While most of the press attention this week here in the UK is on Liverpool’s impending takeover/messy court case or on Mancini and Tevez’s dressing room fight, a potentially very important event is taking place that is receiving little to no attention.
This week an important event that may well have a large effect on the future of the Premier League has begun to take place in a courtroom in Luxembourg. It is a classic David vs Goliath encounter, as a Portsmouth publican is taking on the might of the Premier League, but this time, if David wins, the shockwaves may be felt all around the Premier League and all European Union nations.
It’s all to do with broadcast rights. Most pubs in Britain regularly show live football. It is a way to draw customers in and it is a major source of revenue for pub owners.
Live Premier League football in the UK is shown on two channels. The majority of games are shown on Sky Sports while the rest are shown on ESPN. Whilst home subscriptions are reasonably priced, the subscriptions for pubs and bars are very expensive, over £1000 per month. Also, rules prevent Saturday games that kick-off at 3pm from being broadcast, in order to encourage people to attend games. However, with ticket prices having risen so high and demand outstripping supply for many clubs, watching a game in a pub or on the internet is the only way many fans get to see their team.
The majority of pubs cannot afford to pay such steep subscription costs and so subscribe to other European broadcasters at a fraction of the cost. This allows them to show all the games that are on in the Premier League, including those on Saturdays at 3pm, for a fraction of the cost of a UK subscription.
This is what Karen Murphy; a publican from Portsmouth did in her pub, The Red White and Blue. She subscribed to the Greek satellite broadcaster NOVA, paying about 10% of what a Sky subscription would have cost. Unfortunately, this is also illegal, as it is in breach of UK copyright law, because she was not using the authorised broadcaster, Sky.
Ms Murphy was caught by enforcers acting on behalf of the Football Association Premier League limited (FAPL), who look after the broadcasting interests of the Premier League, and was fined £8000 in court.
Ms Murphy however, believes the law is unfair and has taken her appeal to the European Court of Justice, the highest court in the EU. Her case is based on freedom of trade. She believes that by limiting her choice of satellite provider and banning foreign decoder cards, the Premier League is contravening one of the principles of the European Union, the free movement of goods and services between member nations, and prevents open competition.
"I think it's unjust. I think it's a greedy private company trying to dictate to the small people what they can and cannot do, purely for profit," Ms Murphy told the BBC.
"If I wanted to go and buy a car, I could go to any garage I like. Me, as a publican, if I want to show football, I can only go to the Sky garage, and have to pay 10 times the price of anybody else [in Europe]. I don't believe that's fair."
The Premier League argues that its fight to protect its broadcasting interests is all about maintaining standards. "Without this protection it is the consumer, or fans as we prefer, that would ultimately suffer as the investment in quality content will inevitably be diminished. It is also unfair on those licensees that respect the law."
Some are calling this case ‘the Bosman of TV rights’ as the consequences of the Premier League losing may be severe. Frank Dunne, the acting editor of TVSports Markets.com says “The doomsday scenario for rights-holders [such as the Premier League] is that their ability to sell their content on an exclusive basis by individual European territory, charging different rights fees according to the size of the individual market, will be undermined…Nobody seems really sure how rights sales would work if that system were ruled to be in breach of European law on the free movement of goods and services…The Premier League is confident that it is going into the case with strong arguments. But it was also confident of its arguments when doing battle with Youtube in the New York courts, and it lost that one (referring to the Premier Leagues unsuccessful attempt to sue Youtube for allowing match clips on the site)”.
Basically this means that instead of the current system where the Premier League can sell TV rights on a country-by-country basis, it may end in a situation where anyone in a European Union country can legally subscribe to any sports channel from any EU country, which will be better for consumers. Alternatively, a situation may arise where the rights for the entire European Union may be sold in one package, which may end up being worse for consumers. It is unknown which way the courts will lean. What is known is that if the court allows freedom of choice for everyone, this would severely hurt the revenues that the Premier League generates from TV rights.
If the money raised from TV rights is reduced, this will have a potentially devastating effect on clubs. It is estimated that the Premier League sold their TV rights for 2010-13 to foreign broadcasters for £1.4bn. This translates to about £23m a season for every club, which for some clubs can mean the difference between solvency and bankruptcy.
If this TV money disappeared or was vastly reduced, the consequences on a club such as Manchester United, who are in the Champions League and pack out a huge stadium every match, may be minimal. But, for a club like Wigan, who play in a half-empty stadium, the consequences could be catastrophic as these clubs are heavily dependant on their TV money.
While a judgement is not expected until early 2011, and whatever the outcome it is likely that both sides will appeal, clubs would be wise to get their affairs in order and find other revenue streams than TV money. Sadly, I doubt they will.