Ligue de Football Professionnel (LFP), French football governing body, has taken legal action against London-based streamer DAZN over payment for Ligue 1 rights. As reported by The Athletic, DAZN withheld half of LFP’s latest payment for Ligue 1’s domestic rights. Therefore, LFP “is facing a new financial crisis.”
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.
The two deals combined are more than 10 percent lower than what Amazon Prime and Canal+ paid for Ligue 1 rights in France over the last three seasons. They also represent just half of the value of the domestic deal LFP agreed with Spanish company Mediapro in 2018, which began in June 2020 but was terminated only five months later.
This, along with the pandemic, have hit French clubs hard. Now, DAZN has made it clear that 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. RMC Sport suggests that should DAZN enact its exit clause, then it is probable that BeIN – which has complained about being mistreated by the league – would do the same. Therefore, the situation for the French clubs has become even more dismal.
DAZN has only sent half of a €70m (£58m) instalment payment that is due to LFP, putting the rest into an escrow account. DAZN also considers that Ligue 1 clubs are not doing enough to provide exclusive editorial content and that the means to fight piracy are inadequate.
DAZN has therefore referred LFP to Paris’ Commercial Court. The broadcaster believes they are owed €264m in compensation for “breaching” the contract signed with the LFP. What’s more, DAZN are demanding a further €309m from LFP for “market dishonesty.”
It is also reported that DAZN may have overestimated the size of the market. Recent media reports from France indicate that the service has attracted only 400,000 subscribers, which is over a million short of its breakeven target of 1.5million. If DAZN does not reach that figure by December, it can serve notice to LFP regarding the possibility of terminating the four-year deal at the end of its second season.
Despite this, LFP is gearing up to take legal action.
Pierre Maes, an international consultant on sports media rights, told The Athletic:
“I never thought DAZN would adopt such an aggressive position so soon…
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.”
LFP expressed that 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.”
LFP “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.”
However, it seems an agreement between the two will be difficult as DAZN also recently reported a £1.2billion loss for 2023, a result that meant British-American 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. Therefore, with both parties facing financial turmoil, “an amicable outcome” is uncertain.
With that being said, SURJ, the sports investment arm of Saudi sovereign wealth fund PIF, is in talks with DAZN about the purchase of a 10 per cent stake in the business for $1billion, 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.
L’Equipe also reported that DAZN is firm in its belief that LFP did not provide the broadcaster’s executives with all the necessary information about Ligue 1’s market distribution prior to signing the €375m per year deal. The outlet further suggests that this dispute could persist for months, if not years, and notes that DAZN's decision to initiate legal action likely indicates the broadcaster’s intent to recover its losses.
