Eyebrows around the sports rights world were raised by Portuguese football club Benfica’s decision to start broadcasting its home matches on its own TV channel rather than a dedicated pay TV service. Although no longer one of Europe’s elite clubs Benfica is easily the biggest so far to take this step. Even so it looks unlikely to cause too much consternation among the major pay TV operators such as Sky who virtually rely on football rights for their livelihoods or at least would be immensely poorer without them and likely to suffer damaging churn.
The reason is that Portugal and Spain are the only two major footballing nations where clubs are allowed to cut their own deals for football rights. And soon Portugal will probably be alone as Spain is likely to join other leading European football powers such as the UK, Germany and Italy in negotiating rights via collective bargaining. The Spanish government plans to introduce legislation for this to happen later in 2013 after recent experience has shown that only the very big clubs benefit from negotiating their own TV rights since most of the money comes to them. The smaller clubs that attract lower TV audiences get the crumbs left over.
Under collective bargaining TV rights money is allocated more evenly across all clubs in the league, which tends to be at least a little more competitive as a result. In Spain the two leading clubs, Real Madrid and Barcelona, split half the total $900 million pot of rights for La Liga between them and dominate the country’s league and cup competitions, while recently three smaller clubs Deportivo La Coruna, Real Zaragoza and Real Betis have gone into administration. The situation in Spain has been exacerbated by the severe recession there, prompting the government to act before more clubs fall.
Even though the situation is somewhat similar in Portugal, the tide seems to be going the other way as Benfica goes ahead by setting prices of €10 a month on top of a cable TV subscription to watch typically two home matches played at its Luz stadium on television. Fans can subscribe to the channel through either of the country’s two largest cable operators, Portugal Telecom and Zon, with the matches also available in Portuguese speaking Angola via MSO Zap.
Benfica TV is also providing exclusive coverage of English Premier League after securing the screening rights in Portugal over the next three seasons. Oddly enough a similar move was plotted in reverse in the UK by Liverpool football club in 2011, which launched a bid to negotiate its own overseas TV rights deal. The club argued that the ‘bigger clubs’ should be allowed to secure a greater share of international TV cash when the current deal ends this year. Under that deal all 20 top-flight teams get an equal share of the £1.4 billion overseas revenue for three seasons 2010/2011 to 2012/2013. It looked like Liverpool was also testing the waters for a possible much bigger bid for UK rights but it was jumped on by the rest of the Premier League, so the idea there is off the agenda. Given the size of the latest EPL (English Premier League) rights pot it is unlikely the bigger clubs will be planning to jump ship soon.