What is the Football Association Premier League?
The Football Association Premier League is made up of 20 teams from England competing to become the Premier League champions and is the top flight of English regulation football. Since the onset of the Premier League in 1993 the televised side of the sport has been completely revamped by Sky television and their parent company BskyB.
What is meant by television rights?
Television rights are Intellectual Property rights which are made up of broadcast and copyright rights and is effectively the right to show the sporting contest on television. They are often broken down into the right to show the contest live and the right to show delayed highlights of various matches. If one party has the right to show the match live then this will thus be infringed if another party also shows that game live.
How are television rights for the FA Premier League sold?
Currently the FA Premier League clubs sell their rights collectively through the FA Premier League. This means that the owner of all the television rights for the FA Premier League is the organisation which runs the league rather than the individual clubs that participate in the league. Consequently this means that a broadcaster only has to deal with one party and can purchase a package of rights for a number of seasons relating to all 20 of the Premier League clubs.
This can be compared to other European countries such as Italy where the rights for Serie A football matches are sold individually by the clubs.
Collective selling versus Individual selling
Is the system run by the FA Premier League the preferable option?
Whether collective selling or individual selling is the preferable option depends from which angle you look at it from. The bigger clubs in Italy such as AC Milan, Inter Milan and Juventus are able to sell the rights for their matches themselves and due to being the biggest sides they are the most sought after matches. The clubs can therefore run an auction process to sell their rights to the highest bidder. This will therefore provide them with increased income than if the rights were sold collectively. It does, however, put the smaller clubs at a disadvantage as they will not be able to attract as much venue for their matches and therefore will be unable to compete with the bigger clubs.
The system in England is intended to provide more competition within the league as if the rights are sold collectively the revenues made from this can then be distributed more evenly. The bigger clubs will still traditionally see more of this revenue as the money is split proportionately depending on where each team finishes in the league table at the end of the season but it is not as disproportionate as the system in Italy.
The bigger clubs in England feel that they should be able to sell the rights to their games individually as they cannot sometimes compete in the money stakes with their European counterparts when it comes to transfer fees but the Football Association in England feel that this would decrease competition within the league in England as the smaller clubs will stand little chance of competing. Imagine the money that could be made by a club like Manchester United if they could individually sell the rights to their matches.
European Union Competition Law
If Competition is increased between the teams in the League does this decrease competition for the consumer?
Article 81 European Treaty
Article 81 of the European Union Treaty expressly prohibits agreements, arrangements or concerted business practices which appreciably restricts or distorts competition and which affects trade in the European Union.
If the agreement restricts competition but this is limited to trade within the UK then it will be caught by Section 1 of the Competition Act 1998.
The European Commission has provided its opinions on the agreement between the FA Premier League and the 20 clubs making up the FA Premier League to sell the rights collectively. It felt that the agreement had the following effects:
- That collective selling reduces the choice of media operators by limiting the packages available to them
- That collective selling reduces the choice available to consumers by reducing the amount of different media operators who can show Premier League matches
- That collective selling lead to higher prices as a reduces amount of media operators or in some cases only one in the case of Sky means that there is no competition in relation to price on the market
- If there is no companies competing against each other on the market and all the rights are held by one broadcaster such as Sky then technological innovation will be reduced to the detriment of consumers
For more information on:
- What did the Commission decide?
- For how long are these commitments binding of the FA Premier League?
- What happens if the FA Premier League is found to have breached these commitments?
- Have these commitments been successful in increasing competition?