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House of Commons
LONDON SW1A OAA

The Rt Hon Peter Mandelson MP,
Secretary of State far Trade & Industry
President of the Board of Trade
1 Victoria Street
London
SWIH OET

8th September I998

Dear Peter,

I am writing to you in my official capacity as the Chairman of the All Party football Group (which has 120 members from the Commons and the Lords) after discussing this issue with the officers of all three parties.

I should also like to declare an interest as a director of the Premier League club, Sheffield Wednesday.

The opinion of those members I have contacted are that the decision of Sky TV to purchase Manchester United Football Club, is certainly not in the best interests of football in general, and not in the public interest of sport or the media either.

If Parliament had been in session we would certainly have been calling for an immediate debate. Consequently we would like to urge you to insist that this merger be halted until the House has had a chance to debate it, then refer it to the Office of Fair Trading for an investigation.

The reasons are as follows.

  1. It surely must be an unfair trading situation for BSkyB to sit on one side of the table negotiating television deals with football clubs, especially those in the Premier League, then at the same time be sitting on the other side of the table, as owners of the biggest football club in Europe, negotiating TV deals for or against itself.

  2. Currently the money Sky put into football, based on appearances and League table merit, is open to fair competition This competition would be open to distortion if one of the recipients was owned by the promoters.

  3. The current situation in football is already distorted by the sheer size and strength of Manchester United. They are twice as big as their nearest competitors Arsenal or Newcastle. They are four or five times as big as an average Premier League side such as Coventry, and ten times as big as the premier League's smallest club Wimbledon. Compared to foreign teams they are bigger than Inter Milan and Juventus put together.

    Their receipts from just one of their matches, is more than the annual income of either Hartlepool or Darlington.

  4. When the Premier League was formed in 1993, Manchester United (floated on the stock exchange in 1991) had an annual profit of 4.2 million. Last seasons profits are expected to top 30 million.

  5. The effect of this growth has been to inflate players wages by over 30% per annum in each of the last four seasons. The consequences of this has meant that nearly 600 players this season (out of 2,500) have been made redundant because smaller clubs cannot afford to retain them.

  6. It is now perfectly possible for three or four big Premier League clubs to pay individual salaries of over 1 mil1ion per year to several players, whether they play them in the team or not, simply to restrict the market and stop other clubs from signing them.

  7. Fans consistently complain about high admission charges, yet these don't even pay the players wages, even in the lower leagues. Gate receipts are now less than forty per cent of a club's income. Everything else depends on TV sponsorship, corporate hospitality and commercial sales.

  8. Rupert Murdoch's pay satellite television is now an unfair competitor to both ITV and the BBC. ITV companies have to be awarded franchises and satisfy the adjudicators, to ensure they will act in the public interest.

    The BBC charter insists on this too. Yet. Mr Murdoch's terms of satellite pay TV appear to have no such restrictions. Which gives him a very unfair advantage.

  9. The real reason however for Mr Murdoch's proposed purchase of Manchester United is not immediately obvious. But there is no doubt it is due to the meetings last week between the Premier League clubs and an Italian based television company called Media Partners. This company has proposed setting up a European super league to operate from 2001, playing matches on midweek evenings, and offering a "pot" of 3 billion TV cash to Europe's top clubs.

  10. If this new Championship were to go ahead in 2001, it could seriously jeapordise the renewal of the BSkyB British football TV contract that year. Rupert Murdoch was not involved in the negotiations and, I understand, has no satellite interest in several European countries.

    It is because of this absence at the negotiating table that Mr Murdoch is now attempting to buy Manchester United so that he can block, or at least influence, the proposed new Championship and television income. Manchester United are the biggest card in the European pack and he wants to buy it. In addition you will be aware that the Director of Fair Trading is being challenged in a court case next January by the Premier League regarding his initial decision that television companies should be able to negotiate contracts individually with clubs and not on a Premier League inclusive basis. There is an argument that the Premier League is "a cartel," even though it changes its members by three teams every season due to promotion and relegation.

  11. Consequently as both Manchester United and BSkyB have assets of over 70 million each and are quoted companies and therefore within the scope of the Office of Fair Trading, we think it is reasonable to ask you to prevent this deal from being concluded and to insist on a full investigation in the public interest.

Also while accepting that the licensing and control of television companies is perhaps a matter for the Home Secretary and not Trade and Industry, we should like an assurance that any further new initiative in the field of pay TV and sport should have to have that departments approval too.

We look forward to your reply.

Yours sincerely,

JOE ASHTON M.P.

 


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