The true genius of Ken Bates' LUTV empire TSS August 3, 2010 Leeds United 45 Comments Ken Bates' media empire There was an interesting read on the Guardian’s website yesterday about the big money takeovers that have happened in the EPL over the last few years, and how it currently appears as though these billionaires are here to simply throw money away. With Liverpool the latest club linked to a billionaire takeover from Kenny Huang, the Guardian questions the motives of these men who seem to be using Premier League football clubs as nothing more than expensive toys – the latest fashion accessory for the uber-rich. The more cynical amongst us have probably been waiting for the small-print to emerge for some time. Indeed, it always struck me as odd that successful businessmen like the Glazers, Ambramovich and those that make up the Abu Dhabi group, didn’t have hidden motives for their investment – a way to earn all these billions back. After all, they didn’t become billionaires by squandering all their money on a profitless venture like an EPL club. According to the Guardian’s, Matt Scott, it seems these businessmen aren’t burning money after all. Instead, what we currently see are a bunch of billionaires putting their money in a long-term investment. If anything, they’re pioneers who are well ahead of their time. The fans of these billionaire-run clubs can rest assured that the big money signings aren’t going to dry up any time soon. In fact, the big money signings are integral to the owner’s long-term business plan as they excite the fans and help build the brand further. That said, the players are pretty insignificant on the grand scale, as too are the fixtures and fittings like the stadium (which is probably why the Glazer’s had no problems taking loans out on Old Trafford). The real money is in the brand. Manchester United and Liverpool for example have huge worldwide fan bases that despite the clubs best efforts have yet to be fully exploited. Sure, they may be buying the odd replica shirt and flying to Anfield once in a while. They may even subscribe to online content like overseas Leeds fans do with LUTV, but this is simply the tip of the iceberg. It’ll come as no surprise to most that it’s the American’s who are showing the world how sports can truly be capitalised upon. The Guardian quotes the figures from America’s biggest baseball team, the New York Yankees. A club that’s assets are valued at $1billion. An impressive enough figure, I’m sure you’ll agree, but that’s nothing compared to the Yankee’s media network, which alone, is worth in excess of $3billion. At the moment, the worldwide and national rights for clubs such as Manchester United and Liverpool are sold by the Premier League. Leeds United’s rights are sold by the Football League – but how long will it be before clubs with such enormous worldwide fan bases want to cut out the middle man, like the Spanish clubs before them and their sporting equivalents across the pond? It all comes down to pay-per-view. If a club like Leeds United could broadcast all their own matches to viewers across the world for a fee, then the 40,000 inside Elland Road wouldn’t come close to the money generated by the PPV income. Nationally, this could quite easily be an on demand feature where every clubs games are available through Sky for a fixed amount. The club takes a percentage and Sky takes a percentage for their part in it all. With the EPL worldwide broadcasting rights already above the billion pound mark and growing year on year, the money is most certainly out there. Manchester United’s frequent tours of China and Japan aren’t just to sell an extra couple of shirts, but instead, it helps them increase the brand in a massive market that was largely ignored until recently. The old English football teams we know and love will eventually make way to franchise-like brands that span the world over, and if Leeds United want to compete again, they have to be on the boat. Luckily enough, it seems that we are. The only remaining success of Peter Ridsdale’s reign is the LUTV service he introduced. Whether he was aware of the potential of this at the time is debatable, but our current chairman, Ken Bates hasn’t missed a trick. Taking back the clubs radio broadcasting rights and charging those outside the Leeds area was a very clever – if somewhat unpopular move – that is netting the club a very healthy profit. Tying this live match commentary into the LUTV package with news and highlights made LUTV a very saleable package backed by the Leeds United brand. For all those tens of thousands of Leeds fans exiled abroad, LUTV is an absolute must have. It won’t stop there either. Whilst stage one of Bates media may have netted a healthy enough profit for Leeds United, its absolute peanuts when you consider the potential. Following in the footsteps of American sporting teams like the New York Yankee’s, Ken Bates has already tested the possibilities of live worldwide PPV streaming, and whilst there’s plenty of kinks to iron out, this will have done nothing but wet his appetite. If Bates can charge £5 a month for pre-season friendlies and get thousands upon thousands of fans happily digging deep, just imagine the money to be made from live league and cup games being streamed around the world. There’s a few stumbling blocks to overcome before English football clubs take full control of their own media rights and start selling independently across the world, not least of which will be the Premier League restructuring to a franchise operation like the NFL. Sky Sports will also have to figure out how they’re going to make money from it all when the clubs become more powerful than the network. The danger for Leeds United at the moment is our current league position. Leeds United as a brand is much more marketable as a Premier League club, and if we’re not back in the EPL by the time the technology is in place to implement these changes, we may find ourselves struggling to compete with other clubs financial clout forever.