The Battle for TV Rights II: Aulas Ups the Ante

By: Inara | November 29th, 2007

The last time I brought this topic up, Jean-Michel Aulas was demanding that the French league receives a substantial increase in TV rights. The current deal, which was signed nearly three years ago, was worth approximately €600m per year, which at the time was the most expensive TV footballing deal signed in history (though the EPL’s current deal broke that record).

However, Canal+, the current holders of the TV rights, have claimed that French football has gotten worse, and while they are willing to negotiate a new deal, they want to offer less. The LFP, on the other hand, are saying that French Football has gotten better and are demanding more.

Here is the lowdown on how France’s TV rights work, thanks to this very excellent site. L1 actually follows the EPL’s path in which the entire league negotiates a single deal to be split among all the clubs. That is very different from Italy and Spain, where each club negotiates their own TV rights.

Canal+ paid €550m for the 2005-2006 season, €600m for the 2006-2007 season, and €650m for the 2007-2008. About 5% of that went to the non professional football section, and another 5% went to a fund devoted to global sport development. This is how the shares per club currently breaks down:

* 50% is a constant share (each club starts with €12m).
*28% is based on the final table position (23.3% on current standing plus 4.7% on the standing from the last 5 years).
*18.7% is based on the amount of games shown by the TV rights owner (14% on the current season plus 4.7% on the standing of the last five years).
*3.5% given on the standing based on the “Le Challenge de L’Offensive,” which was created by the LFP to reward the most offensive team in the championship.

Based on this, last season Lyon earned €45m from domestic TV rights. Lens earned €34m, Lille earned €25m, and Valenniences earned €15m. The numbers seem puny, but keep in mind that money is also given to Ligue 2 clubs, which is the reason why in France, the second division clubs tend to be more financially secure than their counterparts in other countries.

What makes France different from England is the discrepancy between top clubs and bottom clubs. In England, the top club earns twice as much as the bottom club. But in France, the top club earns three and a half times as much as the bottom club. But don’t get too excited - Lyon’s share of TV rights is equivalent to what the bottom dweller in the EPL earned last season.

French TV rights have long been a cause for complaint among L1 clubs (especially the rich ones), which is why the LFP has been pushing for a better deal for 2008-2012. Aulas, who previously demanded an increase of €150m per season (to make it worth €750m), is now asking for €900m. That is an obscenely high number, and I had to reread that a few times for my mind to process it.

However, the LFP haven’t gone off their rocker. They are looking around and seeing that the TV deals in Spain, Italy, and especially England are leaving France behind. Only Germany has it worse. Since French clubs are also forbidden from being sponsored by alcohol and gambling companies, a club’s main source of income is their TV deal, which often represents 50% of their total budget. And without this income, L1 cannot improve.

Logic is on the LFP’s side. Despite what Canal+ say, L1 has been providing spectacle and suspense this year, as well as a lot of goals scored. Three of the five top scorers in the top leagues are in France at the moment - when was the last time that happened? Right now, football is France’s #1 sport, and it’s growing more popular by the year, highlighted by the fact that ticketing is steadily increasing every year.

As great as foreign football is, most people want to watch their own league. For example, Liverpool vs. Arsenal received only 400,000 viewers but Lens vs. St. Etienne was watched by 1.2 million. And of course high profile games featuring the heavyweights Lyon, Marseille, and PSG against each other will have double or triple the audiences. Even Ligue 2 attract more viewers than France’s other big sport, rugby.

The problem is that right now, Canal+ is the only interested party. Before the last deal was signed, there were two - Canal+ and TPS. The LFP held a closed auction, so neither party knew how much the other was bidding. TPS bid €400m and Canal+ €600m. So Canal+ could have had the rights for €401m, and that is undoubtedly part of the reason for their reluctance in laying down even more money. TPS and Canal+ have no merged, and there aren’t any other domestic providers who can pay that much money.

The LFP is looking into other options of course, including foreign broadcasters and the internet. To increase the pressure on Canal+, they have decided to split the offers in different kinds of small packages (for example, a game on Saturday or another one for a game on Sunday). So the games next season will look like this: On Saturday, 5 games played at 7PM and 1 played at 9PM. On Sunday, 3 games played at 3PM and 1 game at 9PM.

We’ll have our answer in two days. I’m not sure how this is going to work out, but the LFP seem very confident that they will get a better deal. Perhaps not the €900m that Aulas is daydreaming about, but it’s looking like L1 clubs are banking on something closer to €700m, which isn’t too shabby when you consider the fact that this is France.

If the LFP is bluffing, they have damn good poker faces.