The new $7.8 billion domestic TV deal in England will be like prune juice according to Alan Sugar, which sounds terribly clever … until you realize his role in Sky’s dominance of the Premier League.
Sugar’s graphic depiction of what will happen to all the extra cash that will be pumped into the Premier League when the new deal kicks in — not counting the overseas cash that has not yet been announced — is probably accurate. Premier League chairman Richard Scudamore has already made it clear that it’s not the club’s responsibility to pay a living wage for their lower paid workers. You can bet ticket prices won’t be reduced much (if at all) so of course a lot of this new money will end up in players’ and agents’ bank accounts
But who is Alan Sugar? Well, aside from being a Baron, a Knight of the Realm and the UK equivalent of Donald Trump on The Apprentice, Sugar is an entrepreneur. He was also chairman and later owner of Tottenham Hotspur at a crucial time in the history of English soccer.
Back in the early 1990s, Rupert Murdoch’s nascent satellite TV network Sky was hemorrhaging money to the tune of an estimated 1 million pounds a week. Very limited uptake by consumers — who seemed happy with the over the air offerings from the BBC, ITV, and Channel 4 — threatened Sky’s long-term existence.
One of Alan Sugar’s tech companies, Amstrad, had a deal with Sky to manufacture the physical satellite dishes required to receive Sky, so the low interest in the network was bad for his business too.
Around the same time, the Taylor Report investigating the Hillsborough tragedy in 1989 was published. The report recommended all clubs competing in the top two divisions in English soccer should have all-seater stadiums by no later than 1994. The recommendation became a requirement and, considering many had barely been updated since their inception in the 19th century, stadia were antiquated and squalid. Clubs needed money and they needed it fast.
As luck would have it, TV rights were up and so the first scramble for more consistent live match broadcasts began. The only two runners were Sky and the over-the-air-network ITV. The BBC could not afford to enter into such a large auction and was more interested in reinstating its Match of the Day highlights show on Saturday nights.
ITV started with a bid of 205 million pounds, later increased to 262 million. However, it also offered favorable exposure to the big five clubs in the league. (At the time those were Liverpool, Arsenal, Manchester United, Tottenham, and Everton.)
Funnily enough, Spurs chairman Alan Sugar was the only one who rejected the ITV offer. Head of ITV, Trevor East, allegedly overheard Sugar speaking to someone on the phone, saying “blow them out of the water.”
Sky bid 304 million, won the rights, and recovered from its poor start. Subscribers increased, Amstrad made the dishes and soccer in the UK changed forever.
It’s fair to say that this is not all down to Sugar — the other top-flight chairman could have voted for the ITV deal, the Premier League Chairman Rick Parry endorsed the Sky offer (after initially preferring the ITV one) and the BBC could have co-bid with ITV. Even the government could have intervened to keep the national game accessible to as many people as possible.
The point here is that anyone involved in that initial bum rush for cash in the early 1990s has absolutely no credibility when it comes to criticizing what’s happened with TV deals since. The free market is king, you’re only worth what someone will pay and competition without regulation is a good thing.