The foundation of the Premier League in English football occurred in the early 1990s. A proposal for the establishment of a new league was tabled at the end of the 1990–91 season. It received the support of representatives of all eighteen First Division clubs, as well as The Football Association (FA) through its "Blueprint for the Future of Football" publication. The Premier League was actualised in stages: the signing of the Founder Members Agreement on 17 July 1991, clubs handing a joint notice of resignation from the Football League, and the final go-ahead from the FA who administered affairs.
The Premier League was created "to prevent the top clubs from losing income to the lower leagues", but also served the purpose of maximising the clubs' bargaining position for when the next television contract was up for renewal. ITV held exclusive rights to live Football League matches, having paid £44 million over a four-year period (1988–1992). The arrangement came after the withdrawal of a joint bid made by the BBC and British Satellite Broadcasting (BSB). Both broadcasters later obtained rights to FA Cup football.
Unlike the Football League, the Premier League was set up with a two-man board: Rick Parry, the chief executive, and Sir John Quinton who was appointed as the league's chairman in December 1991. Decisions would be taken on by all members, through a one club-one vote motion. A clear majority needed two-thirds.
The big five The first major step to its formation occurred in October 1990, when the managing director of London Weekend Television (LWT), Greg Dyke, met with the representatives of the "big five" clubs – David Dein of Arsenal, Philip Carter of Everton, Noel White of Liverpool, Martin Edwards of Manchester United and Irving Scholar of Tottenham Hotspur. The meeting was to pave the way for a breakaway from the Football League. Dyke believed that it would be more lucrative for ITV if only the larger clubs in the country were featured on national television and wanted to establish whether the clubs would be interested in a larger share of television rights money.
Talk of a super league of elite English clubs had been frequently mentioned by various footballing bodies, and by the media, since the mid-1980s.
The fundamental difference between the old Football League and the breakaway league (what became the Premier League) is that the money in the breakaway league would only be divided between the clubs active in that division whilst in the previous arrangement it was shared between all Football League clubs across all divisions. The plan was drawn up for a Premier League of 18 clubs to be created in time for the 1992–93 season, although the recently announced plan to increase the First Division from 20 to 22 clubs for the 1991–92 season still went ahead, as the creation of the Premier League had still not been confirmed by this stage. However, 14 of the 22 clubs who would be competing in that season's First Division had agreed to form a breakaway league of their own if the Football Association's bid to create a breakaway league failed.
The five clubs decided it was a good idea and decided to press ahead with it, however the league would have no credibility without the backing of The Football Association and so David Dein of Arsenal held talks to see whether the FA were receptive to the idea. The FA did not enjoy an amicable relationship with the Football League at the time and considered it as a way to weaken the Football League's position. Football League president Bill Fox even described the FA's plans to form a breakaway league as an attempt to "hijack" the First Division.
Broadcasting rights
The Premier League was formed with the intention of English football's top clubs capitalising on television rights. Whereas in the Football League money is distributed to the lower leagues, the Premier League intended to sell its own rights, with earnings from broadcasts divided equally between the member clubs only. The decision to break away and start a new league also gave clubs the chance to vote on decisions through a one club-one vote motion.
In November 1990, Rupert Murdoch's Sky Television merged with satellite competitor BSB to form a new company – BSkyB. The takeover created problems for Murdoch as the company was losing £14 million per week. Cost-cutting measures were imposed by BSkyB's new chief executive Sam Chisholm, one being the successful negotiation of cheaper contracts to screen films from Hollywood studios.
Although their financial position was far more stable by the end of 1991, BSkyB accumulated £2 billion in debt and stood to lose £1.5 million per week. To counteract this, the company considered purchasing Thames Television, but Murdoch decided against it because the price was too high. BSkyB therefore was left with three options: offer its subscribers pornography, major films or exclusive sporting events. The first presented itself with "too many problems" and BSkyB for the second were not prepared to renegotiate with the film industry so sport was seen as the best choice. BSkyB already held rights to cricket and rugby league and assembled talent to present its growing football coverage. Chisholm identified the Premier League as a target, aware that smaller clubs did not favour ITV's coverage. Live rights to top-flight football was moreover unaffordable for the BBC, whose priority was restoring Match of the Day to its traditional spot on Saturday evenings.
Premier League chief executive Rick Parry and chairman Sir John Quinton were assigned the task of finding suitors. Parry initially favoured working with ITV, led by Greg Dyke, but wanted the network to pay in excess of £30 million for live football. In the meantime BSkyB – a company formed by the merger of Rupert Murdoch's Sky Television, and British Satellite Broadcasting – looked into the possibility of obtaining live rights to the Premier League. BSkyB chief executive Sam Chisholm attempted to make a joint offer with ITV which did not come into fruition, so he formed an alliance with the BBC, as he was aware the corporation wanted a highlights package. Although Chisholm was against Parry's idea of a football-only channel, he built a rapport with the Premier League and his company invited Parry to its facilities in Livingston, where he spoke to Murdoch in person.
