Trevor Watkins of Pinsent Masons, the law behind Out-Law.com, was commenting after a day of major announcements regarding Premier League TV rights and the value of the European football market more generally.
On Thursday, the Premier League announced that BT Sport and Amazon had acquired the remaining two packages of rights to broadcast Premier League matches from seasons 2019/20 to 2021/22. Five of the seven broadcast packages that the Premier League made available for the three seasons were auctioned off earlier this year to Sky and BT in a deal worth £4.5 billion in total.
It is the first time that an online-only content provider has obtained UK broadcasting rights for the Premier League. Amazon will live stream two full rounds of live Premier League matches during December in each of the seasons via its Amazon Prime Video service.
The Premier League separately announced a new formula for the sharing of revenue between clubs deriving from the sale of international TV rights. Currently, all revenue generated from the sale of those rights is shared equally between the clubs.
Under the new model, any increase in revenues generated from the sale of rights above current levels will be distributed based on where clubs finish in the league standings. An overall cap will be imposed to prevent a club at the top of the league receiving more than 1.8 times the amount the bottom-placed club receives. The new model will apply from season 2019/20.
According to a report published by Deloitte also on Thursday, Premier League clubs generate 86% more revenue in total than clubs in La Liga, Spain's top division.
The Deloitte report, however, highlighted that combined revenues across the 'big five' European football leagues in England, Spain, Germany, France and Italy grew by 9% in season 2016/17 to a record £21.9bn. According to the report, revenue in the Premier League market is now growing faster than wage costs.
Watkins said: "The headline figures suggest the game is in rude health financially, notwithstanding the high wages paid to players and significant agent fees clubs pay. The Premier League is the leader in the market, but it faces increased competition from other leagues whose clubs have been developing their on global growth strategies – Spain, France, Italy, Germany, the Netherlands and other leagues are all pressing for global growth and investment, as evidenced by their attendance at the leaders international sports conference in the US and intention to be at Soccerex in Miami with emphasis on securing investment and building commercial value."
"There is sustained interest in investment across the sports sector and particularly football. We predict increasing divergence of interest with investment targets now spanning several jurisdictions, including France, Spain, Ireland, Scotland, Germany, the US and England, reflecting the great interest in the sector from investors all over the world, including China, North America and the Middle East. It is a case of finding the right partnerships between investors and structuring a deal to the satisfaction of all," he said.
"The fact that clubs are better balancing their finances helps to attract investor interest. The TV rights market is the main driver behind this as the relative importance of match day revenues to clubs continues to reduce. An example of this is the fact that AFC Bournemouth is the 28th richest club in the world, according to the latest data, despite the capacity of its stadium being just 11,500. It is a factor that underpins the significant number of funders that we work with who are new entrants to financing business in this sector both domestically and internationally," Watkins said.
"The challenge for the Premier League is to ensure that central funds continue to be shared fairly across all clubs, and not just those at the top – the international rights revenue decision largely preserves that distribution albeit the competitiveness of the league is central to its success and marketability. Perhaps in future, as rights deals come up for renewal, there will be scope to give individual clubs greater freedom in respect of digital content rights to help them grow their brand globally. The advent of Amazon, however, could in itself transform the way in which the game is watched, consumed and experienced over the next 10 to 20 years," he said.