French football is facing a new financial crisis after DAZN withheld half of its latest payment for Ligue 1’s domestic rights, a move that prompted the Ligue de Football Professionnel (LFP) to start legal action against the London-based streamer.
In a four-year deal that started this season, DAZN agreed to pay LFP €400million (£334m) a year for the French rights to eight of the nine Ligue 1 fixtures each weekend, with Qatar’s beIN paying €100m (£83m) a season for the right to broadcast the remaining game on Saturday evenings.
In total, these two deals were more than 10 per cent down on the amount Amazon Prime and Canal+ were paying for Ligue 1 rights in France over the last three seasons, and half of what LFP agreed in 2018 with Spanish firm Mediapro for a domestic deal that started in June 2020 but collapsed five months later.
These blows, combined with the pandemic, have hit French clubs hard but there could be more pain on the way as DAZN has made it clear it either wants to renegotiate a much lower annual fee or activate the break-clause in its deal with LFP and walk away at the end of next season.
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In a move that appears to have surprised many in the French game, DAZN has only sent half of a €70m (£58m) instalment payment that is due this week to LFP, putting the rest into an escrow account. It has done this because it claims the league has not done enough to help tackle digital piracy in France, while it is also upset that some clubs have not helped DAZN shoulder content for its Ligue 1 platform or with efforts to promote its service.
While there may be some truth in all of that, it is also true that DAZN appears to have significantly overestimated the size of the market, with recent media reports in France saying it has only attracted 400,000 subscribers, more than million off its breakeven target of 1.5million. And if DAZN does not hit that figure by December, it can serve notice on LFP to rip up the four-year deal at the end of its second season.
LFP, however, appears to be tooling up for a legal fight.
In a statement released shortly after an emergency meeting of its board of directors on Wednesday evening, it said it had “taken note of DAZN’s unfounded refusal to honour its financial commitments” and had already gone to a commercial court in Paris “to obtain, as a matter of urgency, an order against DAZN to pay the sums stipulated in the contract and an injunction to perform all of its contractual obligations”.
It concluded by saying the league “intends to firmly defend the interest of French professional clubs, while hoping for an amicable outcome to the dispute, which it hopes will be temporary”.
DAZN is yet to comment but its decision to bring this matter to a head earlier than expected comes only two weeks after it reported a £1.2billion loss for 2023, a result that meant Anglo-Russian businessman Len Blavatnik, its majority shareholder, had to pump in another £665m into the company, taking his overall investment in DAZN to £5.3bn since its launch in 2007.
DAZN’s deal with Ligue 1 only began at the start of the season (Denis Charlet/AFP via Getty Images)
However, SURJ, the sports investment arm of Saudi sovereign wealth fund PIF, has recently paid $1billion for a 10 per cent stake in the business, which is the amount DAZN paid for the global rights to this summer’s FIFA Club World Cup. DAZN has also just agreed to buy a majority stake in Australian pay-TV giant Foxtel.
Where does Ligue 1 go from here?
What all this means for French football, though, is hard to decipher.
“I never thought DAZN would adopt such an aggressive position so soon,” Pierre Maes, an international consultant on sports media right, told The Athletic.
“It seems the will to reduce costs at group level has led them to extreme and urgent measures in France.
“But I don’t think LFP is able or willing to accept a renegotiation – they will pursue payment from DAZN. And if the platform doesn’t pay, LFP will have no choice but to cancel the agreement.”
This would take French football back to the same precipice it faced when Mediapro discovered it had massively overpaid for Ligue 1 in 2021. LFP’s response then was to force Canal+ to keep its part of the Mediapro agreement – a move that further poisoned relations between the league and its former long-term partner – while offering Amazon Prime a sweetheart deal for Mediapro’s rights in an attempt to create a new partnership with the American streamer.
Amazon Prime, however, broke LFP’s heart two years later by saying it had no interest in continuing to be the home of domestic football in France, forcing the league to beg beIN and Canal+ to rescue the situation, before agreeing a deal with DAZN.
One possibility is that this third likely divorce in four years will force French football to take a step it considered last year but decided was too risky: to cut out the middleman and go direct to consumers with its own streaming service. That option was preferred by some club owners, most notably Lyon’s John Textor, but they were outvoted.
With Amazon and the other US-based streaming giants seemingly uninterested, beIN and Canal+ still annoyed by the Mediapro debacle and DAZN now unconvinced it can make money in France, LFP may well be left with no other option but to take the media operation in-house.
In the meantime, French football’s financial regulator the DNCG may have to revisit its estimate that the country’s club sides will post a combined loss of €1.2bn this season, a shocking figure that already threatened the existence of some of them.
(Fred Tanneau/AFP via Getty Images)
