OFT Embarks On Case Which Could Change The Future Of Televised Football
In a landmark case, the Office of Fair Trading (OFT) is today presenting a case to the Restrictive Practices Court claiming that the Premier League’s 20 football clubs are operating as a ‘cartel’ in collectively selling TV rights to broadcasters (see Premier League Pledges Live Football For All). The outcome of the case could dramatically change the future of football on television, not to mention the structure of the League.
At present there are 380 Premier League games played each year; however, only around 60 of these are broadcast on British TV, mainly through BSkyB’s sports channels. Highlights of these matches are shown on the BBC under the current contract. The OFT is arguing that this £670 million contract between Sky and the League is operating anti-competitively and against the public’s interests. It is to claim that such a cartel would not be acceptable in other industries and therefore should not be permitted in football and television.
The OFT will say that the current set-up is preventing clubs from selling rights to the matches on an individual basis which, in turn, is limiting the number of games available for fans to watch on television. The trade watchdog also believes that the system is artificially inflating the prices for which matches are sold which then increases the cost to the viewer of buying the channels which broadcast the games.
The Premier League is likely to argue that if the clubs are free to negotiate on an individual basis some will benefit greatly and others will suffer, depending on the general profile and status of the club. In this sense, the League is acting as a defender of the clubs’ rights and is holding the league together. If some clubs did command a greater broadcast ‘value’ there may be a breakaway by these teams from the rest of the League; this could damage football as a whole.
For BSkyB and, to a lesser extent, the BBC, the current system is preferable as both broadcasters have access to top football matches which other broadcasters do not. If the OFT wins the case, Sky’s main selling point, live football, may well be threatened as other broadcasters are able to buy into the action. Since its inception, BSkyB has sold its dishes basically on the back of high-profile sports rights. However, as a result of this, Sky is uniquely placed to continue to forge deals with Premiership clubs should the market be opened by an OFT victory.
Another litmus test for the future of football and football broadcasting is the proposed £623 million takeover of Manchester United by BSkyB. The Monopolies and Mergers Commission (MMC) is currently considering whether this deal should be allowed to go ahead. If it does, and if the OFT wins its case, the natural step is for other media companies to snap up football clubs which they will then control the broadcasting rights to.
Although a number of media companies have shown interest in clubs – Carlton was in talks with Arsenal (see Carlton Calls Off Arsenal Takeover Talks) and cable company NTL has secured an option to buy a majority stake in Newcastle United (see Update: NTL/Newcastle United Deal) – none has yet acted on a full buy-out, prefering instead to wait until the results of Sky’s audacious bid are known.
With emergence of digital television, and the increase in the number of channels it can carry, owning a football club will almost certainly mean owning its spin-off dedicated TV channel as well. Manchester United has already set up MUTV, a joint collaboration between the club, Granada and BSkyB and other clubs are likely to follow suit.
The current contract between Sky and the Premier League expires in 2001. The League’s chief executive, Peter Leaver, recently promised that the League would commit to selling rights with as many broadcasters, across as many platforms (including terrestrial) as possible (see Premier League Pledges Live Football For All). This could not happen until 2001, however, and in the meantime the OFT intends to prove the League’s cartel as illegal. A decision from the Restrictive Practices Court is expected in the next few months.
Office of Fair Trading: 0171 211 8000 Premier League: 0171 262 4542