Streaming revolution the next big challenge for Premier League juggernaut
So the 25th instalment of what we often hear described as ‘the greatest league in the world’ has kicked off. It has been a summer of unprecedented transfer spending by Premier League clubs. The traditional superpowers, Manchester United, Manchester City and Chelsea, have as usual spent heavily yet it has been the collective spending of the rest of the teams that has caught the eye. With a few weeks still to deadline day, a spend of over €1bn has set a new record in the English transfer market.
A report released by Deloitte in January listing the world’s top 20 clubs by revenue included 12 from the Premier League. Fuelled by wealthy owners, strong attendances, vast sponsorship deals across every industry and enormous broadcast rights fees, the league is a financial juggernaut. Yet the continued disruption in the sports industry and how fans are engaging with their teams presents both challenges and opportunities for the Premier League as it looks towards the future.
English football was transformed forever when the biggest clubs in the game decided to break away from the Football League and form a shiny new one in February 1992. At the time, English football was in crisis, the game’s reputation had been badly damaged by a mixture of violence and tragedies such as Heysel.
Top players, including English internationals Paul Gascoigne and David Platt, had transferred to European leagues, attendances were poor and cash-starved clubs were struggling for survival. A complete overhaul was required and led by then Arsenal chairman David Dein, the new league immediately gave the clubs more autonomy and earning potential.
Sensing the opportunity to be part of this revolutionary movement, a new pay-per-view entrant signed up as broadcast partner in an initial deal worth €38m to show 60 live games. Sky Sports brought a new sense of style to the league and almost overnight it looked and felt different.
The impact was seismic. The years that followed saw the game completely revamped, becoming a more family-friendly product and commercial and sponsorship income flowed. Barclays became title sponsor and with the increased cash, world-class players from every corner of the globe moved to the home of the beautiful game.
Interest in the Premier League locally was soon followed by a global audience attracted to the iconic clubs and world-class players on show. It has now grown to the point where 380 matches are beamed to over 500 million homes in 211 territories with an estimated global audience of approximately 2.65 billion.
It is this enormous growth in the appeal of the Premier League at a global level that convinced both Sky Sports and new entrant BT Sport to pay a staggering €9.2bn for exclusive rights to the Premier League in 2016. The huge influx of cash, roughly €90m per club, is a key driver in sustaining the continued growth in both player wages and transfer fees. The average Premier League wage currently sits at approximately €60,000 per week, that’s over €3m per year.
Chelsea and Roman Abramovich, one of the first wealthy owners to drive this change, have spent over €1bn on transfers since the inception of the Premier League. Daniel Levy, the Tottenham chairman, has called it “unsustainable”.
The Premier League is not immune to market forces and consumer behaviour and will have watched with interest the complete disruption of both the music and film industries by large Silicon Valley players such as Amazon and Netflix as well as other social media giants such as Facebook and Twitter.
For some time now, traditional broadcasters have been dealing with the impact of these new online challengers and the blurring of the lines between more traditional forms of broadcasting and the new trend for on-demand streaming services. Advertising revenue has been affected most severely with budgets being transferred into digital platforms.
James Brogan, CEO Legacy Consultants