Why Premier League’s new deal is a warning, not a record

You may have seen the headlines about the Premier League's new domestic “record TV deal” worth £6.7 billion ($8.4 billion) for the 2025-2029 cycle, and your eyes may have widened as they often do around large numbers.

You might have thought, “OK, it's the most successful football league in the world, they're making billions, no wonder they're raking in money.” Everything is fine. »

Except that's not the case.

This new “record” TV contract confirms a trend that has been going on for a while: the value of media rights, both in real terms and as a percentage of club revenues, is decreasing. And while the Premier League is better prepared than most of its peers, at some point it is bound to need a reset because there are only a limited number of ways to make money.

– Stream on ESPN+: LaLiga, Bundesliga and more (US)

So, to what extent is the new TV deal not “record-breaking,” in meaningful terms? Well, a lot. For a start, it's a four-year deal, not the usual three years, so on a seasonal basis that's £1.675 billion a year, less than the £1.713 billion a year of the 2015 agreement which covered the 2016-2019 seasons. . Accounting for inflation, with the cost of living now 30% higher than in 2015, this deal is about a third less valuable than that deal, which was the highest ever checked in. (The 2019-22 deal, which was rolled over to 2022-25 and meant the same rights holders kept their packages, already represented a decline before last month's announcement.)

Oh, and then there's the fact that this deal covers 99 more games than the 2016-19 deal. Consider inflation and, per game, the value of each individual game has decreased by 50%.

So why is all this happening?

It's not because there is an underlying change in the popularity or cultural relevance of the league: stadiums are still full, trade deals continue, interest remains high. In fact, the Premier League remains by far the most successful and popular football league in the world. And incidentally, the decline in the value of media rights actually affects all major European leagues; in fact, it's worse elsewhere. England's new deal represents an increase of 4% on the previous contract (over the period 2019-2022 and 2022-2025), La Liga increased by 1%, Bundesliga remained stable, Serie A declined by 3% and Ligue 1 was interrupted. because no one has reached the minimum price. (Instead, they will attempt to reach an agreement through individual negotiations.)

In my opinion, it's mainly the fact that broadcasters made very big bets on the growth of football and overpaid in previous decades, either because they got their numbers wrong or because they were trying to gain market share. They are now much more cautious and value-conscious than before.

The fact is that these are mature markets: it's not like people are unaware of the so-called “football” that they can pay to watch on subscription TV. If they don't subscribe, it's either because they're watching illegal streams; because they are content to attend matches in person and watch highlights on social media and free TV; because they cannot afford it; or because they just don't like the game.

What does this mean for the Premier League? Well, their domestic contract is still much bigger than that of other major European leagues, and their international rights revenue leaves the others in the dust. (However, some questions also arise: How much longer will the owners of beIN Sports, their largest partner, continue to throw money at them? And will their second largest partner, Viaplay, remain solvent ?). In terms of maintaining the TV revenue gap with the rest of the competition, it's unlikely anyone will catch up anytime soon, mainly because they face the exact same challenges.

Maybe things will change. Perhaps the big tech giants – like Apple, Meta, Amazon and Google, some of which have already dipped their toes in these waters, like Apple with MLS and some Premier League games broadcast on Prime – will go all in and raise the stakes. price at the next auction, but we've been hearing this for 10 years and none of them have done it.

Maybe someone will figure out how to monetize live games, like Walmart is trying to do with “Add to Core?” » Can you imagine it? Erling Haaland scores a late winner, rips off his headband and you can click to buy one exactly like this for $19.95… or the camera pans to Jose Mourinho pointing at his watch, a link appears, and this same watch is yours. the very low price of $2,500.

Maybe, since most of us never watch live TV other than sports, breaking news and the odd extravaganza like an awards show, we'll revert to some sort of ad-supported free TV? (Hell, it works pretty well for the NFL.)

However, until all this happens, the current television rights model appears to be all but exhausted. And this is important because, fundamentally, most clubs only support themselves in three ways: broadcasting (including prize money, which is directly linked to broadcasting), match revenues and commercial activities, such as sponsorship and merchandising.

We covered broadcasting. Match day revenue can only increase to a limited extent. There's only so much you can charge for tickets, there's a limit to the size of a stadium you can build – you can't really exceed a capacity of 100,000, otherwise you'll have a ton of crappy seats that no one wants to pay for – – and while corporate hospitality and luxury boxes can be nice little revenue streams, there are a limited number of very wealthy clients you can sell to . Regardless, most Premier League clubs have extracted as much as they can from their stadiums. (It's a slightly different story in Spain or Italy, where Real Madrid, Inter, AC Milan, Barcelona and Roma have all recently renovated their pitches, plan to do so in the near future or are looking to build new stadiums.)

There remains commercial income and here the clubs are under enormous pressure. This may explain why, unlike in the past, instead of mainstream brands, we now often see a group of sponsors – think crypto brands, B2B operators and bookmakers, often with a bunch of numbers in their name, like bots on social media – – most of us hadn't heard of them until recently, if at all. Again, maybe someone will get really creative, really quickly and things will scale exponentially, but if you're counting on brands willing to roll the dice to gain market share or reputation before spending money is not the most stable relationship.

Are the major European championships aware of this? You hope so. Some, like the Premier League and Bundesliga, are probably more future-proof than others. But you don't have to be an accountant to realize that if revenues are growing more slowly than costs, you're going to run into a problem, and wages account for between 60% and 90% — sometimes more — at the end of the day. vast majority of clubs.

At some point, unless they find new sources of income, wages will have to stop rising, or even fall, making the Premier League TV deal a canary in the coal mine. Will these warnings be heeded before it is too late?