The English Premier League sold its live rights to Sky and BT last week for a jaw-dropping £3bn. That figure, which covers 2013-14 until 2015-16, represents a 70% increase on the current contract. It means that the average cost per match is up from £4.7m to £6.6m.

 

Sky”s deal gives it 116 games per season for £2.3bn, which means it remains the dominant player in the UK market. However BT”s £700m deal is also significant since it is the first time the company has entered the lives rights market. To do so, it had to outbid ESPN, which holds a package of rights under the current contract. BT”s deal gives it a total of 38 games of which 18 are first-picks. These will now be used to launched a football channel on BT”s IPTV platform BT Vision.

 

Despite the huge price-tag, both broadcasters declared themselves happy with their deals. Jeremy Darroch, Sky’;s Chief Executive, said: “This is a good result for our customers and for our business. It means Sky Sports remains the home of Premier League football and that viewers will continue to enjoy our live and exclusive coverage until at least 2016. In what was a very competitive tender process, we are pleased to have secured the combination of rights we wanted, providing certainty for us and our customers. Whilst the cost is higher, we have capacity for this increase through the combination of excellent work on cost efficiency across the business and choices over other future spending.”

 

BT, meanwhile, has justified the deal as part of its wider investment in broadband. BT CEO Ian Livingston said: “BT is already investing £2.5bn in fibre broadband. Securing Premier League rights fits naturally with this, as consumers increasingly want to buy their broadband and entertainment services from a single provider.”

 

Analysts are not convinced that the deals are good ones, however. Both Sky and BT saw their share prices hit in the days following the announcement of the deals. For Sky, the big question is whether it will have to increase subscription prices, a move which will risk customers churning out at a time when Sky”s original content investment is also very high. As for BT, the concern is that it will not grow its subscriber pool fast enough to justify its heavyweight entry into the live rights market.

 

The Premier League, of course, is delighted – particularly as it can also look forward to an increase in the value of its international rights. The question from this angle, however, is whether the money will go on sensible infrastructure investments or continue to feed the wage inflation that has put so many clubs in serious debt.