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Last month's bidding frenzy for the Champions League football games has reaffirmed the importance of owning the rights to broadcast the nation's leading sporting events.

The public's appetite for premium sport has never been greater, with sell-out games at Premier League football grounds, fans travelling thousands of miles to watch British boxers fight, and racing drivers narrowly losing the Formula One World Championship on foreign soil.

In this way, acquiring the rights to sporting jewels such as the Premier League or the Rugby World Cup is like winning the National Lottery for broadcasters. Holding the best rights gives broadcasters more power to attract viewers than ever before, as well as providing access to lucrative advertising deals, such as Sony's multi-million-pound sponsorship of the 2008 Formula One Championship on ITV.

Even the non-commercial BBC regards showing major sporting events as a huge coup, a display of strength that justifies its position as the UK's national broadcaster.

Last month, the BBC snapped up a five-year deal to broadcast Formula One motor racing from next year, after incumbent ITV exercised its right to break its deal with the sport's governing body, the FIA. The BBC has not officially confirmed the amount it paid for the five-year deal, but at an estimated £40m per year, it is significantly higher than the £29m per year paid by ITV for its existing five-year deal, to cease at the end of the current season.

ITV's decision to end its Formula One rights deal allowed it to prioritise retaining the first-choice TV, internet and mobile rights for the Champions League matches for 2009-2012, which it won for £165m, after BSkyB secured the remaining share of the rights for £240m.

ITV, which described its sports strategy as "a straightforward commercial decision", seems to be concentrating its resources on prime-time television: typically, only three of the 18 Formula One races each season are staged at prime time.

With ITV facing increasing competition from digital channels such as Sky Sports, Setanta, Virgin Media and BT Vision, it was important for executive chairman Michael Grade to demonstrate his commitment to Britain's most popular sport.

There were four English teams in the quarter-finals of this year's competition. Grade is betting that such British success will continue and, with it, the huge audiences and advertising revenues.

The Uefa Champions League has been a huge success on ITV in recent years, with viewing figures for the 2006/07 season the highest since 2002/03 - helped by consistent British representation in the final stages of the competition, including the last three finals.

The competition's largest audience was for the 1999 final, when 19 million people tuned in to see Manchester United's epic victory over Bayern Munich.

Grade said: "I'm thrilled that ITV is now the definitive home for all premium free-to-air football in this country. This is good news for ITV's shareholders, advertisers and viewers. With Arsenal, Manchester United, Liverpool and Chelsea all through to the quarter-final stage this year, British representation in Europe has never been stronger."

The increased number of bidding broadcasters on the pitch has broken BSkyB's dominance of sporting events. While it still has the majority of football games on its channels, including the lion's share of the Premier League live rights, it has, according to most observers, seen that dominance broken. Hence, insiders at BSkyB suggest that the ongoing Ofcom inquiry into its so-called monopoly is a waste of time.

A BSkyB spokesperson, who does not wish to be named, says: "Firstly, channels such as ITV and Setanta claim there is huge competition for rights, and Setanta claims it is getting huge audiences. Then the same broadcaster claims to Ofcom that Sky is dominant. The two claims don't fit together. We bid for rights on a competitive basis. If we bid the most, we win, and if we don't, we lose. It's how competition works."

BSkyB's official line is more diplomatic, but there is little doubt that the broadcaster that built its reputation and revenues on the back of its sports coverage is rattled, not least by Setanta Sports, which teamed up with ITV last March to snatch the rights to the FA Cup and England home international games with an audacious £475m joint bid.

Innovative opportunities
Adam Rowland, director of sports marketing agency Fuse Sport, does not believe BSkyB's dominance is over, but feels Setanta and ITV's raid on BSkyB "will naturally be a cause for some concern".

He says: "Coupled with the proliferation of male-targeted channels such as Dave and sports channels such as Eurosport, Sky will naturally be checking over its shoulder while looking at innovative opportunities for the future."

The boxing market has certainly become a battleground between BSkyB and Setanta, with both broadcasters sharing big Ricky Hatton fights. Sky grabbed the major prize - the Floyd Mayweather fight - while Setanta boasted the "Battle of Britain" between Enzo Maccarinelli and David Haye, and will broadcast next week's super-fight between Joe Calzaghe and Bernard Hopkins.

