Sky set to retain live Football League rights in £180m-a-year deal

Sky is set to retain the rights to the Football League in a blockbuster bidding battle with BT that has seen the price as much as double to £180m a season.

The Football League is understood to have entered into exclusive talks with Sky for the live rights, in a three to five-year deal worth between £500m and £900m.

The official announcement, which could come as soon as Wednesday, will scupper any hope that the recent years of inflationary bids for the crown jewels of sport might be at an end.

Bosses at the Premier League will be rubbing their hands at the outcome of the bid, with Sky and BT set to go head to head in a potential £6bn battle for the UK’s most expensive sports rights at the end of the year.

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ITV is heavily tipped to win the Football League highlights rights from Channel 5.

It is understood that the Football League, which decided not to take up an automatic one-year extension with Sky, although the broadcaster still has two years left on its current deal, had been expected to make a decision last Friday.

However, it is understood that bids from BT and Sky extended the auction timeline, vindicating the Football League’s decision to take its rights to the market early.

The deal, which will be for three or five years, is crucial for Sky to win as it has just embarked on a new strategy of scrapping its numbered Sky Sports channels in favour of themed ones focused on specific sports – led by football, golf and cricket.

With two football channels, the flagship focusing on Premier League matches, to lose the Football League would have been a hammer blow.

“Sky needs this deal more than BT,” said one source. “BT can survive without it on the same model. Sky has its new channel strategy to fill and the Football League is the number one product in a lot of households in places like Leeds, Nottingham, Derby and Norwich. Most of the eastern side of England has no Premier League.”

It is the second time in as many months that Sky has gone head to head with BT in a big-money deal: it spent £1bn to retain the rights to all international and domestic cricket in England with the England and Wales Cricket Board. The £220m a year deal, which included the BBC getting some Twenty20 matches, is worth about three times the £75m a year Sky paid under its existing deal for exclusive rights. With its dedicated cricket channel, Sky, which has said that cricket is the most valuable sport for its business after domestic football, had to win the rights renewal.

Later this year, Sky and BT will face off again for the biggest prize of all when the Premier League rights come up for renewal in what could be a £6bn sports rights auction. The pair could be joined by Amazon, which earlier this month poached the UK rights to the ATP men’s tennis world tour – all the tournaments outside the grand slams and the finals at London’s O2 Arena each year – from Sky.

Amazon has deep pockets, but may not be ready this auction cycle to commit such sums to drive its Prime Video service and wider business, but the threat could spur more big spending from BT and Sky.

The spiralling cost of sports rights, primarily the Premier League, has weighed on Sky’s business. A one-off £629m rise in its Premier League rights deal contributed to a 14% fall in profits at its UK and Ireland operations in the year to end of June.

Earlier this year, BT’s chief executive, Gavin Patterson, who has said that he believes an end is coming to eye-watering sports rights inflation, authorised a £1.2bn deal to hold on to exclusive Champions League rights.

Last month, Jeremy Darroch, the chief executive of Sky, said that the company had “walked away” from bidding for some sports rights recently as there was better value in spending the cash elsewhere in the business.

Sky has spent years building its entertainment programming, including long-term deals with Game of Thrones maker HBO and launching Sky Atlantic for top-flight shows, and spending hundreds of millions of pounds annually on original commissions such as glitzy Riviera.

Sky, BT and the Football League declined to comment.