Sponsors set to lose out after BT’s Champions League win

Now BT has poached the rights from free-to-air ITV, the Champions League will effectively disappear behind a full paywall and millions of football fans will be disadvantaged, says Raymond Snoddy. Will sponsors have to say goodbye to some of their audience?

Suddenly the unimaginable is entirely possible. It’s a late spring day in 2015 and you don’t have to be a visionary to conjure up a triumphalist press conference where BT will announce that it has outbid Sky for five of the six packages of Premier League rights. The cost – £4 billion, or whatever crazy number you want to suggest.

The only certainty is that as a result more money will be drained out of the pockets of football fans and transferred, without barely touching the sides of football clubs, to the off-shore bank accounts of multi-millionaire players.

There were many intimations of just how serious BT was about getting into TV Sport long before the deeply shocking defeat of Sky and ITV to win Champions League rights. It was the equivalent of Queens Park Rangers going to the Nou Camp and beating Barcelona 5-0.

Only the Premier League bosses know the precise details of the voting rounds in the bidding for the current Premier League deal. It is, however, believed that BT was either ahead of Sky, or very close, in the battle for all six packages of rights.

For the Saturday lunchtime package BT was so far ahead it was declared the outright winner. The others were sufficiently close to go to a second round when Sky – presumably tipped off in a subtle way about the peril it was in – came up with knock-out bids 40 per cent higher than the previous deal.

There was no such horse-trading for the Champions League and Europa Cup deals because at almost £900 million the BT bid was roughly double what Sky and ITV had been prepared to pay.

This, as Rupert Murdoch might have said, was the most humble day of Sky’s existence; the first time that the satellite group has ever lost something so central, so meaningful to its reason to be there.

The notion that the loss is not so serious because European football only accounts for 3 per cent of airtime compared with 19 per cent for Premier League, doesn’t even begin to work as an argument.

You can dress up Sky Atlantic all you like; exclusive sports – and football in particular – is the primary driver of Sky subscriptions and it can look like a cruel winner-takes all kind of contest.

You either have the main rights that people want to watch or you don’t.

Sky can certainly shrug off the immediate impact of the Champions League loss, but to be out-bid for the majority of the Premier League packages would be a serious body blow and a likely tipping point between one corporate bruiser and another.

The City’s instant judgement, which has wiped around 10 per cent, or £1.6 billion, off Sky’s share price, is correct. Either Sky suffers the disaster of losing to BT, or more probably is forced to bid truly eye-watering amounts to hold on.

It could be the tensest crap-shoot since the original multi-billion auctioning of mobile phone licences.

And Sky could have no complaints whatsoever. It used its financial muscle to force its way past terrestrial broadcasters – except when rights owners wanted to be on free-to-air – and everyone else who came along.

BSkyB saw off Virgin, Setanta and ESPN with displays of its power but in BT it now faces a deadly serious rival with the ability to win.

The satellite broadcaster cannot run off to regulators to complain about how BT is planning to package and bundle its services and offer “good value propositions.” Because that is precisely how BSkyB has maintained its commercial dominance since it first got its hands on Premier League football and film rights.

There are obvious losers and they could, strangely, include UEFA itself.

Many people have thought over the years that UEFA had been very clever to insist that there should be a substantial element of free-to air television involved in its rights deals, even if a little less money was raised as a result.

Sponsors of course wanted to reach as many people as possible on as many occasions as possible, and UEFA wisely wanted the largest possible audiences to see its only product, intense, competitive European football: one of the best sporting tournaments in the world.

All that has gone and it is difficult to avoid the conclusion that UEFA has succumbed to greed and stuck up two fingers to the average football fan in the UK.

The combination of Sky and ITV was, and is, a good one until the current deal runs out.

The residual protections are minimal and represent little more than a fig leaf. The finals of the two competitions will be freely available though they are not always as interesting as you would imagine – as in two German teams fighting it out earlier this year.

The promise that there will be “at least” one free game a season for each of the British teams taking part does not take us very far. “At least” will turn out to be one free game a season per club.

The fact is, that from 2015 the UEFA Champions League and Europa League will effectively disappear behind a pay wall and many millions of football fans, who either can’t or won’t pay, will be disadvantaged.

The BT line that they will charge less than Sky does nothing at all for those fans.

How will BT justify spending double what Sky and ITV thought the European rights were worth and how would they justify an enormous bid for Premier League rights?

The telecommunications company obviously sees all of this as a play for all-important broadband subscribers. The concern is that the cost will be spread over all of BT’s customer base, including those who have no interest whatsoever in football. This is denied but at the very least such customers might benefit less from costs savings across the group than they otherwise would.

The likeliest outcome? Two corporate bruisers will fight out a costly 3-3 draw in the interests of competition – a destructive competition that will not operate in the interests of consumers.