The stunning amount broadcasters are willing to pay for the rights to screen live football matches was front and centre again today as Sky Plc (LON:SKY) published its nine month trading update.
The European broadcaster saw its bottom line hit by the big hike in Premier League football costs, following on from the record £5.14bn deal it, along with BT Group PLC (LON:BT.A), secured back in 2015.
That three year agreement kicked off in August at the start of the current season, and Sky has already had to fork out an extra £494mln compared to last year.
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The £5bn-plus the two broadcasters are shelling out for the next two-and-a-bit seasons is 70% higher than the £3bn they paid for the previous three years.
To put the current agreement into perspective, the cost of screening the first 19 games of this season was the same as what Sky paid for all live Premier League fixtures between 1992 and 1997.
North of the border, there are rumours that Scottish football rights will be the next battleground for Sky and BT, with the latter apparently prepared to go all out to secure the exclusive rights.
The two currently pay £21mln a season to show 60 SPL matches – a drop in the ocean compared to other contracts – but reports suggest BT could be set to almost double that if it gets its way.
German football costs also spiralling
It’s not just in the UK where football leagues are commanding more and more money, Sky has faced a similar issue in Germany.
Last summer, its German division, Sky Deutschland, paid €3.5bln to secure the rights to screen top-flight football matches in the country through to the 2020/21 season.
The new deal – which will see Sky screen more than 1,500 live Bundesliga and Bundesliga 2 matches – comes into effect from the start of the 2017/18 season, and averages out at €876mln a year.
That’s a whopping 80% increase on the current arrangement, which come in at €486mln per annum.
Speaking at the time, City broker Liberum said: “This [deal] further brings into question the long term profitability of Sky, as we believe competition dynamics will undermine their ability to fully pass through these cost increases to customers.”
It’s not just domestic football which is commanding big money
Sky isn’t the only one paying through the nose though. Its rival, and fellow Premier League broadcaster, BT has spent A LOT of money securing the rights to European Champions League and Europa League football.
In fact, back in 2013 BT paid £897mln for exclusive rights to Europe’s elite club competitions which, at the time, was seen to be a stonking figure given that it was more than double what Sky and ITV had paid for the previous contract.
At this point, many in and around sport thought that the relentless inflation might be coming to an end as falls in viewing figures and the threat of illegal streaming took hold.
But BT didn’t stop there though.
Back in March it agreed to pay a further £1.2bn to extend its exclusive TV rights deal for another three years when the current arrangement expires at the end of next season.
With BT paying 35% more than they did last time, it serves as a reminder of the importance telecoms firms attach to live football as a means of attracting customers to other services.
Will the relentless rise in football TV rights ever stop?
Bidding for Premier League rights from the 2019/20 season is expected to start early next year, and it remains to be seen if the recent uptrend will continue.
Given how much of Sky’s sports coverage is centred around top flight English football, it won’t want to concede any more ground to BT, so one would imagine it will fight tooth and nail to at least keep its hat in the ring.
For its part, BT is trying to forge ahead in a market which has been traditionally dominated by Sky and, as its recent deals show, it’s prepared to chuck a lot of money at football's governing bodies to achieve that.