Sport, soccer ... and value?

Is soccer’s Premier League really a £1bn a year business? A billion a year just for the UK market, incidentally - who knows the eventual global value of the next three years.

It’s a 70% hike on the previous price, inflated by BT’s desperate bidding, designed to deny a slice of the league to fellow second-tier competitor, ESPN.

And this morning, there’s been any number of those who care far more about soccer than seems sensible arguing on the airwaves what it should all mean. 

Most seem to agree that what it won’t mean is a better deal for ‘ordinary fans’, cheaper ticket prices or better development of young, home nations players. I’m sure all of that and more is true.

The numbers clearly make sense to Sky and BT – Sky Sports subscriptions form a substantial chunk of BskyB’s £6.6m plus annual take from viewers and doubtless BT hope something similar will come their way. It’ll have to if they’re going to get any return on the £6.5m an hour they’re stumping up.

It’s a classic bubble … but one that’s refused to burst. Yet.

Value

One of the things that the banking and sovereign debt crises have made us all more aware of than perhaps we were is that ‘value’ is more abstract than we thought.

We all know that things are only worth what someone is prepared to pay. We’ve all seen it with house prices, Bargain Hunt on TV and even the price of petrol.

But we have a vague sense lurking somewhere in our minds that the ‘value’ of a sack of potatoes or something that has real ‘work’ in it, like a car, or a doctor’s cure has more intrinsic ‘value’ than a complex financial instrument, the odds on a bet, the cost of borrowing money … and the right to watch a live soccer match.

Now, I’m no soccer fan. For me, soccer has no “transfixing appeal” and therefore the right to watch a live match has no value to me either.

Yet I have to shovel money at the Premier League, money that works through the system and, among other things, ascribes implausible value to a couple of hundred young men and their agents. And creates a business model that’s debt ridden and loss making, and therefore unsustainable in any rational world, for more than half the businesses in the league.            

Here’s why.

I follow three sports. Rugby union, cricket and cycling. If I want to watch any of those live on TV, I have to buy a ‘bundle’ of Sky Sports and Eurosport (though, yes, ITV4 does cover the big cycling events, ‘free’ at the point of delivery and I do get the Six Nations on the BBC) that costs around £300 a year – twice the BBC licence fee.

And since ESPN snatched half the rugby premiership, another seventy quid if I want to guarantee that I can see the games I want.

Fixed price trollies

The vast majority of what’s in that £300+ bundle has no value to me – not just the soccer but that’s the greater and costlier part of it. But I have to pay for it nonetheless to get at what does have some value.

It’s a bit like having a fixed trolley price at Tesco (oh … ok … Waitrose) where the store fills it with £400’s worth of stuff when you only want £20’s worth. And the other £380’s worth has no intrinsic value but has had its price inflated by crazed bidding with the wholesalers.

Of course, you’ll hear the same argument about the BBC licence fee. You have to buy one if you want to watch live TV at all – even if you never watch BBC programmes. Though the way the maths work, you’re likely to end up paying far more for what you don’t watch, don’t value, in a broadband provider’s or Sky bundle than in the BBC’s meagre licence fee.

You could argue I don’t need to watch the sports that I value live on TV. And that it’s up to me to decide whether the price I’m asked to pay is close to the value I put on the opportunity to watch.

That’s true – except for one thing. That price has nothing to do with the value of the sports I do watch and everything to do with the grossly, chronically distorted bubble economics of premiership soccer that I don't watch.

Value and success  

There are two other consequences, too.  

As I imagine we’ll find out again soon, the Premier League is one thing, the English national soccer team another. And that latter really isn’t very good. 
Of all the things the money pouring into top flight soccer has done, improving any of the home nations’ chances of ever winning anything isn’t one of them.

Those who know more than me about soccer tell me the Premiership has little to do with national teams and I’m sure that’s true. But it has to be bizarre that the country that hosts what is apparently the most valuable soccer league in the world can rarely get beyond the last eight in international competitions.  

That does a huge disfavour to British champions in other sports who really can beat the world, who generate national pride instead of sullen disappointment.

My hunch is that during the Olympics, many of us will watch British champions win medals in sports we’ve never seen on TV before – because they’re rarely there or, when they are, they're broadcast when only the athletes and their families are watching.

And these will be champions who, in the early years of their careers, will have had to pay their own way, buy their own kit and compete during their annual leave from their ‘proper’ jobs. 

And though lottery funding has changed beyond recognition the lives of those who make it to the elite in these sports, you can imagine at least some of our gold medallists looking across at an indifferent soccer player breezing by in his second best Ferrari, wondering  whether we really do have any sense of the value of sport.