Live sport goes Sky high

22 June 2012 by
Live sport goes Sky high

The decision last week by broadcaster BSkyB and telecoms provider BT to splurge over £3b between them on the rights to screen three years' worth of Premier League games has got pub operators worried.

The deal, which marks a 70% increase on the revenue from the current rights package held by BSkyB and ESPN, will run from the 2013-14 season until 2015-16.

The fear among licensed operators is that charges for hospitality businesses to screen those games will rise sharply to help shoulder the inflated costs of the new deals.

Sky, which has screened Premier League matches since the inception of the Premier League 20 years ago, will pay a total of around £2.3b for five packages of live rights for the three years of the agreement. That is a steep increase on the seasons 2010-11 to 2012-13, when it bought five of six packages for just over £1.6b.

Meanwhile, BT has bought the rights to screen two packages of games, representing 38 matches per season, for a total of almost £740m. As part of the package, BT has the rights to 18 of the 38 "first pick" games, which means it will be able to broadcast some of the Premier League's most popular games. It is a significant investment from BT, which will pay the equivalent of £6m per game. To put that into perspective, ESPN currently pays less than £2.5m per game.

But Kate Nicholls, strategic affairs director for the Association of Licensed Multiple Retailers (ALMR) warned Sky and BT that the licensed trade would not be able to bankroll their record spending spree.

"Pubs and bars got a bad deal from the last auction process in 2009 - not only were prices hiked across the board, but most ended up having to move to Sky to continue the must-see matches. Indeed many thousands missed out on key England games because they were unable to pay the additional premium Sky demanded," she said.

bad news

British Beer & Pub Association (BBPA) chief executive Brigid Simmonds warned, meanwhile, that additional costs to screen football games could be bad news for pubs at a time when they were already struggling under the burden of increasing taxes.

Simmonds said: "Pubs need a more competitive pricing policy, as well as alternative providers. Live sport is a key part of the pub for millions of customers, and publicans have endured huge price hikes from Sky, year after year. This has been on top of other huge pressures, such as a 42% hike in beer tax in the past four years."

However, it will be some time before licensed operators find out whether or not their pleas for charges not to be increase will be heeded.

A BT spokeswoman told Caterer and Hotelkeeper that it was "too early to go into any detail" on how it planned to broadcast the games to which it had the rights and that it could not give out any details on how it planned to charge.

"In terms of pubs and clubs and what we are doing in other areas, our response is that we will announce our approach in due course - whether we decide to sell directly or through intermediaries will depend on our discussions with other parties," she said.

Meanwhile, Sky referred Caterer and Hotelkeeper to a statement by its chief executive Jeremy Darroch, made on Wednesday last week when the deal was announced, in which he appeared to suggest that prices may not rise by as much as some fear.

"While the cost is higher, we have capacity for this increase through the combination of excellent work on cost efficiency across the business and choices over other future spending," he said.

A Sky spokesman added: "Tens of thousands of commercial customers invest in live sport because it's good for business. By investing in thousands of hours of high-quality live sport, Sky can help businesses attract customers.

"As a result, we ask that customers pay a price that reflects the value of Sky to their individual businesses, said the spokesman. "That said, we recognise that many of our customers are facing difficult times and we've frozen our underlying subscription prices several times over recent years.

"What's more, this year we've introduced a range of new discounts for pubs based on their location and whether they serve food. These discounts have benefited thousands of pubs across the country."

By Neil Gerrard

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