{UAH} AS FRANCE CHASE EURO TITLE, LEAGUE FACES $400 MILLION HOLE

As France chase Euro title, league faces $ 400 million hole

20/06/2021

 

Updated: 7 hours ago

 

 

French football’s new televised deal was supposed to save the league and its clubs from financial collapse.

Instead, it maybe made a bad situation worse.

Shortly after France’s premier football league, Ligue 1, announced this month that it had pushed Amazon to become its main broadcaster, its longtime television partner, Canal Plus, responded with fury.

Canal Plus will not pay for or broadcast the two games per week to which it owns the rights, the company said. Not at the premium price in its contracts, at least. And certainly not when Amazon was paying around $ 100 million less for four times as many games.

“Canal Plus will therefore not broadcast Ligue 1,” the company said in a statement.

The implications of the Canal Plus threat for cash-strapped French teams could not be more serious. Already reeling from the effects of the coronavirus pandemic and the collapse of their league’s billion-dollar television contract last year, clubs across France that were planning to cut budgets are now faced with an urgent crisis.

While Amazon agreed to stream eight games a week for just over $ 300 million per season, Canal Plus was on the verge of paying nearly $ 400 million for the two games per week it had picked up during from a previous auction of rights. Now that he refuses to pay, many clubs have entered the summer player trading market less worried about sales and signings than the possibility of bankruptcy.

And they may only have a few weeks to find a way out.

The chaos behind the scenes of the French league stands in stark contrast to the international image of French football, tarnished by the success of its men’s World Cup winning team. France started their quest for the European Championship last week with a calm performance against Germany, drew Hungary in Budapest on Saturday and remain the favorites to lift the trophy next month.

Most of the players on the French Euro 2020 roster play for clubs outside of France, but almost all have made their debuts with French teams. Now those same clubs are trying to plan for a future that they can’t predict.

Can they afford to recruit new players to strengthen their squads? Can they even meet the salaries of those they have? Or is it wiser now to be sellers – even in a depressed pandemic market? The answers can determine how many teams enter the season with their financial future in doubt.

“If you are not able to renegotiate the salaries of the players, you risk bankruptcy, it is that simple,” said Pierre Maes, author of “The Business of Football TV Rights”, a book on the football rights market.

The deal with Amazon came as a shock to many who believed that a months-long reproduction rights dispute between the league and Canal Plus – a league partner since the network’s inception in 1984 – would be resolved by an auction victory for the French network. But Amazon was chosen on a joint offer from Canal Plus and its Qatari partner, beIN Sports.

Canal Plus executives have publicly expressed concern about Amazon, with Maxim Saada, the network’s chief executive, telling business publication Challenges that Amazon’s power posed the “greatest danger” to the business model of the network. Canal Plus. “We dodged them constantly,” he said. Perhaps underlining this power, a senior French football official said the league was not ready to turn down a deal with a company as big as Amazon, saying a bet on the e-commerce giant was a gamble. on the future.

But the result introduced even more uncertainty for a league that has been in freefall since announcing in 2020 that it would not be able to complete the 2019-20 season due to the pandemic. France was the only one of the major European championships to take the measure.

Almost as soon as he returned to the field for a new season, however, the league was quickly rocked by a second crisis – and perhaps a much more serious one. Late last year, Mediapro, the China-backed company with which the league had signed a record-breaking television deal, said it could not meet its commitments. Less than three months after the start of his three-year contract, Mediapro ceded the rights to French football and walked away.

Canal Plus picked up the pieces, picking up games from Mediapro at a discount, but it soon found itself in its own dispute with the league.

After learning that the price Amazon paid for the rights to its games was lower than what Canal Plus pledged to pay for fewer (and less publicized) games, the network argued that it did not should no longer have to spend 332 million euros. ($ 394 million) for the rights it sublicensed to Qatari broadcaster beIN.

“Canal Plus will not pay 332 million euros for 20% of the matches, while Amazon broadcasts 80% for 250 million euros,” Saada told L’Equipe.

While in many ways the situation Ligue 1 finds itself in is uniquely French, the collapse of the rights market in the country is just the most recent example of the plunge in the value of football rights in Europe. more generally. In recent auctions for TV rights in Italy and Germany, the leagues in both countries ended up getting less than in their previous deals.

The English Premier League, the richest domestic competition in the world, required a special waiver from the government to renew a deal with its current partners to avoid a risky auction. And Spain’s top league will change the way it sells its rights to mitigate what is likely to be a big drop in the price it can charge.

“My conclusion is that in France the bubble has burst and that’s actually what I plan to become a reality in other countries as well,” Maes said.

The value of Canal Plus rights has been significantly lower since the collapse of Mediapro, Canal Plus argued ahead of the latest auction. He asked the league to renegotiate the price or include his rights in the auction to find Mediapro’s replacement.

The league refused and a French court ruled in favor, saying that Canal Plus had failed to demonstrate how it had been wronged.

But as the network prepares new litigation and claims it can champion its case, Amazon and the league are impatient.

“Ligue 1 football has a new partner and an exciting future,” said Alex Green, Amazon’s managing director of sports programming for Europe, after the announcement of the company’s biggest football contract at this day. “We won’t let you down. “

For France’s top-flight teams, the joy of having a new partner with deep pockets was quickly tempered by the potential loss of hundreds of millions of dollars from Canal Plus.

Some leaders of French clubs, such as the president of Olympique Lyonnais Jean Michel Aulas, predict that Canal Plus will retreat. “I do not see at all how Canal can deprive itself of having access to Ligue 1,” said Aulas, a member of the French League’s television rights commission.

But, according to Canal Plus senior executives, the company is holding up. Its first payment is due on August 5. At the moment, he has no intention of paying it.

The break is important. The relationship with Canal Plus – which overcame previous disputes – supported the French league’s economy for decades. The strain of the pandemic even led to intervention by government officials, including President Emmanuel Macron, who called on the network to play its part when the league’s finances began to falter.

Ligue 1 president Vincent Labrune met with Canal Plus’s Saada several times ahead of the auction and warned him that a modest bid for the broader rights package offered could lose out if a rival emerges . Saada and Canal Plus considered this unlikely after the league failed to sell the rights in a January auction in which neither Canal Plus nor beIN participated. But the disagreement between the league and its main partner began to escalate.

Bitterness, according to many commentators, has clouded the negotiations and led to a result in which the only winner appears to be Amazon, which, thanks to the deal, for the first time secured majority rights to a major league of European football.

“It’s very opportunistic because Amazon took advantage of a very emotional situation,” Maes said.

A member of the league’s board of directors involved in the decision said Ligue 1 was convinced Canal Plus should honor its contract and that under French law action could be taken within 15 days if the money was not paid.

But for French clubs who now have to decide on budgets, players and plans for next season, it may be too late.

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