Barely a few weeks left for the season start, Ligue de Football Professionnel (LFP), the governing body of professional football leagues in France and Monaco, found themselves caught between rock and a hard place. With no domestic media deal in place, they were reportedly contemplating launching their own ‘direct-to-consumer’ (DTC) streaming service, which could have been a game-changer but required significant resources and efforts (our earlier blog highlighted this), till a breakthrough was achieved
We analyse some of the critical aspects and consequences of the deal in this blog
The Deal
The partners in this deal, DAZN and Qatar-owned BeIN Sports, have reportedly acquired the domestic broadcast rights to French soccer’s Ligue 1 for a combined €500mn per season until 2029. Although details of the deal are yet to be finalized and released, according to AFP, however, Ligue 1 clubs have broadly agreed to the proposal in principle
Adding the €40mn for the second-tier Ligue 2 media rights that BeIN Sports will be paying and further €140mn secured for international rights, that makes a total of €700mn for the next few years, at least 2 years till the exit clause lock-in period for DAZN. Two main reasons why it’s worrying for the LFP
- It is at a 30% lesser value than the original target or anticipation of €1bn for combined rights
- Ligue 1 domestic media rights value is lower than the previous deal with Amazon & Canal Plus-BeIN by 17%
- Although the international media rights value has increased but the net total is still lesser than the previous deal value
Broadcast Revenue Share
It’s important to understand the overall Ligue 1 revenue structure and the share of broadcast revenue stream
In 22/23, the aggregated revenue of Ligue 1 clubs was €2.37bn of which broadcast stream contributed €779.3mn or 33%, more than the other revenue streams.
For PSG (who incidentally contributed €807.3mn or 34% of the total league revenue!) the share of broadcast income is 21% and for the rest of clubs, average share is 40% of the total revenue, a substantially high figure
Here it gets more interesting. French Ligue 1 also has a separate revenue head called ‘others’ which is presumably about merchandising, licensing, community grants etc. It contributes significantly in the total revenue, €662.6mn or 28% share.
Hypothetically, if we don’t include this in the total revenue, then the broadcast revenue and its share can be broken down into four segments as explained in the chart
It is clear from the chart that dependence on domestic broadcast income is very high. So while lower media rights deal value leads to lesser broadcast income, there will be high strain on the revenue equation for the clubs, especially at the lower end of the table
Effects of Lesser Income
Adding to the lower income from broadcasting, there is also the CVC loan to contend with. To those unaware, private equity fund CVC Capital had acquired a 13% stake worth €1.5bn in Ligue 1’s media rights business (in a separately created company)
Removing that share, the distributed amount for league clubs will be substantially reduced. This might lead to the following consequences
- The efforts for ‘other revenue’ will considerably increase
- And, so will the efforts for sponsorship revenue increase
- 24/25 transfer spends will be frugal. More emphasis will be placed on player selling than purchase
Conclusion
The looming impasse might have been taken care of for now, but this definitely leads to greater introspection at the league level and accordingly they will have to act in some key areas
Mbappe’s departure from the league leaves them shorn of a star face, that’s one area the league will have to work towards. Create a bank of multiple home-grown star faces for the future would be on the agenda. The other area for the league will be to rebuild relationships with the broadcast media outlets, to avoid a Canal+ like situation in future
In any way, we are looking forward to see the new rebranded French Ligue 1 & Ligue 2 become stronger!
