In 1992, at the birth of the FA’s new brainchild of football entertainment — the ‘Premier League’ — Rupert Murdoch, founder of a then fledgling Sky TV, made the remarkable decision to bet everything on the elite league’s success in a smash-and-grab £304 million five-year deal for exclusive rights. 

 

The Premier League was born at the epoch of a new media era, and right now, we are amidst another new media epoch: online streaming threatens to do to satellite television networks what they did to terrestrial broadcasters in the early 1990s.

 

No act signals the anxiety of the old-guard greater than Sky Sports’—now a Leviathan of British entertainment—recent unveiling of a new kind of sports package. Designed to attract a tech-savvy generation, the flexible and cheap packages offer an alternative to the current standard price of £27.50/month. As of 18 July 2017, sports-fans can now opt into just one channel that will broadcast one of ten sports—be it football, golf, tennis, formula one, etc.—for just £18, roughly two thirds of the previous price. The move is a clear attempt to give viewers more control; to promote Sky Sports to the hyper-personalised league of online streaming services. 

The question is, is it sustainable? 

While the amount consumers expect to pay for quality home entertainment has been suppressed by the likes of Netflix and Amazon Prime, the cost of broadcasting sports rights has spiralled into absurdity. Sky recently paid £4.2 billion to continue to broadcast the Premier League; an 83% jump from the previous deal that comes to almost £11 million per game. Further, BT Sport just paid almost £1 billion for rights to the Champions League and the FA will receive approximately £820 million for six seasons of international rights to the FA Cup. Surely, traditional broadcasters cannot afford to cut prices and maintain stratospheric bidding wars.

    

Additionally, while the viewing figures for cinema-grade TV productions have sky-rocketed around the world, viewing figures for sporting events are, arguably, beginning to dwindle. 

 

Early season ratings for live Premier League matches on Sky Sports have reduced by one fifth and, at one point, BT Sport’s Champions League figures were down by 40%. This is not  confined to English football. In the US, where broadcasters and cable carriers have collectively paid out more than $50 billion for rights to the NFL, there has been a double-digit decline in viewers this season.

 

The reasons for plummeting viewing figures are numerous. The main reason, however, is surely the ease of access to the same events via illegal online streaming platforms, readily accessible through Google. There has also been a recent explosion of ‘Kodi’ devices in the UK, which let people watch sports and films for free using a wireless set-top box.

Admittedly, there is an enormous effort underway to curb illegal online streaming. For instance, the High Court recently (27 July 2017) issued a ‘game-changing’ court order; UK Internet Service Providers will soon be required to prevent people from watching illegal streams of Premier League matches. A similar temporary measure was initiated at the end of the 2016/17 Premier League season and lead to over 5,000 server IP addresses being blocked in two months. But despite increasingly draconian measures, the ease of downloading via a virtual private network will likely render illegal streaming a normality.

    

Perhaps the death knell of Premier League’s televisual omniscience is starting to sound and, logic dictates, that the eye watering salaries many footballers fetch will consequently begin to  wane. 

 

Following Paul Pogba’s record-breaking move to Manchester United for £89 million last year, this summer has seen Romelu Lukaku transfer from Chelsea to Manchester United for £75 million, marking a British record for this year. Contemporary fees make the likes of Alan Shearer’s 1996 £15 million move to Newcastle United seem insignificant. Indeed Financial experts PwC have recently predicted footballer transfers fees exceeding £100million will become normal by 2025. However what they, like most, have failed to consider is precisely how the market will sustain itself in the long term.

 

In the global village brought about by the proliferation of internet access, sport needs to revolutionise its offering all over again. The answer is not authoritarian regulations against illegal streaming, but low cost streamlined packages reminiscent of Netflix or Amazon Prime—and like those offered by Sky Sports—that provide quality, personalised entertainment at a fair price. 

 

Udo Onwere is a Partner at Bray & Krais Solicitors, and leads the firm’s Sports practice www.brayandkrais.com

 How far will    the money go? 

 Udo Onwere - Partner at Bray & Krais Solicitors