“Footballers aren’t overpaid, it’s just their market rate.”
Do you think footballers wages are too high? If you disagree, you are in a small minority (or a pro-footballer; in which case, what the hell are you doing reading MediaWeek?!). The bottom line is that those wages are set to rise – and whether you agree with this or not – there are good reasons for it.
BT and Sky have just bought the Premier League rights for the next block of three years, at a whopping 71% price increase. That is a massive raise, but importantly it is significant because it represents 1) the increasing value of great (and live) content, and 2) the massive disruption that our industry faces in terms of how we ‘purchase’ entertainment through subscriptions and advertising (or both).
Now we all know that live sports is about as good as it gets for reaching certain demographics, not only that – it’s fast becoming one of the last bastions of mass reach, live advertising opportunities. The latest catch-up figures from YouGov, or BBC iPlayer, indicate that drama and entertainment dominate the content genres watched via catch-up, or time-shifted viewing. Sports – whilst it figures in catch-up/timeshifted – is still a sure-fire bet for a significant live viewing audience, therefore any distribution company looking to plan their content strategy for the next five years will opt for sport if they can afford it, especially if like Sky your business is originally founded on that offering. As long as the numbers stack up you cannot really go wrong with owning sports content.
Talking of numbers, I think distribution is where the deal starts to make sense. Sky has spent years building up relations with over 10 million homes in the UK via their sports and movie content. Not only do they make money from the initial subscription, they also make money from the manufacturing of the box and of course the advertising, plus other ‘unseen’ elements such as carriage charges to 3rd party channels. I am expecting both Sky and BT to tie their sports subscriptions into their broadband offering. Content distribution via the internet is set to see huge growth in the next five years, which means the delivery point (i.e. your home broadband provider) will become a vital battle ground. BT has already made some comments with regard to this area – “…consumers want to buy their broadband and entertainment services from a single provider” and I think that we will see their sports content getting ‘married’ to their fibre-optic broadband offer. It also makes sense for Sky; the web allows their current platform partners to go direct to consumers e.g. Eurosport can (and do,) run their own iOS/Android apps without having to pay Sky carriage fees for their channel to sit on the Sky TV platform. This means that Sky needs to consider their future distribution model for its content.
I think this deal for the Premier League marks that moment, from a strategic perspective Sky could not afford to lose this content, plus they need a partner to avoid monopoly issues and BT is the perfect foil. I would expect that by the end of the next three year deal, a home that wants Premier League content will be on BT or Sky broadband for the best pricing.
All of which is great news for the young footballer, ultimately they are creating that content, and if you were in their position wouldn’t you argue that a 71% increase should have a positive impact on your wages?! Of course you would! They’re not over-paid – it’s just their market rate.