How much are SPFL TV rights really worth?

The Daily Record recently put up an article in which they spoke to a football accountant under the guise of a media rights expert who was stating just how much the SPFL live TV rights are undervalued by.

Not too surprisingly, especially considering the publication in question, the article would be generously described as tripe. The argument put forward by Charles Barnett, the accountant in question, was that, as Scotland had 8.3% the population of the UK, so the TV deal should be 8.3% of the EPL - namely, £142 million per season.

Please accept my apologies if anyone was having a drink when reading that - as you’ll likely have spat it all over your monitor/mobile in incredulity. While “football number cruncher” Barnett swiftly back-pedalled in saying that that amount was fanciful but that Scotland should expect “£20-30m more”, the Record naturally led with the misleading headline that SPFL Chiefs sold TV rights at a tenth of their actual value.

Charitably, I would describe Mr Barnett’s guesstimates as bollocks, but they open up a debate again, a debate I’ve not really ever gone into - just how much should the SPFL expect in a TV rights. We’ve been looking so intently for a new, better model that we’ve not actually looked at what the maximum value of the current model is.

What we can do is compile several different models for SPFL TV rights value and use those to come to a conclusion. But first, one has to deal with the answer as would be given by someone with a smart mouth - the value is whatever the market says it is. This is, of course, only half right. There are many ways in which the league can adjust the value upwards without ever starting from the so-called market value.

For a start, the bidding process. Currently, as one can tell from the hodge podge of times and games across channels, games are sold as one and then divvied up between Sky and BT. Offering them as the EPL does in a set of time specific blocks and pick slots would increase value overall as each broadcaster seeks to fill in specific holes in their programming rather than slotting the SPFL in where there’s space, whether they need it in that slot or not.

The second is also an adaption from the EPL in that the slot sales be run as a silent auction. BT, Sky, etc would all bid for individual slots rather than as a job lot which would make each individual slot worth more than it is now. Current slots would be Friday nights, Saturday Lunch, Sunday Lunch and Midweek games but this should be expanded to include one further slot for games which would be a Saturday 8pm Kick Off (which broadcasters would want to run against La Liga) and then also incorporating Monday Night kick offs into one of the other packages. By offering a unique time slot in Britain, it would make the SPFL more valuable simply by making it undoubtedly the premier sports offering in that time slot. By not changing much at all, it is possible to bump up the market value simply with alterations to the bidding process.

To the various models then and one must include that population based model as a start. Scotland has 8.3% the population so to have 8.3% the money would seem somewhat fair. £142m per season is certainly on the high side, but it is a model to consider.

The next and, let’s face it, more realistic model is that of value to the TV companies. If we measure the value in terms of the amount of eyes on the product, where does the SPFL come in? The answer is actually different depending on which broadcaster one looks at. If we accept the average for the current SPFL season is at around 88k viewers per game, then this is proportionately different for BT than Sky. Where on Sky, the SPFL is averaging 88k on channels where EPL gets 2 million, the EFL gets 500-750k and the Darts gets 400k plus, you can see that, to them Scottish football is worth somewhat between diddly and squat - that is no criticism of Sky or of the SPFL, it is simply an appreciation of where it stands. Sky could, if they wanted, dump the SPFL, buy Serie A rights and run the games without incurring production costs as high and still get similar viewers on the channels.

For BT, however, the SPFL is their second best performing show behind the EPL. This will get supplanted by the Champions League from next year, but the fact is that BT, without the SPFL, would be much worse off because the EPL only gets 500-750k viewers. It’s simplistic to say but the SPFL are more valuable to a channel where they get 12-18% of EPL ratings than they are to a channel where they only get 4-6%. But Sky are the majority partner in funding the SPFL. For all BTs coverage is superior, their funding is not. By my understanding of the current deal, were BT equal partners, the deal would be in excess of £20m - they get a lot of bang for their buck. In terms of advertising revenue, obviously broadcasters make make more from slots in EPL games than they do SPFL which brings value down by a couple of percent once more.

Were we to compare it to what broadcasters pay international leagues for their games, we’d have a very hard time as they simply don’t publish those figures. The only possible guesstimate one could make is that BT do probably pay the Bundesliga more for coverage than they do the SPFL. Even so, that’s a huge guess based only on the fact that the total international rights for the Bundesliga are available for past deals and estimates of the current totals are available also. The only directly comparable football package at that value is the English League Cup which, when bundled in with the Johnstone’s Paint Trophy, costs Sky in the region of £15m per season for what is, all in all, about 25 games per season - far fewer than the SPFL offer but, all in all, likely similar in terms of total viewer reach.

The Daily Record also suggested that one could compare the value to another sport. Their example was Rugby League. This, of course, is very dumb as a Rugby League audience is comprised of different people than a football one. Broadcasters pay more for Rugby League than the SPFL because Rugby League brings in more of a unique audience. The type of audience matters as broadcasters assume (generally correctly) that people watching the SPFL will also be watching another football product (eg EPL) so it makes little sense to spend more on SPFL rights when it adds little in terms of subscribers.

So when compiling a viewers based model, one can only go from the comparison to the EPL. In that respect, even if one goes in at a conservative 4% of EPL ratio to compensate for ad revenues, you’re looking at £68 million a season.

Model three is the subscriber based model - Scottish Sky subscriptions provide Sky with somewhere in the region of £220m a season in revenue or, if you will, seven times higher than what Sky pays out to Scottish sport. Transpose this to England and you see a ratio of 5:3 rather than 7:1 - this model would give the SPFL a half share of about £120m.

Model four, and perhaps the most interesting one, is the SFA model. For the rights to the Scottish Cup, Scotland Friendlies and, it’s fair to say, Scottish International qualifiers, the SFA get about £14m per year. Scottish Cup games get good ratings, Scotland internationals are reasonable but the important factor is that they get this for about 20 games a season or, if you will, £700k per game. Based on last year’s viewing figures, an average SPFL game will get about 2/3 the viewers of your average Scottish Cup game. Proportionally, if we go on the conservative side, it would mean that, on the same terms, each SPFL game has a value of about £450k. Based on that figure, which is derived from viewership of games that are featuring the same teams and players as the SPFL, the contract would be worth £31.5m per season - a smidge over double its value now. This is my own favourite model as we are able to actually base the SPFL’s value to Sky against a more or less identical product which runs up against more or less identical opposition in terms of competitor programmes in corresponding timeslots.

The final model, not that it’s a model at all, is that the SPFL isn’t undervalued at all - instead, everything else is overvalued. If we go back to our viewership model and apply it backwards, the SPFL’s £15m 4% share translates to a £375m 100% share that one would attribute to the EPL. That particular amount still comes to more money than is earned by the NHL, NBA and MLB a year - far from a pittance. And it’s hard to argue that, on that basis, the SPFL doesn’t get that raw a deal at all as one would surely find it hard to justify why the EPL should be getting 4 times more a year than the NBA.

So, Daily Record, you’re wrong. Super League earning more money than the SPFL is no “TV Crisis” (and I’d hasten to add that more people live in Rugby League’s hotbeds than do Scotland). Certainly a population based model is ludicrous as the original article proposed. Were I to be asked what I think the value of the contract is, I would more or less follow the SFA model - it so neatly fits every element we are looking for that it’s impossible to ignore. It puts the SPFL’s rights value domestically at double what it is today with justification. Once other changes to the bidding process are implemented, the potential for growth is even higher.

I, personally, still espouse the streaming based SPFL Network concept over all of this, but if the SPFL don’t want to reinvent the wheel, it is, at least clear they can do better and, unlike the Daily Record, can see the logical and evidence based arguments for growing TV revenues.