Why did Sky buy Manchester United? Why is Carlton in talks with Arsenal? You know the answer: it’s all about television rights, isn’t it?
Well, not if you talk to Sky. Sky’s stated reasons for wanting Man Utd are manifold, but not many have anything to do with TV. United is a good business (27m pre-tax profit last year), Sky understands football and has an affection for the game and there are synergies between the two businesses. Sky could put its considerable subscriber management skills to work servicing United’s season-ticket holders and help exploit the United brand around the world.
Last week, a Sky spokesman poured scorn on any suggestion that the company was seeking to dominate the Premier League ahead of any future negotiations over television coverage – United is, after all, just one among 20 clubs – let alone the fact that United might break away from the League altogether and do its own TV deals.
Sky’s interest, I was told, lay in maintaining the Premier League, into which the company has pumped some 700m. Even Man Utd needs other teams to play and those teams are in the League: ergo, United must stick with the League.
This is true, but also disingenuous. For one thing, negotiating TV rights separately once the present contract ends in 2001 need not involve leaving the League. Agreeing which TV companies should broadcast which matches and who pays how much to whom, match by match, might be an organisational nightmare when every club has its own TV contract, but it’s not insuperable.
For another, such an arrangement may be forced on everyone if the Restrictive Practices Court next year decides that the League’s deal with Sky and the BBC is anti-competitive, because the League effectively acts as a price-fixing cartel.
United itself, before Sky’s bid, made clear it thinks its present income from TV of around 12m a year is too low. One United adviser reckons the club could get 25m or more. That’s why United enthusiastically entered into negotiations for the formation of a new European Super League, bringing together the likes of Barcelona, Bayern Munich and Juventus with United, Liverpool and Arsenal.
Across Europe the biggest clubs have now woken up to the fact that they can make more – much more – from TV.
Last week I went to Milan. One of the city’s two great teams, AC Milan, has been owned by a television mogul for the past 12 years.
Silvio Berlusconi was an AC fan as a child and he’s still a fan. Since 1986 he’s pumped millions into the club, enabling it to buy star players and for a time it seemed to win every Italian and European cup available.
The vast modern San Siro stadium, which AC shares with local rivals Inter Milan, is a powerful symbol of football’s importance in the city. It holds 75,000 spectators, and looks like a vast bedstead on coiled springs: it’s one of the most impressive and ugliest buildings you’re likely to see.
Berlusconi’s motives for owning AC are very different from those of Sky in buying United, or Carlton in acquiring Arsenal. Sky and Carlton want football clubs because it makes good business sense. Berlusconi wanted a football club because it’s fun and because owning a leading team in Italy does wonders for a man’s public profile and prestige. In Berlusconi’s case it even helped him briefly to become Prime Minister at the head of a party, Forza Italia, whose name was derived from a football chant.
But even in the macho, willy-waving world of top-flight Italian football, commercial reality is starting to dawn.
AC Milan under Berlusconi has never shown a profit and he has scarcely tried to exploit synergies with other parts of his empire – even his three free-to-air TV channels. But he did spot the potential when his fledgling pay-TV company, Telepiu, negotiated its first deal for live coverage with Italy’s equivalent of the Premier League.
Berlusconi has since been forced to sell most of his stake in Telepiu, but Telepiu still has the contract. With digital technology it can now offer fans not just one match at a time, but a pay-per-view choice of every “Serie A” game being played.
Now AC Milan, like Manchester United, is leading the charge towards a Super League. The commercial company behind the League idea, Milan-based Media Partners, is run by former Berlusconi executives – although any suggestion that the company is a Berlusconi front is met with denials all round.
Adriano Galliani, the Berlusconi executive who runs AC, says a Super League is inevitable: “Europe has a common currency. It must have a European champion-ship as well.”
What’s more AC, along with three other top clubs (Inter, Juventus and Naples) has just broken with the Italian league and signed a separate deal with Telepiu from next season. The extra money from television will, says Galliani, mean more money for big players, improved performance on the pitch and more exciting matches between Europe’s biggest clubs.
Across Europe, the big football clubs are now big business – and don’t let anyone tell you that television rights aren’t one of the keys to unlocking their potential.