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Spaniards enduring both a debt crisis and the European Union’s highest unemployment haven’t had much to celebrate in recent years other than the exploits of soccer stars Iker Casillas and Xavi Hernández. Spain’s national team won the European Championship in 2008 and the World Cup in 2010. Now Spanish broadcasters say they may not be able to afford the TV rights to future soccer matches.
Antena 3 de Televisión and Mediaset España Comunicación, Spain’s biggest commercial TV stations, say that when the rights to broadcast next season’s top weekly soccer matches come up for sale in June, they won’t bid unless prices fall by half. Rival station La Sexta, which is merging with Antena 3, paid about €60 million ($79 million) last season, or €1.6 million for each of the 38 matches, according to Antena 3.
Spanish broadcasters are struggling to turn their nation’s success on the field into a profitable business. A 15-year-old Spanish law requires that one major game a week be shown free on broadcast TV; the rest go to cable and satellite pay-TV operators. That scarcity of sports programming for conventional broadcasters has helped push up the prices they must pay to air that one weekly match, which can be a huge ratings draw. Pay-TV operators suffer as well since they lose subscription revenue from fans content to watch one game a week free of charge, the Spanish Soccer League says. “The problem with sports events is that it’s good for ratings, but it’s a financial disaster,” says Antena 3 Chief Executive Officer Silvio González.
The prospect of lower TV revenue in turn threatens the financial viability of Spanish clubs and their ability to slow down the exodus of star players to the English Premier League, where clubs are bankrolled by Russian oligarchs, Middle East oil sheiks, and Indian food companies. Players are concerned about whether Spanish teams can honor contracts if there’s a collapse in the value of TV rights, says Rodrigo García, a lawyer in Madrid who handles negotiations for several players in La Liga. “You aren’t 100 percent certain of getting paid,” he says.
While the Spanish League, which generates about €600 million in annual TV revenue, trails the English league in overall income, its superstars are the world’s highest-paid players. France Football magazine estimates that Barcelona’s Lionel Messi is soccer’s No. 1 earner with an annual income of €33 million, including base salary, bonuses, and endorsement deals. Real Madrid’s Cristiano Ronaldo is No. 3 with €29 million, the publication says. Representatives for the players declined to comment.
Players who have left the country in the past two years include Spanish national-team players David Silva and Juan Mata, who left Valencia for Manchester City and Chelsea, respectively. Valencia’s banks had stopped lending it money, and at one point it was late with salary payments to players.
European media is abuzz with speculation that other stars may head north. Manchester City, owned by Abu Dhabi’s Sheikh Mansour bin Zayed Al Nahyan, may make a £42 million ($67 million) offer for striker Radamel Falcao, who scored more than 25 goals for Spain’s Atlético Madrid this season, the Sun reported on March 29. Chelsea, controlled by billionaire Roman Abramovich, may pay £80 million to get Ronaldo and his Real Madrid teammate Gonzalo Higuaín, the Daily Telegraph said on March 26. Representatives for the clubs declined to comment.
In the English Premier League, La Liga’s biggest rival, no games are shown live on free TV. British Sky Broadcasting Group (BSY), the pay-TV company that’s held exclusive rights to England’s top soccer games since 1992, has more than 10 million subscribers and is one of the most profitable businesses of Rupert Murdoch’s News Corp. (NWSA)
Although teams concede there’s little hope Spain’s government will end the free-to-air TV rule in the current economic environment, that hasn’t stopped them from crying foul. “It’s not compulsory to put movies or theater on free television in Spain,” says La Liga spokesman Juan Carlos Santamaría. “So why should it be for soccer?”
The bottom line: Spanish soccer generates about $792 million in TV revenue annually. Broadcasters say they can no longer afford the hefty TV rights.