Boots, Camera, Action!

Analysing the new domestic broadcasting deal agreed by the Serie A, and if this can catapult their clubs back amongst Europe’s elite.

Italian football will always have a special place in the heart of many in Britain. The airing of ‘Football Italia’ on Channel 4 from 1992 until 2002 treated the nation to a level of quality far greater than the standards of the Premier League at the time, with the transfer of national hero Paul ‘Gazza’ Gascoigne to Lazio another incentive to ditch England for Italy.

This difference in quality is best demonstrated by Serie A’s dominance of European competitions in the 1990s – there was at least one Italian side in 18 of the 20 European finals (which includes both the Champions League and UEFA Cup) that took place during the decade. This included a run of seven straight Champions League final appearances from 1992-1998 - a feat only matched by the Spaniards way back in the 1950s.

(Right) Two of the best, Ronaldo and Paolo Maldini face-off in the Milan derby in 1998.

However, at a time when broadcasting revenues were starting to sky-rocket for European football, by contrast - the dominance of Italian sides were beginning to decline. Football Italia was cancelled and, following the match-fixing scandal of 2006 (known in Italy as Calciopoli), the league’s reputation was left in tatters. And thus, Italian clubs started to lag behind. The annual Deloitte Money League aptly demonstrated this, reporting in 2002 that half of the top 10 highest earning football clubs were Italian - a stark contrast to their 2019 report which concluded that the highest any Italian club could muster at the time would be an11th placed ranking.

But is this all about to change? With the recent agreement of a €2.5bn broadcasting deal between the Serie A and streaming service DAZN making international headlines, I shall be delving into how this compares to the previous domestic broadcasting deal in the Serie A, as well as the other broadcasting deals around Europe, to see if Italian clubs can make their way back to the top.

New TV deal for Serie A

It’s a record-breaking deal for a streaming service. The agreement, which is worth more than €830m per season, is the first time one of the major European leagues have opted for a streaming service to own the broadcasting rights for all games of a league campaign – with 266 (out of a total of 380) of them being made exclusive to DAZN. The rights to the remaining, non-exclusive matches (which make up 3 of the 10 matches that take place each week) is expected to be shared with Sky Italia in the coming weeks, taking the total revenue earned by the league to just over €900m per season.

While these figures may seem extortionate, it still remains less than the current Serie A broadcasting deal – which has raked in €1,050m for each of the past 3 seasons. The league had originally hoped for an uplift on the current deal, but after no broadcaster was willing to match the €1,150m target set, the Italian clubs eventually settled for the offer made by DAZN.

Arguing that the decline in value is due to nothing but a lack of quality in the league would be without controversy. Failing to produce a Champions League or Europa League (the hip, rebranded version of the UEFA Cup mentioned earlier) winner since 2010, not even the addition of colossal winner Cristiano Ronaldo to the league was enough to turn the Italian fortunes around in Europe - with only three final appearances during that time showing how far behind the power curve the clubs have fallen.

It should be added that a lack of quality can be excused from a fan’s perspective, if the league maintains an element of competitiveness – you only need to look at the viewership figures of the rollercoaster league that is the EFL Championship to deduce this. However, when you consider the fact that Juventus have won the league title (with relative ease) in every season since 2012, it seems like the same level of competitiveness cannot be offered by the Serie A.

So perhaps that is why the value of Serie A’s TV rights is declining. With low quality and what seems to be zero competitive edge, there is little incentive for a domestic broadcaster to pay significant sums of money in order to bring Italian league football to their channels.

Let us now contrast the fall in value of the Serie A broadcasting deal with the other, four major European leagues.

England & Germany bubbles bursting?

Since the creation of the Premier League from the old First Division in 1992, the amount earned by clubs in England’s top division has risen seemingly to no end. With Sky purchasing the exclusive TV rights for £304m in the league’s inaugural season, not many would have expected the cost to reach an astonishing £5bn almost 20 years later.

