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The Premier League is set to announce a new TV deal today that will soar past the £4billion mark – further swelling the coffers of Newcastle United provided they can retain their top flight status for the duration of the new deal.

The remarkable popularity of English football’s top flight continues to grow both at home and abroad and today’s announcement, which should be confirmed early in the afternoon, will definitely see an increase on the £3billion spent by Sky and BT Sports to secure rights to screen games live in the UK.

In 2011, £1.77billion was spent on the rights. In 2013, it doubled to £3billion and while the sealed bids process is secretive enough to leave an air of mystery – rumours of a surprise broadcast bidder abound – it will definitely hand top flight clubs an increased windfall from the period between 2016 and 2019.

Broadcast analysts think it will rise towards the £5billion mark, an incredible inflation-busting rise that just emphasises the importance of staying on the Premier League gravy train until 2017, when the next live rights package is negotiated.

But what will it mean for Newcastle specifically?

1. Newcastle are going to get an extra £10million a year from the new TV deal – at least

In short, a lot. If the predictions of a 45% rise are right, United can expect a guaranteed extra £10million every year – minimum.

Unlike rival European leagues where individual clubs negotiate their TV deal, every single club that plays in the Premier League gets a guaranteed payment. Last year United – in common with the rest of the division – banked £52.2million.

That was topped up by prize payments for their league position and ‘facilities fees’ (£750,000 per live game), which are calculated on the basis of how many games were televised that year. That took United’s Premier League payments to £77.4million, eighth in the division.

The domestic TV income, which is what is being bid for at the moment, was £21.63million of that – so any rise is going to bump up that figure significantly. The overseas TV deal, which is up for renewal later this year, is worth £26million and should also rise significantly.

 

 

Value of the domestic TV deal

£1.7bn £3bn £4.5bn?

2011-13 2014-16 2017-19

2. Spending power should – theoretically – rise again

It seems very simple: more cash in the bank means more money to spend in the transfer market, right?

More TV money means more spending power under the league’s Financial Fair Play rules, so more freedom to invest.

It should do but it’s worth noting that in the last three years – when the TV deal soared through the roof – Newcastle hardly spent freely. In fact they have turned a profit on player trading in two of the last three transfer windows. It’s hard to see a new deal changing things significantly at St James’ Park, although it does boost their ability to import from foreign markets.

It’ll probably strengthen the club’s resolve to continue mining foreign markets. France, Holland, Germany and increasingly the lower tiers in Spain are going to be even more fertile ground for Newcastle, who can outstrip the wages and fees on offer from all but the very biggest clubs in those markets.

3. Even less reason for Mike Ashley to sell?

Mike Ashley says he will stay around until at least 2017 and the new TV deal makes it even easier for him to stay in place at St James’ Park.

Think about it: the club is staffed by his close allies and crucially, it now entirely funds itself. He doesn’t need to put a penny in and on top of that, St James’ Park offers prime space to advertise his retail business Sports Direct.

If he chose to start taking back some of his loan – which he hasn’t shown any inclination to at this point – he could start doing that without probably harming Newcastle’s ability to compete at the level they are now. Ashley got in at the right time. If he can keep brushing off the criticism, it looks the perfect win-win for him.

He’s not the only one thinking like that. When was the last major Premier League takeover? There hasn’t been one since Fulham were taken over at the start of last season, and Randy Lerner has recently shelved plans to sell Aston Villa. Why is that, if not because the Premier League looks very lucrative at the moment?

On the flip side, outside investors might see the rising TV deal as another reason to clamber aboard the Premier League gravy train. With the worldwide economy improving and the Premier League offering lucrative opportunities for exposure, those overseas investors might start looking again.

You can’t help thinking it would now take a big offer to tempt to Ashley.

 

 

NUFC TV deal earnings

£77.39m

Newcastle cash payments from the Premier League

14

Number of times United were on TV last season

Sporting Intelligence

4. Some more bizarre kick-off times

This time there are 168 live TV games up for grabs, an increase of 14 on the last deal. There is no sign of a return to the 3pm kick-off time that most of us prefer.

Indeed the new domestic TV deal will also mean Friday night games for the first time, which is a major break from tradition.

United fans have the longest distances to travel for away games and are often hit in the wallet by the TV companies moving games to kick-off times which make it difficult to find reasonable train tickets and hotel rooms. That isn’t going to change any time soon, unfortunately.

As anyone who has been at the club’s last two home games will testify, 5.30pm on a Saturday and 2pm on a Sunday hardly do wonders for the atmosphere.

5. Expect it to be harder to keep wages and agent’s fees down

Wages went up by 11% in 2013 and will have soared again last year. Agents fees, which were a staggering £115million last year, were up by £19million. That isn’t going to change any time soon.

United, interestingly, slashed the amount spent on agents by nearly half in 2014, and took £3million off the wage bill last year. It’s going to be harder to do both in the future.

6. Cheaper ticket prices?

Maybe not everywhere but at St James’ Park, the TV deal is helping to subsidise ticket prices.

