BT Group PLC's (LON:BT.A) faces added uncertainty over the potential effects of the proposed new European Super League on the company's £400mln-per-year Champions League broadcast rights, UBS says.
Analysts at the Swiss bank said it was another reason to sell the shares.
"With vocal opposition from senior European politicians and domestic football leagues, it is not clear cut that the new Super League will come into being.
"Nevertheless, the news creates an element of uncertainty and is unhelpful for investor sentiment on BT, which holds exclusive UK rights to the Champions League for the 2021/22 to 2023/24 seasons at a cost of £400m pa.
"What is the range of outcomes for BT? Status quo is a possibility given objections from senior politicians.
"Should the Super League go ahead, the legal ramification around broadcasting contracts for the Champions League rights is unclear," wrote analyst Polo Tang in a note to clients on Tuesday.
BT's potential scenarios, as the UBS analyst sees it, include paying £400mln a year for a diminished Champions League; saving £400mln pa from not showing Champions League "but the impact on broadband/mobile churn is unclear" as BT Sport is bundled into many broadband/mobile packages; BT having to pay more to broadcast the new Super League; or another broadcaster (such as new sports market entrant Amazon.com) acquiring rights to the Super League.
"We remain cautious on BT given its premium valuation to the sector... and the prospect of rising infrastructure competition from Virgin Media. Other elements of uncertainty include the triennial pension review and the English Football League rights auction."
Analysis by the FT calculated that the clubs such as Arsenal, Barcelona, Juventus, Manchester United and Real Madrid forming the proposed Super League have together lost out on around €800mln of revenue due to the coronavirus pandemic.
The figure does not include Liverpool, as it has not reported financials for the 2019/20 season.
Funding from JPMorgan Chase is supposed to fill this gap, with the US investment bank having committed to underwriting a debt financing deal with a so-called infrastructure grant of €3.25bn, shared between the 16 teams as an “advance” before any competition begins, the newspaper reported.