Does the high cost of Premier League rights benefit advertisers?

Will brands be prepared to pay more in order to advertise during top-flight football matches, David Benady asks.

The rocketing costs of Premier League TV rights will need to be recouped somehow. But will advertisers play ball?

With Sky and BT set to pay £5.14 billion for broadcast rights to Premier League football matches over three seasons from 2016/17 – a rise of 70 per cent on the £3 billion paid for the current contract – Sky, in particular, will be looking to squeeze as much money as it can from every conceivable source.

The broadcaster claims the majority of the hike will be covered by cost savings. But its share price fell after the announcement as analysts digested the news and wondered whether investors would bear the brunt with reduced profits.

It is possible that Sky will raise subscriber costs – a high-risk strategy in an increasingly competitive digital entertainment environment. But as the company knows better than anyone: never underestimate the lure of top-flight football in the UK.

Revenue from advertising during the games is small compared with subscription fees, but at least one media buyer thinks Sky is likely to try to hike up airtime costs if it can: "Of course they will try to. Will media agencies accept? Some might, some might not – it will be up to agencies to negotiate."

For certain brands, advertising during Premier League games is highly valued due to its reach among 18- to 24-year-old males who are light viewers of TV. As clichéd as it sounds, think gambling, lager and fast food. With ITV, which has not shown the Premier League for many years, losing Champions League rights to BT from next season, Sky and BT have now become the only places advertisers can reliably reach this audience.

As Sky and BT plough such huge funds into the game, Premier League clubs will be a lot richer, so they can attract more global stars to the UK. If the likes of Lionel Messi come to the Premier League, the games will be even more appealing.

Duncan Wynn, the director of sales at Sky Media, insists it’s "great news" for brands: "We never forget advertisers have a choice where to spend their money and we are excited about working with them to help them get the most from their spend."

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