April 10 (Bloomberg) -- European soccer’s governing body promised its 53 national affiliates record broadcasting revenue of about $1.5 billion for rights to qualification matches to Euro 2016 and the 2018 World Cup, two people familiar with the matter said.
UEFA is scheduled this month to issue an invitation to tender to broadcasters and rights agencies for the qualifying matches that begin in September 2014. The European body convinced national federations to allow it to sell the games for the first time centrally by offering them record income.
The Nyon, Switzerland-based organization decided to sell the rights to boost demand for national team competition and to promote greater financial stability for smaller associations, according to its president Michel Platini. The officials said they couldn’t be identified because the figures are private agreements. UEFA’s press office declined to comment.
UEFA may have to dip into its 500 million-euro ($657 million) cash reserve to fulfill its revenue commitments to the national federations.
“Most of the sports rights agencies that we’ve spoken to think the difference is pretty big between market value and what UEFA’s commitment is,” Frank Dunne, editor of TV Sports Markets, said in a telephone interview. “It could be in the region of 300 million euros and 400 million euros even allowing for the usual bit of public negotiation.”
Sell Home Games
Currently nations have the rights to sell their home games, while broadcasters buy away games from host federations or media agencies. Under the new program UEFA will be the sole point of sale for the games, giving broadcasters an opportunity to buy the whole set of a national team’s fixtures from one place.
Matches will be spread out on six consecutive days between Thursday and Tuesday as part of the governing body’s new “Week of Football” concept.
“Here we will create a story with consistent branding,” Guy-Laurent Epstein, UEFA’s marketing director, said in an interview.
Niall Sloane, controller of sport at ITV Plc, which broadcasts England’s home matches, said UEFA’s efforts to raise the money it promised in rights sales “will be an interesting task.”
“They will press us,” Sloane said in an interview. “It’ll be a negotiation. They will value it up and we will value it down. If they ask too much and we can’t afford it we won’t buy it.”
One factor that may hurt UEFA is the continuing difficulties that have gripped most European economies. In almost all countries, national team matches must be broadcast free to air and are often done so by the state broadcaster, many of which have had their budgets cut in recent times. Spain’s government in January said it was cutting 200 million euros from RTVE’s annual 1.4 billion-euro budget
“From a time of say 18 months ago when this project was first tabled there’s been a progressive worsening of the economic situation in a lot of European markets,” Dunne said.
UEFA’s move to take control of the rights came after complaints from smaller federations that they were being squeezed by agencies that pay money up front and profit if teams draw nations such as England, Germany, Italy and European and world champion Spain, according to Epstein. Dunne said while some federations may double their income from qualifiers as a result of the new deal, UEFA had to promise the biggest nations even more.
“The pot will be bigger, that’s for sure,” Epstein said in an interview.
UEFA makes 1.3 billion euros from its quadrennial European Championship, which will be staged in Ukraine and Poland this year. It makes a further 1.2 billion annually from the Champions League, European soccer’s elite club competition. For the year ended June 30, 2011, it had 494 million euros in cash, according to its annual financial statement.
Gianni Infantino, UEFA’s general secretary, said the agreement won’t put the non-profit organization in financial danger. He said experience from centralizing the sale of Champions League rights has proven that revenue can increased when broadcast and marketing are bundled together and sold by the governing body.
“When you create such a new centralized model you benefit from the creation of a new product with new branding,” he said.
Infantino said UEFA was confident it would “generate a lot of money” but “will have to see if where we have to dip in” to its reserve if it fails to break even. He predicted additional funds could be raised through the 2016 tournament in France because it will be expanded to 24 teams from the current 16.
“Let’s not forget the final tournament for 2016 is with 20 more matches, eight more teams,” he said. “So the revenues there will be higher than the revenues generated for 2008 and 2012.”
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