French football is more than ever in crisis. Hit hard by the health crisis which deprives it of ticket sales and coming out of a relatively sluggish transfer window, French football is now facing a major dispute with its main broadcaster, Mediapro. On Monday, October 5, the Sino-Spanish group decided to block the second deadline for Ligue 1 TV rights, estimated at 172 million euros (out of 814 million euros per year, L2 included). The LFP then reacted by seizing the Paris Commercial Court in order to obtain the settlement for the month of October. War is declared.
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The time when the leaders of French professional football boasted in all the sports media to announce “the biggest contract in the history of Ligue 1” therefore seems a long way off. The euphoria has since given way to concern after the Sino-Spanish group announced its intention not to pay and to renegotiate downward the rights to Ligue 1, dearly acquired in 2018. Decisions that put today French football is in danger.
Le Point: Has the Professional Football League (LFP) been completely fooled by Mediapro?
Pierre Rondeau: The LFP is partly responsible for the situation in which it finds itself. First there was the Italian precedent [Mediapro avait tenté d’acheter les droits pour les revendre, en vain, NDLR] on which the French leaders turned a blind eye. Then, the League did not require any bank guarantee. Only a guarantee from the majority shareholder of Mediapro, the Chinese group Orient Hontai Capital. It was a mistake. As early as 2018, and the obtaining of TV rights by Mediapro, the Cultural Affairs Commission was concerned about the group’s economic model. Many observers and analysts had warned about the non-viability of the Mediapro project. It was considered that the explosion of TV rights could eventually cause an implosion of the system and, therefore, the probable failure of French football.
The League has certainly been fooled. But she is obviously at fault because she was completely blinded by the promised billion. The objectives set were based on the sale price and not on the broadcaster’s ability to honor its contract. When we listen to Didier Quillot some time ago, he was convinced that it would work. It is not so !
Buying TV rights to renegotiate them down, was that Mediapro’s initial strategy?
To think of this sort of thing is to fall into conspiracy theory. Mediapro was unable to anticipate the Covid-19 health crisis or the resulting economic crisis. What is certain is that in 2018 the project provided that Mediapro would be a producer and broadcaster of matches, but also a sub-licensee of TV rights. This is particularly what the group does in Spain, where it owns the Iberian rights for the international market. One of its main activities is the resale of rights for the foreign market. In France, for example, beIN Sports goes through Mediapro to broadcast La Liga.
But the concern is that, this year, the competition (Canal + and beIN Sports) did not want to buy back the rights to Ligue 1 at a higher price than expected. In the end, Mediapro therefore found itself on its own to broadcast the matches in France when it had no experience in France, no credibility, no legitimacy, no popularity. They were forced to buy a name from TF1 in order to exist and were the source of a very bad advertising campaign. A number of leaders of Ligue 1 clubs had already complained to the League in August, to criticize the media and advertising campaign of Téléfoot. They particularly regretted that nothing had been done to activate the collection of subscribers, to attract consumers. In reality, nothing had been done to meet the target of 3.5 million subscribers.
In a month from now, the Téléfoot channel may well stop broadcasting the matches Ligue 1 and Ligue 2. The LFP will therefore have to find a new broadcaster without losing too much. Is it possible ?
The whole question is to know what will be the strategy put in place by the buyers of rights. There are two possible scenarios. Either they will want to maximize their profits and recover the rights at a discount. Either they must attract subscribers to competitive content and therefore avoid dropping the price of rights too much, at the risk of L1 becoming a second-class league (like the Dutch, Portuguese or Belgian league).
At Canal +, the rumor says that two camps clash. That of Maxime Saada, who advocates maintaining the competitiveness of football by positioning itself at a price almost similar to that of 2016 to 2020. And that of Vincent Bolloré (CEO of Vivendi) who wants to spend as little money as possible and take a Ligue 1 at a discount. For my part, I cannot believe that Ligue 1 is lowered to less than 700 million euros.
As we know, the economy of many Ligue 1 clubs is essentially based on money from TV rights. In the absence of pledges, are these clubs in danger?
In the short term, there will be no failure or bankruptcy of the system, as loans are put in place to deal with the lack of cash. The concern is more about the medium and long term. The clubs will face a fall in ticketing revenues, a fall in trading income, a fall in commercial income, sponsorship, marketing, merchandising … All of this will add up to the loss of Mediapro, and to the devaluation term of TV rights.
The problem is that all the clubs have drawn up their accounts based on the budget forecasts for the next four years. If this budget collapses, the entire club project is deconstructed. There will inevitably be negative repercussions for clubs. What will happen in 2021, 2022, 2023 when the clubs will have to repay the credits, pay the players, the operating costs, with less money due to the economic crisis and the fall of a Streamer ? We will therefore have to expect rebalancing on the payroll, layoffs, social plans within clubs. The wage bill will become the main adjustment variable. An adjustment variable which can unfortunately cause sporting setbacks. If you part with your best players or cut wages, you lose sporting level. If you lose in sport level, you lose in economic level. It’s a vicious cycle that can have long-term repercussions.
In a crisis situation, there is a club president who is always very inventive: Jean-Michel Aulas. He recently floated the idea of “pay-per-view” TV rights, where the viewer would only pay for the games they want to watch. What is your position on the subject?
I am not opposed to it, but I am afraid of the perverse effects that it can generate. The idea of “à la carte” is in the consumer’s primary interest. But the other side of the coin is that, in the long term, the clubs are no longer remunerated on their sporting performance, but on their reputation alone, on their ability to attract consumers. This will therefore be detrimental to the sporting competitiveness of Ligue 1, because we will only finance the most popular clubs. This is particularly what is happening in Portugal, where there are gaps of 1 to 15. Sports competition in Portuguese Liga is completely non-existent. With this system, we would therefore have three or four ultra-dominant clubs (Paris, Marseille, Lyon) and to a lesser extent, perhaps Lille or Bordeaux. Popular clubs with a strong demographic. And the rest would have next to nothing.
But isn’t that the meaning of the story?
This “à la carte” system would work in a championship on the American model. If tomorrow we move to a closed European SuperLeague (without relegation), this model could be applied and supported. He would even be the best possible model! The clubs would do anything to attract consumers, that would be super interesting. But in the open league, with more or less well-known clubs, that would not be viable at all.
Would there not then be an alternative which would be based on the sale of TV rights by championship day rather than by clubs?
This is what should happen, if the LFP recovers the rights for the 2020-2021 season. In the event of termination of the contract with Mediapro by the end of the calendar year, the sale of TV rights will only be effective next June, because in the regulation of calls for tenders, a seller has six months of delay to respect between the announcement and the date of the sale. For this season, the matches will therefore have to be sold in batches of days to Canal + or beIN Sports, which would choose the best dates. In this case, we can even reasonably imagine that the Gafa (Google, Apple, Facebook and Amazon) are positioned on key matches like the Clasico or the Olympico!
The board of directors of the LFP validated the contraction of a loan of 120 million euros, which is in addition to that contracted during confinement (224 million euros). Can we say that the economic situation of the League is delicate?
Currently, the League and the clubs can cope with their lack of cash through loans. However, a loan commits you and must be repaid. That contracted by the LFP is a commercial loan with interest up to 4%! It is a situation which recalls, all things considered, the subprime crisis of 2008: the accumulation of credits of American households which causes the bankruptcy of the banks. If French football is forced to go through the banking box to live “normally”, this could eventually cause an implosion of the system. Because if the crisis continues and revenues continue to fall, how will the French clubs be able to repay these credits and find balance? This situation will produce its effects in the coming years (2021, 2022, 2023) and certainly foreshadows a decrepitude of French football clubs.