Richard Scudamore may be delighted by the £3bn contract for the period 2013 to 2016, but most of it is likely to be swallowed up by players and their agents
Before gasping at the dazzling lucre of the Premier League's £3bn TV contract from 2013 to 2016, and high-fiving the league's chief executive, Richard Scudamore, it is important to understand what the deal actually represents. Of course, as Scudamore himself beamed when announcing it, this does reward football's transfixing appeal, the jackpot arriving a month after the extraordinary finish to the Premier League's 20th season. This money is 10 times the £305m first TV deal struck by the breakaway league, over five years from 1992, which at the time was itself a whole new ball game.
The £3bn is vast for the clubs, their owners, the players – whose wages currently swallow around 70% of the clubs' total earnings – and their agents. Yet it is not coming from the generosity of Rupert Murdoch's BSkyB and ambitious BT, as a wide-eyed endorsement of the entertainment served up by the 20 clubs. As Mohamed Al Fayed, the Fulham owner, memorably grumbled, BSkyB are the ones who go off and make a huge profit themselves.
The Premier League's global appeal has attracted overseas owners into clubs, particularly the American buyers of Manchester United, Arsenal and Liverpool, but the sure-to-be lucrative auction of world rights is yet to come. This £3bn windfall, which looks so glittering in a Britain double-dipped into recession, is for a more homespun business: selling TV subscriptions in Britain, to pubs desperate for regulars, and folk at home.
Sky struggled desperately for a viable audience before seizing the football rights from ITV in 1992, keeping live top-flight football off terrestrial TV ever since. BSkyB, and Murdoch's News International, recovered from near financial collapse, and built their commercial and political power, largely based on owning live football. Of all the 20 years that were reminisced last season, Wayne Rooney's greatest goal, Eric Cantona's most regal celebration, all the thrilling players and dramas, not one moment has ever been available, live on TV, to the thumping majority of British people who still do not subscribe to Sky. In the year to June 30 2011, BSkyB racked up income, overwhelmingly from their 10m subscribers, of £6.6bn, making pre-tax profit of £1bn. James Murdoch, then still the chairman and heir designate to his father's all-powerful media empire, glowingly increased shareholder dividends by 20%, paying them £253m.
This is a great deal of money flowing from the direct debits of struggling pubs and supporters of the national sport, to BSkyB, then to Scudamore and his clubs, then to players banking their fortunes. The record £3bn commitment from BSkyB and BT is a statement of utter confidence that their tills will ring from subscribers for three more years. It is odd to see this deal landing in the middle of the Leveson and phone-hacking inquisitions that have been so excruciating for the Murdochs. The Premier League, source of BSkyB's commercial strength, sold football to the company again.
Yet while BSkyB has made its owners hugely rich, the clubs themselves have mostly struggled just to break even throughout their 20-year bonanza. In 2010-11, eight of the 20 clubs made a profit while 12 – 60% – recorded losses. Principally that is because players – "the product," as their more blunt-speaking agents describe them – have ensured their wages escalate with every swelling of the TV pot.
Scudamore glowed yesterday that the "security" of the £3bn "will enable our clubs to … plan sustainably for the foreseeable future." However, not many of them, squeezed by the competition to stay in the golden league and succeed, have managed ever to do that. Once Chris Sutton's £10,000 a week contract at Blackburn in the mid-1990s blew minds, so one day Carlos Tevez's £200,000 a week, £10m a year may also appear quaint.
The owners nevertheless, particularly those, like the Americans, motivated by making gains for themselves – the Glazers are reported to be considering the US for a United float – will be thrilled with this. Uefa's financial fair play break-even rule are what Europe's governing body came up with when it decided a players' salary cap would be impossible to enforce, and the clubs hope its introduction, from 2014, might finally dampen wages down.
The boom in TV money has not made it cheaper to attend matches over 20 years; quite the opposite, top flight ticket prices have increased by up to 1,100%. Now, in the recession, they are plateauing, but even this huge deal is unlikely to bring prices down much. The Premier League points for vindication to the quality of football, investment in stadiums, and money trickled lower down – 8.75% of its total income in 2010-11 – excluding parachute payments to its own relegated clubs, which many in football believe remains relatively pitiful.
It remains the case, though, that the national game, which could be attended live very cheaply before 1992, and watched live on TV free-to-air, has based its fortunes since on vastly inflating ticket prices, and selling itself live exclusively to pay TV. For overseeing it all, Scudamore, who is on a personal bonus for TV deals, will be cheered, garlanded all the way to the bank. Read More
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