And this is just for the right to broadcast Premier League football domestically.

Teams such as Manchester United, Liverpool and Arsenal are followed by such large fan bases across Asia, Africa and the Americas, thus causing the value of broadcasting rights internationally to mirror the domestic rights in its exponential growth - with the most recent deal for the 2019-2022 period being agreed at £4.2bn.

Domestically however, the 2019-2022 broadcasting deal was a turning point for broadcasters - as they finally realised their pockets weren’t quite so deep after all. As demonstrated by Figure 1 below, the latest domestic TV rights deal for the Premier League was c£400m less than the previous, with this drop off only offset by the £1.1bn increase in income from overseas broadcasting rights in that time.

Figure 1: A graphical representation showing the increase in domestic and overseas broadcasting revenue received by the Premier League since its inception

The story is remarkably similar in Germany. Whilst the highs of the 2017-2021 domestic TV deal were not quite as astronomic as the Premier League, it was still set to generate an average of €1.16bn per season – an 85% increase compared to the previous deal for both Bundesliga divisions.

Just four years later and the new broadcasting deal, which is set to run from 2021/22 to the end of the 2024/25 season, will *only* pocket the Bundesliga and Bundesliga.2 clubs an average of €1.1bn each season – a decrease of 5% compared to the previous TV rights agreement.

With both TV deals decreasing in value, the same questions that was asked of the Serie A must be put to the Premier League and Bundesliga:

Is there a lack of quality?

With four Champions Leagues and three Europa League titles shared by the two countries since 2012 (which includes two all-English as well as an all-German final), it is difficult to argue that this is the case. If trophies don’t hold a strong enough case, the calibre of world-renowned managers should. Pep Guardiola, Jose Mourinho (both pictured right), Jurgen Klopp, Carlo Ancelotti, Thomas Tuchel, Marcelo Bielsa (need I list more?) all ply their trade in the Premier League - there isn't another division on Earth with this level of managerial pedigree.

Is there a lack of competitiveness?

Now, this will split opinion. In Germany, Bayern Munich have conquered all that stood before them, winning all of the last 8 league titles – even picking off their rivals’ best players in the process. In England, Manchester City appear set to win their 3rd Premier League title in 4 years (their 5th over the last decade), with the Leicester City’s freak title win exactly that, a freak.

The repetitive nature of title winners aside, there are other ways to demonstrate the disparity within each of these two leagues. With this said, I have collated two different sets of data: the total number of points separating both 1st and 4th, and 1st and 20th (18th in the case of the Bundesliga) in each league from the 2008/09 season (as this seemed an appropriate starting point considering 2010 saw the first major increase in domestic TV rights in England) to 2019/20. In order to then assess if the loss in revenue was caused by reduced competitiveness I have then compared these results to the same data for the Serie A.

Figure 2: A graph showing the total points difference between 1st and 4th, and 1st and bottom from 2008/09 in the top divisions of England, Germany and Italy.

As you can see from Figure 2, over the past 10 years the difference between the best in the league and the remaining teams has widened significantly in both the Premier League and the Bundesliga – with the contrast between top and bottom over the years particularly striking. And so, with both divisions seemingly losing its competitive edge, why on Earth would you pay more to watch something when you know the outcome?

It is worth noting per the above graph that the linear trendline for the points difference between 1st and 4th in the Serie A was significantly influenced by the 2019/20 season - where, astonishingly, there was only a 5 points difference. Perhaps these are early signs that the Serie A is becoming more competitive? The fact that Inter Milan appear set to wrestle the league title away from Juventus this season is another good indicator of this.

Of course, there would have been other contributory factors involved in the drop in value of TV rights but - unlike the new Serie A deal, both of these declines were before factoring the long-term effects of the COVID-19 pandemic*. With the Premier League TV rights for the 2022-2025 period up for tender this year, it will be interesting to see just how big an impact the pandemic will have.

