Opinion: EU should limit pay TV for football

In 1997, the EU asked its member states to draw up a list of events that should remain available on free-to-air TV because of their “major importance for society”.

Several countries made a list. Member states translated the importance-to-society criterion as being events that unite the nation, or are an expression of the country’s cultural or social identity.

The Netherlands - my own country - drew up the longest list. It consists of many sports events and some cultural events. For example, it includes all matches of Dutch football clubs in the Champions League and Europa League as well as the extended highlights of our national football league.

So, every Sunday evening at seven o’clock, three million people watch the highlights of the Sunday games for free, keeping a Dutch tradition alive. Thanks to the EU.

The live matches between Ajax and Feyenoord are not on that list. They used to be free, but these and certain other matches are now only shown on pay TV for €15 a month - more than one per cent of our minimum wage.

Still, other countries have more football on pay TV, and their people pay more, either because they have a shorter list of protected events, or no list at all.

As a result, clubs from my country can sell only a limited part of their broadcasting rights to pay TV channels, which limits their revenues.

This is one of the reasons why nowadays our clubs have much lower budgets for players than many foreign clubs, weakening our teams. Recently, Ajax was humiliated by Barcelona in a way that would have been impossible in the past.

Thank you, EU.

A race to the bottom

To let Dutch clubs achieve higher revenues and get better players, we could reduce our list of protected events. However, then we would enter a race in which European football fans pay ever higher prices to enable their clubs to continue to compete. Higher prices mean lower real income, so we are dealing with a ‘race to the bottom’ here. Not very attractive.

It would be better to have a comprehensive European list of protected football events that applies to all countries. It could include all live matches in UEFA tournaments, as well as the extended highlights and many live matches from the national top leagues.

That way, English clubs will earn less revenue, which means they will lure fewer players away from my country. Ajax will have at least some chance to beat Chelsea or Barcelona.

But don’t the English love to see their teams always beat Ajax? Look at the Football Supporters Federation, which represents 500,000 fans from all over England. It now campaigns for lower prices for stadium tickets and a more competitive balance in the Premier League, even though this would mean that the four best English clubs will become weaker.

It appears that for English fans, lower prices and more suspense are more important than always beating Ajax. This makes it likely that they would also welcome an extensive European list of protected football events.

The list could be based on arguments similar to those used for the existing national lists, but it could also be based on another, often neglected argument: a ban on pay TV for all important football broadcasts increases economic welfare.

EU helping citizens

This is related to three simple facts. First, important football matches can also be broadcast on free-to-air TV (without a government subsidy), as the revenues from advertisements largely outweigh the costs of producing the broadcast.

Second, the cheaper the broadcasts, the more people will watch.

Third, the costs of a broadcast do not rise when one more viewer tunes in. These facts imply that, if important football broadcasts are for free, more viewers will watch and enjoy them while production costs do not rise, which leads to an increase in economic welfare.

The fact remains that broadcasters will see their revenues decrease. Basically, this means they will pay the clubs less for their broadcasting rights. The clubs, in turn, will reduce player salaries.

This should not pose a problem for the beautiful game; between 1880 and 1990 the football sector already prove it could produce very attractive play without any money from pay TV.

Of course, it is a disadvantage that the incomes of players, club owners and media tycoons will fall. But this is counterbalanced by the advantage for those fans who watch the broadcasts anyway, even if they have to pay; they save money when football broadcasts are free.

Here, we see a redistribution of economic welfare.

More fans will watch and have fun without extra costs. Yes, the cake gets bigger and is shared more equally as well.

All in all, a European list of protected football events is recommendable not only for social and cultural reasons, but also for economic ones.

More importantly, it could help demonstrate that the EU wants to help the people - which is a necessity rather than a luxury if it wants to survive.

Dr. Tsjalle van der Burg is Assistant Professor of Economics and University of Twente, The Netherlands. He recently published the book Football Business. How Markets are Breaking the Beautiful Game.