Premier League clubs have been criticised for not reducing ticket prices in line with their record incomes but Newcastle have just announced a price freeze on season tickets.

Making watching games more affordable has been one of the biggest improvements in recent years at St James’ Park.

To the club’s credit, they want to continue that. They said last month that the decision “takes into consideration that by the start of next season Premier League clubs will be aware of the value of the new television rights deal negotiated by the Premier League with broadcasters, to commence in 2016/17”.

 

Mark Douglas

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There's no chance Ashley will leave now. I know what I want to happen to him. £100m the rock bottom amount purely off telly. Wish it was 1990 again me for football and NUFC, in more ways than one.

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Top level football clubs in England now only exist as a middle men between media organisations and a very,very select band of talented(?) young men. I think when we complain about what's going on at NUFC we're in essence complaining about the game in general. The amounts are mind boggling and 98% of it will go straight to the players and their agents whilst school school fields are sold for housing and park sides get changed in sheds.

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Top level football clubs in England now only exist as a middle men between media organisations and a very,very select band of talented(?) young men. I think when we complain about what's going on at NUFC we're in essence complaining about the game in general. The amounts are mind boggling and 98% of it will go straight to the players and their agents whilst school school fields are sold for housing and park sides get changed in sheds.

Perfectly put.

 

:(

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Top level football clubs in England now only exist as a middle men between media organisations and a very,very select band of talented(?) young men. I think when we complain about what's going on at NUFC we're in essence complaining about the game in general. The amounts are mind boggling and 98% of it will go straight to the players and their agents whilst school school fields are sold for housing and park sides get changed in sheds.

Good post

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Top level football clubs in England now only exist as a middle men between media organisations and a very,very select band of talented(?) young men. I think when we complain about what's going on at NUFC we're in essence complaining about the game in general. The amounts are mind boggling and 98% of it will go straight to the players and their agents whilst school school fields are sold for housing and park sides get changed in sheds.

 

Yep. Spot on mate.

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Top level football clubs in England now only exist as a middle men between media organisations and a very,very select band of talented(?) young men. I think when we complain about what's going on at NUFC we're in essence complaining about the game in general. The amounts are mind boggling and 98% of it will go straight to the players and their agents whilst school school fields are sold for housing and park sides get changed in sheds.

I think this is true. The logical response would probably be to support the Heed rather than the Toon....

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the game blog

 

Richard Scudamore had to read it twice, not so much because he could not quite believe it but because he wanted to savour the pleasure. You could see, even on the television, just the thinnest glimmer of a grin playing on his lips. It was the face, and the tone, of a man who was very pleased with himself indeed but knew that decency demanded he did not show it.

“Five point one,” the Premier League chief executive said before starting again. “Five point one three six billion pounds.” Then that faint smile, followed immediately by the almost imperceptible command from inside his brain to look very serious indeed.

 

Having just sold the live UK Premier League TV rights for £5,136,000,000, Scudamore might well look pleased with himself - the international rights are still to be auctioned off, potentially taking the total broadcast income to more than £8 billion. Whatever you think of him, he has done his job quite exceptionally well. Between them, Sky and BT Sport will pay that eye-watering, mind-boggling, head-scratching sum of money to broadcast the Premier League between 2016 and 2019.

 

They will, it turns out, commit more than a quarter of all the money spent on television production in the UK on programming that attracts only 0.5 per cent of the country’s total audience. They will pay a fraction under £10.2 million per game, more than £1,000 a second, for their piece of the action. £5,136,000,000. Look at all those commas. Look at all those zeroes. No wonder Scudamore is smiling.

Of course, that was not the universal reaction. There is a natural process to follow whenever the Premier League announces its latest blockbuster television rights deal.

 

First, we must all wonder whether this is all faintly obscene. Then we must decry the fact that it does not seem to relate to cheaper tickets for fans. Next, we must complain it does not lead to greater investment in the grass roots of the game, which now seem to stretch all the way to the Sky Bet Championship. We must demand an increase in the solidarity payments to the Football League, suggest it is time for the Premier League to give something back to the nation that supports it.

 

And then, finally, we raise the dreaded prospect of yet further inflation on player wages, to whatever arbitrary point we have subconsciously decided is the point of no return. Last time, it was the idea of the first £200,000-a-week player. We have long since motored past that, and the world did not end. Most of us did not notice a difference. It will be the same with the first ever £500,000-a-week player this time around.

These are all valid issues. There is no justification whatsoever for not only freezing but reducing ticket prices – not even the laws of supply and demand or the nature of the free-market economy – especially for younger fans. There is no reason at all that the Premier League cannot meet its own pledge to donate five per cent of television rights to the grassroots. The solidarity payments are more than any other league gives its younger cousins anywhere in the world, but that is a PR spin: so they bloody well should be, with that sort of capital coming in. They have to go up, too, no question.

