters still exist: deregulation has ensured that they coexist with an array of private corporate broadcasters, all eager to buy rights to transmit sports events. This transformation has been accelerated by technological innovation. Satellite and cable broadcasting is now common, and the rise and mutation of the internet has changed the landscape still more dramatically. Transmission occurs through an increasing variety of media, and it is highly plausible that the pace of technological change will continue to throw up new forms of rapid mass communication, generating intensified fragmentation in the pattern of supply of audiovisual services.

Sellers—sports governing bodies, leagues, and clubs—have gone some way to meet the increased demand consequent on deregulation and technological change. This is commodification. Competitions such as the UEFA Champions League, which began life as the European Cup in 1956, and the English FAPL, the successor to the first ever league championship won in 1889, are today immensely popular and carefully managed brands which are of intense interest to broadcasters, but the supply of sporting events is not static. Demand generates supply: this explains the emergence of new tournaments such as the Confederations Cup, first staged by Federation Internationale de Football Association (FIFA) in 1997, and FIFA’s World Club Cup, which dates from 2000. It explains too the expansion in the size of existing tournaments, so that, for example, the World Cup, reserved to sixteen countries until 1978, now comprises thirty-two participant nations, and Gianni Infantino, who assumed the FIFA Presidency in early 2016, has proposed further expansion to forty or even forty-eight participants.!® At club level, the Champions League is a vastly inflated project compared with its predecessor the European Cup, while Thursdays, long a football-free day, are now reserved for the Europa League. These represent attempts to increase supply in order to meet demand in order to extract further revenue. These expansionist trends underline the direct commercial interest of governing bodies such as FIFA and UEFA in organizing the calendar, which was discussed in Chapter 10. The International Olympic Committee (IOC) is also involved in this sporting inflation. It is not sporting considerations alone that have led to football at the Olympic Games acquiring a higher profile in recent years, to the detriment of clubs. This was noted by Advocate General Cosmas in Deliege v Ligue de Judo:

... it is no coincidence that professional athletes [In particular in sports such as football and basketball] are now allowed to compete as a means of attracting public interest, nor that new sports with no connection with Olympic history are regularly being introduced for exactly the same reason.[16] [17] [18]

There could be no clearer demonstration of how economic incentives affect what might be thought to be purely sporting choices, confirming the conflict of interest to which sports governing bodies are prey. In similar vein, events are staged with scant regard for the welfare of athletes. The award of the 2022 World Cup to Qatar is the most egregious instance, but to expect the Olympic Marathon to be run in the summer heat of Athens (2004) and the smog of Beijing (2008) makes very clear that the principal priorities of the organizers are remote from concern for the wellbeing of the athletes. Even lesser events receive lavish coverage, as broadcasters aim to deepen the pool of events that appeal to paying viewers: even a sport as negligible as rugby league, popular only in Sydney and a few towns in Northern England, receives ample coverage. But despite all these attempts to increase the supply of events, it remains clear that a small pool of competitions retain a place at the pinnacle and it is events such as the World Cup and the Olympic Games which stand alone from the perspective of consumers and for which demand and consequently prices are at their highest. These are the events that broadcasters want to acquire most of all in order to distinguish themselves from their competitors, and they will pay accordingly.

This is a process of commodification. Sporting events are for sale. Sport at the elite level is awash with money in a way that would be beyond the comprehension of those who established the English football league in 1888 or the Olympic Games in 1896. The dynamic adaptation of the broadcasting sector, enhancing competition and choice, is centrally significant in provoking this avalanche of money. Sports and media feed off each other: they are tightly entwined in commercial motivation and success.2°

This puts the ruling in Bosman into its proper context as an agent for change in sport in recent years.21 Of course the judgment brought to an end intra-EU/EEA nationality discrimination in club football. This was examined in Chapter 8. By generating an adjustment of the scope of the transfer system, it altered the nature of the relationship between player and club. This was covered in Chapter 9. But the dominating issue in professional sport over the last two decades has been the transformation of the broadcasting sector and, in particular, the hunger to acquire the most lucrative rights. The alterations to the status of players wrought by Bosman are frankly a sideshow compared with this cascade of commercialization. The Nice Declaration on Sport of 2000 stated that ‘The sale of television broadcasting rights is one of the greatest sources of income today for certain sports’,22 but even this has now been overtaken. As the Commission’s 2007 White Paper put it: ‘sport media rights are a decisive source of content for many media operators’; and ‘Sport has been a driving force behind the emergence of new media and interactive television services’^3 It further declares: ‘Issues concerning the relationship between the sport sector and sport media (television in particular) have become crucial as television rights are the primary source of income for professional sport in Europe.^4 This is a commercial pre-eminence to which Advocate General Jaaskinen drew explicit attention, using almost the same language in his Opinion in UEFA and FIFA v Commission2 The applicants in the case had challenged restrictions on their commercial plans as violations of their right to property. Their claim was unsuccessful, as will be explained in section 11.9, but the fact that they had incentives to pursue it before the courts highlights the commercial significance of broadcasting deals.

