The collapse of the English Premier League's broadcast deal in China has pulled the plug on the football giant's most lucrative emerging market. With the pandemic weighing on the value of television rights, the league is now hunting for a new partner at the worst possible time.
Days before the new season kicks off on Sept. 12, the soccer league and its Chinese licensee, Suning Holdings Group Co.'s PPTV, said Thursday their agreement had been terminated. In China, where the league is the most-watched overseas soccer competition, fans consoled one another on social media and shared tips on new ways to watch their teams compete.
Tapping the vast spending power of Chinese consumers has long been a dream of major sports including golf, soccer and basketball. While reasons for the deal's breakdown are disputed by both sides, it's another setback for a spectator sport already reeling from the coronavirus pandemic.
"It's quite a blow," said Jack Anderson, professor of sports law at Melbourne University. "China has been a huge market for so many sports. It just doesn't seem to be as sustainable as it should be."
While the league's top half-dozen clubs including Liverpool and Manchester City will be able to absorb losses from the China blackout, it will be tougher for less successful teams, which sometimes must borrow against future earnings to sign players, Anderson said.
The league's three-year, more than 500 million pound ($665 million) deal with PPTV was set to run through the 2021-2022 season. That agreement was signed in 2016 at about 12 times the previous price, reflecting a boom in Chinese investment and interest in the sport at the time. The rights sale was then reported to be the league's biggest deal.
According to a person familiar with the situation who didn't want to be identified discussing a private matter, the league cut off PPTV after it withheld payment. However, in a statement, PPLive Sports International Ltd. said "although PPLive Sports has overpaid the periodic copyright fees to the English Premier League as agreed, PPLive Sports will still end its collaboration with the English Premier League."
A representative for PPLive Sports declined to comment beyond the company's statement.
Part of the dispute between PPLive Sports and the league stemmed from a requirement for PPLive to pay 80% of the total broadcast rights fees in March. But the payment couldn't be made because of challenges posed by the pandemic, according to a person familiar with the matter who didn't want to be identified discussing company matters. The suspension of games between March and June has hurt advertising income for broadcasters.
On Weibo, China's most-used social media platform, news of the deal's end had been viewed by 30 million people by Friday morning, with many subscribers expressing their dismay. "Kinda shocking," posted Ailiu_NancyNg. Another user, Riyiyunqian, asked: "Where can we watch Liverpool in the new season?"
Still, there were some dissenting voices. Some of the most-liked Weibo posts criticized the league for seeking payment when so many matches had been postponed amid the pandemic. "The prices of English Premier League broadcasts in China have been over hyped," said a user named LagrangeZhongzhi. "It's time for it to return to a reasonable price."
That may be the grim reality for the league, which is said to be seeking a new broadcast partner in China.
While sports rights have been the lifeblood of free-to-air television, their value in the world of new media is plateauing, said David Rowe, a professor at Western Sydney University who has researched the links between sport, culture and media. Further, the coronavirus has delayed competitions globally, reducing their appeal to advertisers.
"There's no doubt the pandemic has affected sport a great deal, but what we're seeing here is the playing out of a few trends," Rowe said.
Soccer accounts for three of the five most popular sports events in China, with the FIFA World Cup and National Basketball Association games heading the list, according to broadcast data researcher Nielsen. At least 187 million Chinese are interested or very interested in soccer, based on a "conservative" count of urban populations, Nielsen said in a 2018 report.
PPTV is owned by the sports business unit of Suning Holdings Group Co., one of largest privately owned Chinese conglomerates. The live-streaming platform also held rights to matches of the UEFA Champions League, Italy's Serie A, the Bundesliga and the FA Cup in China, according to its website.
The Premier League dispute is just the latest case of acrimony between the U.K. and China. Ties between the countries have deteriorated in recent months, with the U.K. banning telecommunications giant Huawei Technologies Co. and opposing the new national security law imposed in Hong Kong.
China's state television broadcaster also has relegated English Premier League football matches from its main sports channel.
In taking a swipe at soccer, China is striking at Britain's biggest and most successful cultural export, said Rowe at Western Sydney University.
"Sport is tool of soft diplomacy, but it's also a tool of economic diplomacy," he said.