*Yes, the new Bundesliga deal was announced in June 2020, but this was only 3 months into the outbreak, when the financial situation was not so dire.

The French are in trouble

The fall in broadcasting revenue for clubs in all three aforementioned countries will be damaging, but they’ll be thanking their lucky stars that they aren't in France. Despite signing the second largest broadcasting deal in Europe back in 2018, it became apparent just before the turn of the year that the primary broadcaster Mediapro, who were liable for €814m of the €1.150bn that the Ligue 1 and Ligue 2 were set to receive each season, would no longer be able to uphold to their financial commitment.

In a league that, aside from Qatari-backed Paris Saint Germain, is not awash with multi-billionaire club owners, this loss in revenue will have put the future of many clubs in danger; thus leading the vultures that are other football clubs to begin circling, hoping to take advantage of the desperation of French clubs trying to balance their books. Fears of mass exodus must have gone through the minds of those in charge at Ligue de Football Professionnel (LFP), hopefully on top of feelings of embarrassment considering their inability to do their due diligence.

I say this as, prior to agreeing the deal with the LFP, Mediapro had already seen their proposed deal with the Serie A fall through due to a lack of financial guarantees by the broadcasting company. The LFP on the other hand, chose not to ask for the same amount of financial guarantees, as they became blinded by the prospect of reaching the same stature of the Premier League and La Liga.

Ligue 1 have since, following a court mediation, had to settle on receiving €100m of the €324m that is outstanding thus far from Mediapro (Guardian, 2021). To offset more of this loss in revenue, the French league have also agreed a deal with Canal+ to broadcast the remaining Ligue 1 and Ligue 2 fixtures of the season – for just an additional €35m compared to their current deal (of €330m for the 20% of TV rights not owned by Mediapro).

In other words, they’re receiving a fraction of what they should be. Should this continue, coupled with the potential departure of Neymar and Kylian Mbappe (who, pictured left, are both approaching the final year of their contracts), you do have to wonder if the phrase European top 5 leagues will soon become the top 4.

Spain to follow the trend?

Historically, TV revenue in Spain has been dominated by both Barcelona and Real Madrid. Able to sign their own individual deals with broadcasters, these two clubs thrived off their significant domestic and international following to secure a tidy €140m each in the 2015/16 season. However, with other Spanish clubs not followed by quite so many millions, they could not bask in the same riches that these two clubs enjoyed – leading to worrying levels of debt for many of them.

Thankfully for these clubs, a change in rules which began from the 2016/17 season, have significantly increased this source of income. A model similar to the Premier League was adopted, with the broadcasting revenue earnt by the league distributed using the following criteria:

· 50% distributed evenly for all teams

· 25% based on league results over a 5-year period

· 25% split by Club Support (dependent on viewers and subscribers per match)

This change in revenue distribution worked wonders for Spanish clubs. By comparing the lowest amount of broadcasting income received before and after this rule change and you will find an increase of 42%, with Las Palmas (€27.7m) receiving almost €12m less than Alaves Deportivo (€39.3m) just one season later.

The current domestic broadcasting deal (for the 2019-2022 period) of €3.42bn is also a 16% increase on top of the €2.95bn deal that was in place for the 3 years previous. But this was secured when Lionel Messi was still at the peak of his powers and Cristiano Ronaldo had just won Real Madrid their third Champions League on the bounce.

With Ronaldo now in Italy, and Messi ageing, Spanish football clubs would be foolish to expect any kind of increase in value when it comes to their broadcasting rights – more than likely following the trend of England, Germany and now Italy.

Whether it is down to a lack of quality, competitiveness or broadcasters simply running out of money, it appears that we have now reached the peak when it comes to TV broadcasting rights across the top European football leagues. But, whilst this may be the case in the Serie A, its fans should remain hopeful. In the midst of the COVID-19 pandemic, the new deal with DAZN could have been far worse, especially when considering the state of the agreements with other European divisions. Perhaps the good times are coming back to Italy after all.