Football can collect on betting rights bonanza

Somehow, the authorities and the clubs will have to make good this anticipated shortfall. But let's face it, these enterprises are businesses; they're not going to stand still for the next three years.

A clue as to how they plan to generate more, non-television revenues was buried beneath last week's gloomy talk in the wake of the PFA dispute.

The Premier and Football Leagues have agreed to donate an annual fixed sum of £17.5m to the PFA which will reduce if television receipts fall. They were not prepared to sign a contract committing them to contributing a percentage of total future revenue, because their income is likely to increase dramatically over the next decade.

Unlikely as it may seem, the Premier League is developing a series of commercial arrangements, the value of which could conceivably dwarf the money currently paid to it by the broadcasters.

Lawyers believe that sports bodies such as the Premier League will see the control, sale and licensing of the database and content rights - the rights that result from an event taking place - as a source of revenue.

Forecasts show that by combining the copyright value to Premier League data (database rights) with an anticipated boom in interactive betting, the Premier League could generate £400m a year.

The sports betting industry has made a living from data and content that has not, to date, been ring-fenced. Owners of that content now want to generate an income from its sale.

Leading bookmakers point out that they already make an annual contribution of £4m, in the form of a copyright fee, to the English and Scottish leagues and while football betting is profitable, 85 per cent of bookies' revenue comes from horse and greyhound racing.

Football will need to be realistic about the commercial value of data and will watch how British horseracing fares as it endeavours to establish ownership of data, a matter that has reached the attention of the Office of Fair Trading and the European Court. The racing authorities believe that the value of their data is 2.5 per cent (plus VAT) of bookmakers' horseracing turnover.

Bookies have a strong football presence, using betting on the sport as a method of recruiting new, regular customers and introducing them to betting on other sports.

However, the present value of interactive betting via digital television is tiny. Ladbrokes estimate that it generates about as much revenue as one of their high street shops (they have 2,000); although bookmakers acknowledge that its value will increase, few believe it will grow to a level that justifies writing colossal cheques to the football authorities.

Unless the margin on a bet is good, merely increasing turnover is not attractive to bookmakers, especially if hefty fees are having to be paid to the football authorities that allow bets to be flashed onto a screen every five minutes during a live game.

Nevertheless, football has at least three years to get this right. Even if Sky are the only bidders for live football in 2004, they will continue to pay a significant amount because the combination of live football and the latest movies drives up their subscriber numbers.

In the meantime, the UK is a world leader in the development of interactive television, a technology that will not reach the point of mass adoption until consumers understand how they will use and benefit from it. This is what Kirch's company, Global Interactive Gaming, plan to do from next spring.

Some lateral thinking is required to avoid the doom-mongers predictions. Current contractual arrangements will almost certainly change to take advantage of the anticipated boom in interactive betting.

And they will. Investment banker Merrill Lynch believes the online sports betting industry, including interactive betting, will be worth more than £100 billion within 14 years.

Sky and Kirch already own part of each other's business and have cornered the market in broadcasting football. The football authorities may own the data and content but need bookmaking expertise to maximise the return from this content.

If the four parts of this jigsaw can click together, football's future is decidedly rosy.