The Impact Of Premier League Terminating $750 Million Chinese Broadcast Deal

The Premier League has taken unprecedented action and cancelled the remaining two years of its broadcast deal in China with PPTV, a company owned by conglomerate, Suning Holdings Group.  

The deal, for the 3-season cycle from 2019/20 to 2021/22, was announced with great fanfare in the first season of the previous 3-year cycle – something that was highly unusual. The deal with PPTV was to pay the Premier League $750 million, front-ended with an initial payment of $350 million.

Another payment of $210 million became due in spring of this year but no money was forthcoming, hence the Premier League’s decision to terminate the contract.

The contract with PPTV replaced a deal with Super Sport Media Group that paid only $80 million and limited the league’s exposure. SSMG held back nearly 40% of its Premier League inventory for pay-for-view.  

Deals in two of the world’s biggest markets – China and the United States – helped drive overseas rights for the Premier League to $5.6 billion for three seasons and helped compensate for a softening of the domestic market. The overseas market has become increasingly important to the Premier League. Back in 1992 when the Premier League was formed the value of overseas rights was essentially zero.

In combination, domestic and overseas deals for 2019/20 to 2021/22 concluded with the Premier League banking over $12 billion – until the latest problem that is.

Taken in isolation, a reduction of $200 million for the next two seasons from a base of $4 billion per season does not seem like a major loss – an average of around $10 million per team. However, it comes at a time when the Premier League, like others, is facing the loss of gate money and the ancillary spending that spectators contribute by going to games.

If the Premier League terminated a deal in another country it would act quickly to plug the gap by selling to a competitor. But this is China and politics weigh heavily when it comes to business. Earlier this year, the British government blocked China’s giant telecommunications Huawei from participating in the build out a 5-G network. There is also China’s action in Hong Kong. Add the two together and it seems unlikely that the Chinese government will give a quick green light to an English league looking fora replacement broadcaster.

The reaction from the other European leagues with deals with PPTV will be mixed. On one hand, the other leagues will look at the absence of the Premier League as an opportunity – one less competitor to battle.

Conversely, there will be a nervousness and a level of uncertainty given PPTV’s decision not to live up to its contract. If PPTV is willing to stiff the Premier League, then why not the others?

Suning Holdings

The company was founded in 1996 and Forbes ranks it as 490 in its Global 2000 with annual sales of close to $40 billion and profitability of $1.4 billion.

The holding company operates four divisions: Suning.com; Suning Finance; Suning Real Estate; Suning Sports. Suning Sports owns the broadcast rights through PPTV to other leagues including La Liga, Serie A, Bundesliga, and Ligue 1.

Suning Sports also owns three soccer clubs: Jiangsu Suning Football Club, Jiangsu Suning Ladies Football Club and F.C. Internazionale Milano (Inter) of Serie A.

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