Bidding process The Premier League intended to sell its own television rights, with the proceeds going directly to the 22 member clubs. Parry and Quinton were assigned the task of finding suitors, but the former's negotiation skills worried Arsenal chairman David Dein. He persuaded the clubs to set up a separate working party, which led by himself, Ron Noades and Bill Fotherby in October 1991 came to an agreement of the sale of a shared package. The party was short-lived however; hostility towards Dein meant the other clubs settled with Parry and Quinton in charge of matters. As Mihir Bose, author of Game Changer: How the English Premier League Came to Dominate the World notes, "That did not prevent rival club chairman from meeting competing broadcasters on their own." Dein for instance visited Greg Dyke, chairman of London Weekend Television (LWT), and was offered £4 million per year, over four seasons in pursuance of live Arsenal, Tottenham Hotspur, Manchester United, Liverpool and Everton home games on ITV. Dyke intended to make the same offer to the fifteen other Premier League clubs.
By November 1991, BSkyB's interest in Premier League rights had become publicised. The company met with Noades and Chelsea chairman Ken Bates, though nothing came to fruition. Bates wanted an end to ITV's monopoly, whereas Noades felt pay-per-view (PPV) was the way forward. BSkyB's head of sport David Hill believed there was too much football and he wanted the season to be shortened much like the National Football League. Parry, present at the talks was unimpressed and recorded in his diary for 21 November 1991: "Shambles. Noades/Bates at cross purposes – ludicrous ideas from Hill!"
Dein in the meantime pursued an offer from a television consortium, funded by the Swiss Bank Corporation (SBC). They intended to create a football-only channel, available on the Astra satellite transponder. The Observer believed that in addition to broadcasting league matches, SBC would offer a selection of top clubs fees for airing matches against their European counterparts. Dein was impressed by the proposal – financier Chris Akers forecasted profits of up to £50 million – so he forwarded it to Parry. Although he too was impressed, SBC's offer eventually failed because of sponsorship doubts.
At the beginning of 1992 Parry favoured a deal with ITV, but thought the network should be prepared to pay up towards £30 million for live football. At a meeting in January 1992, Dyke made it clear ITV would not be positioned as they were already paying too much for football. He and executive director Trevor East commented on BSkyB's debt and felt the company would be forced to increase their borrowing if they were awarded a contract. This did not dissuade Quinton, who urged Murdoch to bid. Quinton even informed Chisholm that there were no bidding rules.
Before Sky made a formalised bid, Murdoch asked Chisholm to speak to Dyke about making a joint offer. The events of that meeting are vague, but what is clear was that Chisholm came to the decision of not working with ITV. He instead chose to pursue an alliance with the BBC, aware of the cultural importance of Match of the Day. In February 1992, Quinton met Murdoch over lunch to go over his expectations, with the idea of a Premier League dedicated channel high on his priority. ITV had in the same month revealed plans to offer the league £80m over four years in exchange for exclusive rights. Dyke believed their deal would fend off BSkyB, but the BBC's quiet stance weakened ITV's position.
When the first bids had been tabled by March 1992, Parry and Quinton enlisted the help of Academy, a market research company to look at sponsorship potential, and David Plowright for advice on broadcasting issues. SBC around this time submitted plans for a dedicated football channel and wrote to Parry about the long-term issues the league would face if they sold out to Sky. Chisholm was against a football-only channel; Parry recorded a meeting between the two in his diary for 12 March 1992:
Chisholm submitted his offer with the BBC, which promoted the return of Match of the Day. He told Parry that BSkyB would move its sports coverage on a subscription basis if they obtained rights – the network's revenues up until then "had derived entirely from conventional sales of advertising." To build up support, Sky aired the Footballers' Football Show – a highbrow programme that invited Premier League chairmen to offer insight about the sport. This tactic concerned ITV, who in the meantime prepared a bid for Football League rights as a fall back. Nearer the time of the vote, Sky invited Parry to their facilities in Livingston. He was given time to speak to Murdoch, who promised him his newspapers would back the Premier League if BSkyB won rights.
In April 1992, ITV offered Parry an improved bid of £34 million per year, which bettered the BBC's joint-bid with BSkyB. East was confident of closing the deal – he was supported by 11 club chairmen and was informed that ITV's rivals would have to come up with £100 million a year to better their offer. Parry was undecided as to which bid he preferred; though he favoured a non-exclusive deal with ITV, he wanted the reconsider its decision to work with subscription companies. He harboured the idea of a football channel and noted SBC's approval amongst other clubs. Parry also hoped BSkyB would increase their bid, which they later did.
"Blow them out of the water"