Economic Theory explained by Football – Return on Investment

The news that the new £5.14 billion Premier League television deal hasn’t exactly gone down well in many quarters.  The winning bids represent huge investments made by the media giants, with the Premier League now undoubtably the richest league in the world.  Arsenal manager, Arsene Wenger commented that the TV deal, and the huge influx of cash that will flow to the twenty clubs will allow them to attract the best players in the world.  Everyone’s a winner right?

14327363682_aef7b6c31b_kBut both Sky and BT will need to recoup their investments, and that is likely to spell bad news for subscribers. Rival TV boss, Tom Mockridge of Virgin Media, told ITV News this week that fans who already pay the highest prices in Europe to watch live football as from 2016 prices will see further price rises.  Faced with increasing subscription costs, some fans will abandon their contracts and look at alternative ways to watch their football.

So whilst pubs and clubs may now see more fans coming through their doors to watch games thus increasing their profits, there is a real danger that the number of websites that provide links to illegal streams will increase significantly. The more people that choose to use these streams, the more the broadcasters will be forced to increase subscription costs to recoup their investments. On the other hand, any proactive measures they take to try to identify and remove these illegal streams incur costs too – it is a real catch 22 situation.

So whilst many football fans may bemoan any potential price rises, it is important to understand the impact these illegal streams have on the the genuine product.  Just like any in-demand or aspirational product, counterfeiters and IP infringers will look to satisfy low (or no) cost demand.  The end product in the case of watching streaming sites is often poor quality, whilst downloading any software associated with these sites brings its own set of dangers. The very fans who abandon their subscriptions because of the cost in favour of illegal streams are actually part of the problem rather than the solution. That is the theory of return on investment.

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