 

But, then we must pause, at this point, and acknowledge that we are all complicit in this. We are all guilty of wanting our teams to sign bigger and better players, if they are already in the Premier League, or of getting promoted to the Premier League so they can take part in the cash-soaked carnival if they are not. That is why transfer deadline day has become bigger than FA Cup final day: because we, as a footballing public, have bought into the philosophy of relentless acquisition. You may loathe the prospect of the first ever £500,000-a-week player, but it becomes altogether less disgusting if it’s your club paying that to Cristiano Ronaldo.

 

However. The list of issues that forms the repeat reaction to the TV deal is not comprehensive. There are other questions to ask, too, ones that are just as pressing, just as troubling:

 

● What does the Premier League’s financial might mean for the idea of developing young players?

● What does it mean for the game across Europe, as yet more leagues become nothing more than feeder competitions for players battling to get to the place where they can have their pay day?

● What does it mean for innovation in the league itself, because the rich do not tend to take risks?

● Will it increase the quality of play, or will it follow the example set by recent history, and simply lead to mediocre clubs paying more money for mediocre players (the 70 per cent increase in the TV deal in 2012 did not lead to a 70 per cent increase in Premier League dominance in Europe: quite the opposite)?

● Does it mean that clubs, like Arsenal, wasted a whole lot of time and effort building new stadia, now that matchday revenue is at best a tertiary financial stream?

 

They are all pressing questions, too, ones that can be debated endlessly, each one of which would make a long, inconclusive piece on its own. For now, though, let us look at the other question, the simplest and most complicated of all. Why? Why, exactly, is the Premier League worth so much to Sky and BT Sport?

 

Scudamore, as he revealed the staggering details of the latest deal yesterday, did much to suggest that the relentless increase in the value of the rights was a consequence of the natural law of the market. That would be fine, if this was a process that existed in a natural market, but it does not. Instead, it is part of a cycle of self-enrichment that both broadcasters have worked out.

 

The more money they pay the Premier League, the more (and theoretically better) players the clubs buy, the more glamorous and appealing and overwrought the league becomes, the more people tune in, the more advertisers pay for slots during games, the more people subscribe to the broadcasters. The natural law of the market is that the television companies should want to get the rights for as little as possible.

 

In the artificial market of the Premier League, where the more you speculate the more you accumulate, the exact opposite applies. The more they pay, the more their rights are worth. This is all based, so the logic goes, not on viewing figures but on “quad play” customers – viewers, broadband, mobile and phone customers – which is where Sky and BT are engaged in a fierce battle. The Premier League, like everything, is basically content. Sky and BT want rights so that, when it comes time to renewing your broadband, you go with them. BT is in the process of buying EE, the mobile network invented by Kevin Bacon, to apply the same logic to the mobile market.

 

And yet, this is all based on one great unknown: what is the size of that market? Sky has somewhere in the region of 8 million subscribers to its television channels. It is very protective of viewing figures, but estimates suggest that the very biggest Premier League games attract somewhere beyond 2.5 million viewers. BT, still growing, has tipped a million viewers for their games on a handful of occasions.

How many football fans, then, are out there who do not have Sky or BT and can afford to get it? They have paid 70 per cent more for the rights: can they expand their subscriptions by 70 per cent, too, or have they saturated the market already?

 

The matters of broadband and mobile are even more complicated. There are an estimated 20 million broadband customers in the UK. Of course, those families with football fans among their number will now be tempted to go to Sky or BT if Premier League football is part of the package. How many will do so when those games cost extra, though, rather than appearing as a bonus for your £10 monthly subscription?

 

And on mobile, how many people will pay to stream games direct to their phones? Does everybody want to watch live games on their phones? Are the 3G and 4G networks in the country strong enough to give people a decent signal when they are without wifi? Because, at a rough guess, I would say that outside the major cities it probably is not. And then, of course, there is the cost of streaming.

 

These sound like puerile questions, but it feels as though Sky and BT are both speculating on a market that it is hard to predict with any confidence or accuracy. It is a market that, ultimately, depends on you being willing to part with more of your money – in television subscription, in mobile phone bills, in broadband costs – to watch football.

 

The rights boom seems to be an ever-inflating bubble. The big question has been when it will burst? The answer to that is nothing to do with the Premier League, or even with football. It is when the broadcasters, the broadband providers, the mobile phone networks have taken as much money as possible from your pocket.

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I can't wait until Sky/BT announce their new subscriptions for next season. Will Sky increase their subs. by 70% in line with the extra they have paid the EPL or will they stay the same bearing in mind they have lost the Champions League games? Will BT not only increase their basic sub of £12 by 70% then have a further add on for the Champions League? because you can be sure at the end of the day it will be the viewer who pays the piper.

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In the USA, new TV deals have sky rocketed team values. Both the LA Clippers and LA Dodgers were sold right around when new TV deals were in place, and both were sold well above what their perceived market value is. I wouldn't be surprised if Ashley sells Newcastle within a couple of years for more than anybody thinks they'll be sold for.

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The only positive I can see from this is getting in the champions league will no longer be a golden goose, so the league won't have four teams dominating anymore.

Edited by Phil

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It's worth at least £70m a year to the likes of Man U so it's still far from inconsequential. They'd struggle without that revenue for more than a couple of seasons.

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