The Sky's the limit for sport on TV

Once again British sport is about to change radically. And just like last time, television and money - lots of it - are behind the transformation. The creation of football's Premier League in 1992, and its migration to pay-TV through the satellite broadcaster Sky, was the first revolution. It changed the country's favourite sport for ever - ploughing a quarter of a billion pounds into the game, improving television coverage and helping to fund the refurbishing of stadiums throughout Britain, as well as providing a large pot to fuel escalating pay scales for star players.

The deal with Sky took top-level live football off free television, forcing the serious fan to dish out for a satellite dish and pay Sky a subscription fee. Now, as broadcasters and club owners engage in fresh talks over renewing television contracts, viewers may even have to "pay per view", match by match, as the digital era dawns.

The changes imposed on football have been gentle compared to the revolution occurring in rugby league, where the game has even had its season reinvented. An pounds 89m deal designed to hijack the Australian Rugby League has aligned the British Rugby League with Rupert Murdoch, who owns 40 per cent of Sky, and is responsible for one of the biggest changes in the history of the game here.

From next March matches will be played in the summer in order to fit in with his proposed Australian super league, and the changes will not stop there. Mr Murdoch's News International, as the game's paymaster, will determine how, when and where it will be played.

Football is a mightier force and has been able to resist such fundamental changes - so far. But the advent of 200-channel television will test its resistance to the full.

Against the odds, Sky's relationship to date with football has been relatively sweet, and has not in the main outraged traditionalists.

A proud Sam Chisholm, chief executive of Sky and confidante of Mr Murdoch, says: "It is the most rewarding partnership we have, and the benefits that have flowed to the clubs, the fans and the viewers are enormous."

But if Sky thinks it has helped football, there is no doubting how much of a boost football has given to Sky. Without it the successful flotation of the BSkyB group last year would have been a good deal harder, if not impossible, to achieve.

"There is a growing awareness in the football industry about just how critical football has been to Sky's success," says Roger Devlin of Henry Ansbacher, financial advisers to a number of leading football clubs. One club owner puts it more bluntly: "Let's face it, the Premier League made Sky. In retrospect, we sold our rights too cheaply and look like idiots."

Sky became Britain's most profitable television broadcaster and it is now the biggest producer of sports programming, spending pounds 100m a year compared to the BBC's pounds 90m and ITV's pounds 40m. It dominates virtually all senior football - to such an extent, indeed, that frustrated competitors complain about the Murdoch monopoly: "It almost defies logic that anyone can compete with him."

The move from "free" to pay had other consequences. Where once as many as 12 million people would watch the highlights of a game on ITV or BBC, a Premier League match on Sky might get an audience of 2 million. But the coverage itself is massively improved, as even Sky's harshest critics concede and since Sky started showing football live attendances have gone up.

The last Sky deal, though, left the rest of the Football League hanging, stuck with a relatively paltry deal with ITV and with no share in the fortunes showered on the breakaway top clubs.

All that looks set to change, and the implications not only for football but for all televised sports are huge. For the next generation of sports rights will take us into the era of digital television and the prospect of wall-to-wall sporting events.

Even more money will be thrown at sports on TV - perhaps pounds 800m over five years for the Premier League alone. The rump of the Football League, the First, Second and Third divisions, stand to gain more than pounds 120m in that period, with the FA Cup and international matches generating perhaps pounds 130m. Cricket rights might fetch pounds 5m when the current contract is renewed, while a host of secondary rights (for replays, highlights and the likes) could sweeten the sports pot further.

Just how many events will be available to the average viewer is unknown. But one thing is clear: the fan will have to pay for the extra choice.

It is pay-TV that has driven prices to these dizzying heights: the whole point for Sky is buy exclusive rights, obliging viewers to ante up for the privilege of watching. By 2000, viewers are likely to have a huge choice. But they will be expected to pay, either for subscriptions to satellite and cable, or even for smart cards to plug into set-top boxes, giving them home and away games of their favourite teams on digital television.

Football has already shown the way and rugby is not far behind. Only the few events listed by the Broadcasting Act, including the FA Cup and Wimbledon, will be safe from pay-per-view, although there is nothing stopping satellite or cable broadcasters snapping up the rights to these hallowed events as well.

The first outlines of the future of televised sports are discernible in tense talks now under way to renew the contracts for football. The landmark Premier deal, worth pounds 218m over five years for the top 20 clubs, expires at the end of next season, and the broadcasters and football owners are jockeying for position.

At the same time, contracts for the rights to cup finals and internationals, along with the Endsleigh (non-Premier) League, are also under negotiation.

It is a messy, complicated business. The whole concept of rights in the UK is embryonic, with broadcasters traditionally calling the shots and sports organisations accepting their wishes. Sky helped to change that, by showing just how much money was available. Club owners, the Football Association, the Rugby League and other rights holders have responded by becoming more creative - working together to package rights, for example, or pushing for elaborate profit-sharing arrangements with broadcasters.

Most advanced are the talks between all three main broadcasters and the Football Association, whose commercial director, Trevor Philips, has put together a draft proposal combining the FA's own rights - the FA Cup and international matches - with the Football League. He has secured promises of pounds 250m over five years from Sky, of which the Football League would receive pounds 133m. As part of the agreement, both the BBC and ITV would "sub- let" rights from Sky, and at least some Football League games would be shown on terrestrial television. Sky would inaugurate Friday night football, featuring matches from the Football League. The deal, put yesterday to Football League club owners, must be approved within 14 days, insists Mr Philips.

The Premier League, meanwhile, is making its own pitch to the Football League owners, hoping to entice them into joining forces and securing an even better deal from the broadcasters. David Dein, vice-chairman of Arsenal, says his objective is to "maximise revenues for the game. I, for one, do not believe football should be selling its rights outright. We should have a dialogue with all the main players in football."

If that approach fails, the top 20 teams will again sit down with Sky, and hammer out a renewal of their current deal.

Other potential bidders may be waiting on the sidelines. Companies such as IMG, the sports agency, and the media companies Pearson and Mirror Group, are all believed to be considering joining rival consortia to wrest the Premier League away from Sky.

Whoever wins - and Sky must be the favourite - traditionalists may still have cause to worry. If pay-per-view becomes the norm, the British game is bound to change. With virtually every game on tap, and no need to travel to the local stadium, let alone out of town, can the culture of British football survive? The fears that preceded the first Sky deal - saturation television coverage, half-empty grounds and growing inequality between mega-clubs and the bankrupt also-rans - may well resurface.

Additional reporting by Dave Hadfield.

Listed events

Under the 1990 Broadcasting Act, viewers receiving cable or satellite TV should not pay an additional fee for "listed events". Nothing prevents listed events being exclusively shown on satellite/cable channels: each sporting organisation decides on its own TV contracts. Rugby Union and Wimbledon have so far decided to stay with terrestrial television to reach a larger audience. Rugby League however, because of underfunding, has negotiated a deal with Sky.

Listed events are:

Cricket: England's test matches

Racing: the Derby, Grand National

Football: Fifa World Cup finals, FA Cup final, Scottish FA Cup final

Tennis: finals weekend of Wimbledon

Olympic Games

The Commonwealth Games and the Oxford and Cambridge Boat Race were initially considered but finally removed from the list.