Broadcast dispute signals end to European club rugby competition as we know, says expert

Sports law specialist James Earl of Pinsent Masons, the law firm behind Out-Law.com, said that the body currently responsible for organising broadcast rights for European club rugby competitions, European Rugby Cup (ERC), appear to be "fatally wounded" by the deal struck between BT and Premier Rugby (PR), the organisation representing the top English rugby union league.

Earl said that the deal was "at in least in part borne out of frustrations" English clubs have with the current arrangements around how teams from Ireland, Wales and Scotland qualify for European club rugby's premier competition, the Heineken Cup. However, he said that the BT deal was more than a mere negotiating tactic by the English clubs to achieve reforms and that, instead, it was likely to spawn a new model for the negotiation and distribution of commercial rights associated with participation in European club rugby competitions.

On Wednesday last week PR announced that it had secured a £152 million deal that would allow BT to broadcast matches from England's top domestic club league, the Aviva Premiership, from next season. The deal also provides BT with "exclusive live broadcast rights" to show Aviva Premiership clubs participating in European competitions from season 2014-15 for three years.

However, ERC announced that it had agreed a separate deal with Sky that it said gives the broadcaster the exclusive right to show live Heineken Cup matches, as well as games from sister competition the Amlin Challenge Cup, between 2014 and 2018.

ERC has questioned the legitimacy of PR's deal with BT, claiming that English clubs, together with those in France, Italy, Wales, Ireland and Scotland, had agreed that ERC would sell broadcast rights on their behalf. ERC said that it had been "unanimously agreed at an ERC Board meeting" on 6 June that ERC would extend its current contract with Sky Sports "for the UK and Ireland exclusive live broadcast rights to the Heineken Cup and the Amlin Challenge Cup until 2018". It said that PR was "party to that decision".

However, PR said that ERC only has the right to negotiate broadcast deals on behalf of the six nations' rugby unions until 2014. It said that suggestions that it may have breached international rugby regulations are not correct. In particular, PR maintains that it did not agree to any "specific broadcast deal" on 6 June, so the Sky deal could not involve Aviva Premiership clubs, according to a report by the BBC.

"Does the BT deal mark the end of European rugby? No, but it looks likely to change European competition rugby as we know it," Earl said. "There were discussions this summer between representatives of clubs in England, France, Italy and the Celtic nations over the "structure and format" of the Heineken Cup in the future. This stems from English and French grievances over how the qualification process for the tournament currently works."

"Agreeing a major broadcasting deal – a truly landmark deal for BT – cannot be viewed as a negotiating tactic by English clubs but instead appears to be an irrevocable step. Premier Rugby surely would not have entered into and announced a deal like this one if it was not intent on about changing things permanently [in regards to European completion rugby]," Earl added.

Currently, the Heineken Cup is contested by 24 teams each season. Six clubs from both England and France qualify for the tournament based on their performances in their respective domestic competitions. The Aviva Premiership is contested by 12 clubs, whilst France's top domestic league contains 14 teams.

Three clubs each from Wales and Ireland also qualify on the basis of their performance in the RaboDirectPRO12 league. That competition is contested by only four clubs from each of those nations. The other teams that make up the league are from Italy and Scotland, with the two clubs from each nation selected to participate in the Heineken Cup by their national sports governing bodies. The winners of the previous season's Heineken Cup and Amlin Challenge Cup also qualify automatically.

Earl said that English clubs feel that this process is unfair and that the extra competition that they face domestically to qualify for the Heineken Cup diminishes their chances of winning the tournament.

"The English clubs believe they have to give greater focus and attention to their domestic league than clubs from the Celtic nations, not only in order to ensure that they qualify for next year's tournament but to avoid relegation in their domestic competition," he said.

Earl said that PR will almost certainly have a plan in place that will enable it to deliver on its promise to deliver European matches to BT. He said that the body must be very sure in its right to negotiate a territory-specific broadcast deal over the European competition matches and that if that is the case it would be a "hammer blow" to the viability and power of ERC in its current form.

However, Earl cautioned that such a breakdown model, if replicated in France and across the Celtic nations, could result in great "disparity" of wealth between competing clubs.

"PR must have a plan to ensure that they can deliver European competition as part of the broadcast deal agreed with BT," Earl said. "It may be that France follows suit by arranging their own territory-specific broadcasting deal, as their clubs have expressed similar concerns to those in England over the existing structure and format of the Heineken Cup."

"However, decentralised commercial deals can become very complicated and may also impact on the relative wealth and power of competing clubs," Earl said. "For example, in Spain football clubs negotiate their own TV deals, but this has created a situation where there is huge disparity between the bigger, wealthier clubs and smaller clubs."

"European competitions could become almost token in nature if they are weighted in favour of the bigger leagues. Commercially it maybe more successful, but the essence of sport and cross-border competition may be lost if there is not a truly pan-European make up to the completion," Earl said.