This also draws attention to the fourth theme that animates this chapter: juridification. Law is far more significant in sport today than it was before the broadcasting revolution that has broken in recent years. In part this is simply the result of commodification. Litigation chases the money. UEFA and FIFA probably did not expect to win the case just mentioned, and elaborated more fully later in this chapter, but the sums of money at stake made it worth their while at least making the attempt. But there is a more intellectual seam to the pattern of juridification in markets for the sale of rights to broadcast sports events. Contracting to sell rights to broadcast sporting events is a simple matter of adding value. Sporting events are organized by governing bodies, and sale of rights to broadcast them, combined with associated commercial strategies including sponsorship and brand association as well as sale of tickets to watch the event ‘live’, offers choice to paying consumers. This is, in short, how markets work and why they are normally a good thing. It is the juice of competition that lubricates the process and which ensures that the interests and preferences of the ultimate consumer drive the process, not the desire of suppliers to maximize profit. [19] [20] [21] [22]

Buyers of rights to broadcast events have an interest in acquiring those rights exclusively: they are then able to market those rights to consumers on the basis that they alone are able to satisfy viewer demand. Exclusivity of this type is common in sports broadcasting. Sellers of rights have an interest in joining together: if the rights to broadcast all matches played in a particular League are sold centrally, instead of by individual participating clubs, then a buyer cannot play clubs off against each other. Collective selling of this type is orthodox in sports leagues. The buyer can take or leave the single collectively sold package. There are winners here, but there are potential losers too. This is where competition law looms. In fact, much of the material traversed in this chapter is applied competition law. The acquisition of exclusive rights makes perfect sense from the perspective of the successful buyer, who gains a valuable resource, and the seller too doubtless commands a premium price in agreeing the contract, but the consequence is that no other broadcaster has access to the rights. That is the whole point of exclusivity. This may damage competition in the market, to the detriment of other actual and potential suppliers of services and may also harm the ultimate consumer, who has but one single—doubtless expensive—source of supply. There is not at all an inevitable problem here: this is the market in action, and it would subvert the foundations of our economy to intervene heedlessly simply because X has been able to buy something that Y has not. But the tighter the constraint on competition which flows from the exclusive deal, the more that one may legitimately fear that the exercise of contractual freedom has caused anti-competitive consequences. Whether this is in fact so will depend on matters such as the availability of alternatives to the service sold exclusively and on the length of the exclusive tie. The more populated and competitive the market, the less strong is the case for intervention and, conversely, the more concentrated the power of an individual supplier in a market, the greater the case for legal control to protect the competitive process and ultimately the consumer. In similar vein, collective selling makes obvious sense from the point of view of the seller, because it suppresses competition (between clubs) on the supply-side and therefore increases the price that can be charged for the bundle of rights. This harms those on the demand-side, both the parties which are able to buy the package (for whom the price will be higher than it would otherwise be) and the parties shut out from the deal who have no alternative sources of supply, and ultimately it affects the consumer/viewer. Again this is not to argue that collective selling always deserves condemnation, but rather that a sensitive appreciation is required in order to determine whether in the particular context its benefits exceed its costs.

Sport has long enjoyed a high level of autonomy from legal supervision and the rise of juridification in sport challenges that autonomy. In particular, what is the norm in sport may not fit with orthodox understandings of applicable legal rules. One must then determine whether sport is special enough to deserve appropriately modified treatment under the law. Might collective selling be tolerated if it raises extra revenue which can be shared with the ‘grass roots’? This would be to argue that sport is special because of its structures of vertical solidarity. This is explored later, in section 11.7. Might exclusivity be prevented even where it plainly improves the quality and value of the product or service in order to maximize the access of the public wishing to view events? This would be to argue that sport is special because of its high profile and great popularity. This is explored in section 11.9.

