The Department for Digital, Culture, Media and Sport (DCMS) has written to the Premier League and to Sky, BT, Amazon and the BBC, as the current holders of broadcast rights to the Premier League in the UK, to inform them that the Secretary of State for Business, Energy and Industrial Strategy (BEIS) is ‘minded to’ make an Exclusion Order under the Competition Act 1998, allowing the Premier League to renew its current broadcast agreements with current UK broadcast partners for an additional three-year period starting 2022-23, without conducting the normal tender process.
In order to remain consistent with past commitments to competition authorities and to avoid a potential breach of competition law, and absent Covid-19, the Premier League would normally have re-tendered its domestic broadcast rights in early 2021 at the midpoint of the current three-year cycle and would have concluded sales by now. However, Covid-19 has had a significant impact on the value of broadcast rights for football across Europe. Under an auction, it is plausible that the value of the Premier League’s domestic rights could drop.
The football pyramid receives the majority of its funding via the Premier League’s broadcast revenue. The Premier League and its clubs have already experienced financial losses totalling over £1.5 billion due to the impact of the pandemic, with further losses projected into next season. The wider football pyramid, from the Championship through to women’s football and the grassroots, has also suffered financial losses due to the pandemic.
The Government has been clear that football has the resources to support itself financially to deal with the consequences of the Covid-19 pandemic. To provide financial stability for the football pyramid, the Premier League has therefore requested that the Government make an Exclusion Order allowing it to renew its current broadcast agreements for an additional three years, on the same commercial and license terms, with current UK broadcast partners, without conducting a tender process.
Under paragraph 7 of Schedule 3 to the Competition Act 1998, the Secretary of State for Business Energy and Industrial Strategy has the power to exclude, via a so-called “Exclusion Order”, certain agreements from the application of UK competition law where there are ‘exceptional and compelling reasons of public policy’ to do so.
If such an Exclusion Order is made, the Premier League has committed to:
- guaranteeing existing levels of financial support for the football pyramid for four years from 2021/22 to the end of the 2024/25 season. This includes solidarity payments, parachute payments, youth development funding and funding for grassroots football at existing levels, worth over £1.5 billion over the three-year rights cycle.
- maintaining at least this level of funding even if its international broadcast rights decrease in value when they are re-tendered individually over the next year into 2022, and to increase the level of funding if its international broadcast rights exceed their current value; and,
- providing a further minimum £100 million in solidarity and good causes funding to the end of the 2024/25 season, in roughly equal shares, to the National League, women’s football, League One and Two clubs, grassroots football and cross-game initiatives. This would make a significant financial contribution, including doubling the support for the non-league system, and providing crucial financial support for the women’s game.
The Secretary of State for BEIS and DCMS Ministers have considered the impact of Covid on the English football pyramid and are minded to agree the Government should act to enable the Premier League to provide financial stability to protect the pyramid following heavily disrupted seasons due to Covid, for the following reasons.
Football clubs are a central part of local communities across the country. They provide a focal point, but also huge social and health impacts via outreach and wellbeing programmes and fundamentally provide economic value to local areas through jobs, income and tourism. There is therefore public policy value in preserving football clubs for their fans as consumers and local residents.
There is inherent value in the football league pyramid. As our national game, football holds a unique cultural position, and the preservation of a meritocratic fair system through the football pyramid has a public policy benefit in its own right.
There is public policy value in having a healthy football system. It is a source of international reputation, attracts fans globally and is a major source of exports for the United Kingdom. The strength of the Premier League is one of the UK’s soft power levers for the United Kingdom to attract investment so having a financially stable system enables that.
As the football pyramid receives a majority of its funding from the Premier League, a reduction in the value of domestic broadcast rights would negatively affect the ability of the Premier League and its clubs to continue to directly and indirectly support the football pyramid in England in the current climate. This would compound the impact of the wider financial losses each level of the pyramid has experienced due to Covid, with a real prospect that some clubs and facilities could cease to exist.
An Exclusion Order allowing the continuation of previously competitively tendered rights for another three years would support all of football following Covid. It would help to promote the domestic game after heavily disrupted seasons due to Covid by enabling the Premier League to commit to its solidarity payments, parachute payments, and funding for grassroots football at existing levels, worth a minimum of £1.5 billion to the football pyramid over three years.
An Exclusion Order would also enable the Premier League to release at least £100 million of new funding for particularly vulnerable areas of the sport. This would make a significant financial contribution, including doubling the support for the non-league system, and providing crucial financial support for the women’s game.
The Government is in the process of a fan-led review of football governance, and the Premier League is undertaking a Strategic Review. The proposed Exclusion Order would not preclude those reviews from acting to change the distribution of broadcast revenue, but it would provide a level of certainty for the wider football pyramid and a minimum level of funding to maintain stability to 2024/25.
On advice from my Department, the Secretary of State for BEIS is satisfied that the Premier League’s funding commitments as set out above would provide vital financial stability for the English football pyramid, allowing football to support itself financially, and that renewing the Premier League’s domestic broadcasting rights for a limited period of three years only will help to minimise any possible detrimental effects on the broadcasting market and consumers.
On balance, the Secretary of State for BEIS is minded to conclude that there are exceptional and compelling reasons of public policy to make the proposed Exclusion Order, but would like to consider any representations from interested parties before a final decision is taken. Written representations should be sent to firstname.lastname@example.org by 1700 on Friday 28 May 2021.
An Exclusion Order, if made, should be seen as a temporary measure in response to the pandemic. The Government is content that this request by the Premier League was not made as a result of the recently proposed European Super League.
Ministers at my department will keep Parliament updated on progress with this case. A copy of the ‘minded to’ letter is being placed in the Library of both Houses.
- May 15, 2021 at 5:44 pm by Editor (displayed above)
- May 15, 2021 at 5:44 pm by Editor