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BT is heading into a critical auction of UK Premier League rights with far less of a strut than when it first elbowed its way into the sports market four years ago.

Having spent £3.8bn on football rights since 2012, it has publicly checked its aggression ahead of the next auction, expected to kick off in February, which will decide who shows the 2019 to 2022 seasons.

The British telecoms group’s chief executive Gavin Patterson — who has spearheaded the company’s forceful push into sports — is already raising the prospect of losing BT’s rights to Premier League games.

“We have a Plan B,” he told a Morgan Stanley investor conference in Barcelona two weeks ago. “We are never in a situation where it is existential for us.”

He said the group’s ambition was to retain its position as a “strong number two” behind Sky in pay-TV sports.

Mr Patterson’s task in retaining football rights has grown harder as BT’s TV growth has stalled in recent months, after it started charging for its sports channels.

That, together with a number of other significant blows this year — including an accounting scandal in Italy, a profit warning, a hefty payout to its largest shareholder, Deutsche Telekom, and a record fine by the regulator Ofcom — has led to growing speculation about the chief executive’s position, particularly with the recent arrival of Jan du Plessis as BT’s new chairman.

Chart: Cost of Premier League broadcasting rights

The company’s share price has lost a third of its value this year, returning to lows not seen since well before the launch of BT Sports in the summer of 2013.

Meanwhile its top management team has — with the exception of Mr Patterson — been almost entirely overhauled in the past 18 months, with figures including John Petter, the head of the consumer arm and Delia Bushell, head of BT TV, leaving the business, in addition to the finance director and chairman.

Mr du Plessis has lent his support to Mr Patterson and, according to two people with direct knowledge of the situation, has stressed to top investors that he will continue to back his under-fire chief executive. The chairman supports BT’s sports strategy and believes the company could be making its “biggest mistake” if it is too cautious in the auction, says one of the people. The chairman issued a memo to all BT staff expressing his support for Mr Patterson when he formally took over from Sir Mike Rake in November.

But a loss of Premier League rights, considered to be the “crown jewels” of the sports rights sector, would force Mr Patterson back on the defensive.

“A loss of the rights, even if it were the financially prudent position in a potentially ruinous bidding war with Sky or Amazon, would unquestionably be a body-blow to the BT leadership team,” says Dhananjay Mirchandani, an analyst with Bernstein.

A move away from football could prove popular with some shareholders, however, who fear that the high inflation in the value of sports rights will continue to eat into BT’s profit margins, particularly if new bidders such as Facebook, Amazon and Discovery Communications target the Premier League.

Chart: Most expensive sports to broadcast

The cost of its move into football — £1.1bn this year alone when factoring in production costs — is equivalent to 22 per cent of BT’s consumer unit’s entire cost base and is no longer driving customer growth.

“These two companies have bid to kill and — if not that — fatally wound each other, and this behaviour has been visible in every major auction since 2012 and continues to this day,” says Claire Enders, founder of Enders Analysis.

Bernstein calculates that nearly 470,000 subscribers could quit BT if it loses sports rights, equivalent to £298m of revenue a year.

The analyst says BT’s “walkaway” price should be £1.3bn for the three-year package but that the company could aim much lower if it chooses to focus on improving the profitability of its sports channels.

BT has a safety blanket. It paid £1.2bn to retain its exclusive rights to show European football games for three more years in March — which it originally won for £900m in 2013 — and also has the rights to the FA Cup, MotoGP, the Ultimate Fighting Championship and the current Ashes cricket tour, which has driven renewals.

Still, a person with direct knowledge of the company’s plans says losing the Premier League would be a “real blow” given the weekly games are the “bread and butter” for sports broadcasting.

Apart from punting channels to BT’s EE mobile platform, which has a younger demographic than its core business, and pushing ahead with trials of new technology such as virtual reality, it is not clear what Mr Patterson’s “Plan B” is.

One upside for the company as it heads into the auction is that ratings are up 12 per cent this year. Mr Patterson, an ardent Liverpool FC fan has said “through gritted teeth” that the success of Manchester United this season has boosted viewing numbers for its sports channels and that would feed into the group’s plans for the bidding.

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