Citation of concern to ‘maximize access of the public’ to sporting events is a reminder that it is not competition law alone that is potentially engaged by the sale of rights to broadcasting events. The previously mentioned report heralding the vastly increased revenues of the England and Wales Cricket Board added that ‘the number of people playing cricket in the UK fell by 7 per cent’ in 2014.26 Test match cricket, the pinnacle of the sport, has not been available live on free-to-air television in the UK since 2005. Causal effect is not easy to prove, but it is plausible that the exclusive rights sold to BSkyB, a subscription-only service which became SKY in 2014, have generated short-term profit but long-term decline in the sport’s visibility and appeal. Moreover, although fans paying at the gate used to be the most important source of revenue for clubs, their displacement as the primary revenue source in favour of broadcasters and ultimately consumers who do not leave their front room or the pub means that the interests of those who prefer to watch the game ‘live’ are routinely ignored, as kick-off times are altered, often at short notice, to suit television audiences. The business model of sport has changed: and therefore so has the character of sport itselfTh Greg Dyke, Chairman of the English FA at the time, defended the FA Cup Final’s switch from its traditional 3 o’clock start to a slot later in the afternoon as a consequence of the contract struck between the FA and the broadcasters, on the basis that viewing figures were higher for the later time, and, he asked, ‘What are we here for? We’re here for people to watch football’.2S It was plainly not supporters attending the match with which he was concerned, and especially not those from Northern England unable to travel home after the match by public transport because of the late kick-off. More generally, like it or not and certainly not always with benevolent effects, major sporting events play a role of sorts in defining and promoting a sense of common identity: should they therefore be accessible to all citizens to watch for free? Here questions arise which transcend competition law. They include whether there are certain sporting events that are of such significance that rights of access by citizens should prevail over the commercial profit-maximizing preferences of rights owners. Property rights clash with rights to information. [23]

  • [1] eg ‘Premier League’s ?5.1bn TV Bonanza’ The Times (London, 11 February 2015) 1; ‘They ThinkIt’s Over ?5bn ... It Is Now’ The Independent (London, 11 February 2015) 1.
  • [2] ‘TV Football Breaks the ?3bn Barrier’ The Guardian (London, 14 June 2012) 1; ‘Sky RetainsPremiership Title after ?1.7bn TV Rights Auction’ The Independent (London, 6 May 2006) 1.
  • [3] The Times (n 4).
  • [4] ‘Sky Raises Prices after Premier League Auction: Pay-TV Channel Paid ?300 Million MoreThan Expected for Rights’ Financial Times (London, 18 March 2015) accessed 29 November 2016.
  • [5] The Independent (London, 11 February 2015) 4.
  • [6] See Deloittes Annual Review of Football Finance accessed 29 November 2016.
  • [7] ‘New Chinese TV Deal Worth ?190m a Year’ The Times (London, 18 November 2016) 65.
  • [8] ‘Football’s ?20m TV Goal’ Independent on Sunday (London, 9 February 1997) Business section, 1.
  • [9] I borrow here from David Conn, Richer than God: Manchester City, Modern Football and GrowingUp (Quercus 2012) 332.
  • [10] ‘Cricket Runs into Form with Strong Revenues’ Financial Times (London, 15 May 2015) 4.
  • [11] The phrase is conventionally associated with Rupert Murdoch: eg The Independent (London,
  • [12] October 1996) accessed 29 November 2016. See P Smith, T Evens, and P Iosifidis, ‘The NextBig Match: Convergence, Competition and Sports Media Rights’ (2016) 31 European Journal ofCommunication 536. 15 In 1999 BSkyB’s purchase of Manchester United was blocked pursuant to UK CompetitionLaw (Fair Trading Act 1973). See N Toms, ‘Ownership and Control of Sports Clubs: The ManchesterUnited Football Club “Buyout” ’ in S Greenfield and G Osborn (eds), Law and Sport in ContemporarySociety (Frank Cass 2000) ch 9.
  • [13] Case 155/73 Guiseppe Sacchi [1974] ECR 409.
  • [14] Walrave and Koch (n 1). See Ch 4.2.
  • [15] 1® eg accessed 29 November 2016.
  • [16] Cases C-51/96 and C-191/97 Deliege v Ligue de Judo [2000] ECR I-2549, para 55, Opinion ofCosmas AG.
  • [17] 2° For a good overview, see K Lefever, New Media and Sport: International Legal Aspects (TMC Asser2012) chs 2 and 6, describing a ‘sports/media complex’.
  • [18] Bosman (n 2).
  • [19] Nice Declaration on Sport, para 15. See Ch 6.3: the full text is at accessed 29 November 2016.
  • [20] White Paper on Sport, COM (2007) 391, 11 July 2007, 17, available via accessed 29 November 2016. See Ch 6.5.
  • [21] ibid.
  • [22] Case C-201/11P UEFA v Commission, Case C-204/11P FIFA v Commission, and Case C-205/ 11PFIFA v Commission, judgments of 18 July 2013, para 33, Opinion of Jaaskinen AG, 12 December 2012.
  • [23] See n 13. 27 See generally eg S Morrow, The People's Game? Football, Finance and Society (Macmillan 2003);S Szymanski, Money and Football: A Soccernomics Guide (Avalon 2015); D Conn, The Beautiful Game?Searchingfor the Soul of Football (Yellow Jersey Press 2005). The Deloitte Annual Review (n 9) providesplentiful detail: eg the 2016 Report’s Foreword notes that as recently as 1991—92 matchday revenuewas the largest income source for Premier League clubs, but this has long been surpassed by incomefrom the sale of broadcasting rights. 28 accessed 29 November 2016.
 
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