Ligue 1

Why Ligue 1 is on the brink of financial meltdown

A perfect storm of the Covid-19 crisis and Mediapro defaulting on their agreed television rights has plunged French clubs into a state of crisis.

1:01pm on Friday 11th December 2020
Robin Bairner

French football is on the brink of a financial crisis brought about by the collapse of its television deal with Mediapro.

It is an issue that has been rumbling for weeks. In September, off the back of disappointing subscription figures for its Telefoot channel, Mediapro refused to pay the French League (LFP) their October instalment of €172.3 million (£156m). Similarly, a December payment was also missed.

Reports now suggest that the deal is ready to be dissolved, with Canal+ ready to step in and claim the rights, albeit at a far lower rate than the €1.15bn per year that Mediapro had previously agreed.

Crucially, the LFP shunned long-time partners Canal+ to turn to the Spanish company for the seasons running from 2020-24 and did so by leaving their noses out of joint.

One of the reasons that the LFP was so eager to annul the 2019/20 season due to the coronavirus pandemic was the lure of starting the new television deal with Mediapro in August without a hitch. Their promise, after all, was around 50% higher than the previous contract with Canal+, which came in just over €700m per year.

It is a move that has backfired.

“There is always someone that thinks they will be able to make better use of the rights by paying more than Canal+. TPS, then Orange, then BeIN Sports, then Altice and finally Mediapro,” Saada told Les Echos in October.

“I have always thought that the economic equation was untenable given the price paid for the rights.”

While Mediapro believed that 3.5 million subscribers would be sufficient to cover their costs, Saada predicted they would need in the region of 7 million, albeit he was using a lower price point.

In the event, Mediapro never managed to get close to either of these numbers and asked for a 25% reduction in its right bill for the present campaign.

This was refused, but the company had placed itself under court protection from creditors using a new legal process in place to protect struggling companies from their creditors because of the coronavirus pandemic. As such, the LFP have been unable to enforce the contract.

The upshot is that Ligue 1 clubs are likely to be left with massive holes in their budgets over the coming months.

Between the shock of the coronavirus pandemic and the non-payment of television revenues, the immediate financial future for many of France’s professional teams is bleak. Some may not even survive the financial shock caused by this mess.

In the short term, the LFP have taken out loans to cover the non-payment of the television rights, but this is clear not viable on a long-term basis.

Hindsight is, of course, a wonderful thing, bit warning signs were present.

Serie A, for example, had previously pulled out of a deal with Mediapro over fears that the group might struggle to pay their share of the rights for 2018-21.

Meanwhile, the company’s approach in Spain, where they have enjoyed success was achieved using questionable methods.

“At best, he’s not orthodox,” an unnamed French club president told the Financial Times of Mediapro co-founder Jaume Roures. “At worse, he’s a pirate.”

With Canal+ in a strong position, claiming to have barely lost any subscribers since Ligue 1 largely departed the platform, they are in little need to bid big to regain the rights.

As Francois Godard, a media analyst, told the FT: “All the leagues have been greedy. But the French league has been a bit more greedy, and a lot less lucky.”

With the economic shock of the Covid-19 crisis perhaps still in its infancy, the timing could barely have been any worse.

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