ITV is attempting to restore itself as a credible boxing channel - a title it held during the 1990s with the epic battles between Chris Eubank, Nigel Benn and Michael Watson.

Rowland says: "The broadcaster can claim young protégé and Olympian Amir Khan in its camp. Unfortunately for ITV boxing, there is little else for the viewer or advertiser to get excited about, following limp battles between various cumbersome heavyweights."

The big bouts are usually held during the Saturday night prime-time TV schedule, leaving it bereft when a bout ends in the early rounds.

"Meanwhile," says Rowland, "the BBC makes do with repeats of the night's action, often a week later, which work for many sports fans who either don't subscribe to Sky or Setanta or can't be bothered waking up at 4.30 in the morning."

Vic Wakeling, managing director of Sky Sports, comments: "Sky Sports has given sports fans an unprecedented level of choice, which was very limited pre-Sky, with many events shown as late-night highlights. All channels have improved their coverage since then, but Sky Sports is still the pioneer. In the face of increasing competition from terrestrial and pay-TV competitors, we continue to invest in the content that matters."

Radio's renaissance
Of course, TV is not the only source for sports fans who enjoy following their heroes: radio is also enjoying a renaissance in the sports arena.

TalkSport has increased its live rights by purchasing World Cup and European Championship packages, along with affiliations with other sports bodies such as Twenty20 cricket, the International Rugby Board and the Football League.

A natural progression was to buy the secondary rights for the Premier League football games, once they became available, which allowed TalkSport to share the 3pm Saturday games with BBC Five Live and to broadcast a match once Five Live had had its pick.

These official acquisitions have made the station a more credible sports broadcaster, and have opened up potential advertising and sponsorship revenues. But in the age of digital television and the internet, sports rights are no longer merely about live broadcasts.

There's the "near live" football coverage that broadcasters such as BT Vision enjoy, live internet subscription services, direct to mobile coverage, and the multitude of extra viewing options provided by red button services.

For example, the deals for the Formula One and Champions League coverage are carefully structured to ensure that the authorities running the sporting events are being paid for each and every possible channel, hence the huge rise in fees.

And with the looming analogue switch-off over the next four years, sports broadcasters are preparing themselves for a seismic shift in coverage that could put the current battles for the rights to the Champions League to shame. At present, the "crown jewels" of British sport, which include the FA Cup Final, Wimbledon, the Open golf tournament, , the Grand National, the Olympics, the FIFA World Cup and the Uefa European Championships, are protected by the Government and must be shown on free-to-air television, available to at least 95% of the nation.

This means that the BBC, ITV, Channel 4 and Five are the only television broadcasters able to bid for these events. Five, which now reaches 96% of the population, was given Ofcom's permission to bid last month. However, as the digital switchover gathers pace, all this may change.

Nick Fitzpatrick, partner at law firm and media rights specialist DLA Piper, believes that once the entire nation is digital by 2012, there is no reason why only the traditional big three terrestrial broadcasters should dominate the crown jewels.

"The crown jewels are being reviewed by the Department for Culture, Media and Sport," says Fitzpatrick. "Once the UK is fully digital, there is no reason why Sky cannot bid for the rights to the FA Cup Final, Wimbledon or the Olympics. If Sky, Setanta or Virgin Media bid to put these events on one of their free-to-air channels, then why shouldn't they win them if everybody has access to them? This is going to result in some incredibly hotly contested bidding wars."

So it seems that we have seen nothing yet. If the rights to the Olympics - the BBC has the Olympics until 2012 - ever came on the market, the bidding war would make the scrum for the Champions League package look like a kids' picnic. Even without the crown jewels on the wider market, winning sports events is increasingly crucial to channels' success.

FuseSport's Rowland goes further, stating that sport is necessary to male-oriented channels.
"If media owners want men, then sport is a key to unlock these blokes, and football is the key to really open them up," he says. "The emergence of Setanta is proof that sport drives audience; similarly, Sky's dominance in this market is football-driven."

Even though female viewers may complain of too much sport on television, the major broadcasters will increasingly rely on major sporting events to pull in audiences. And, come the analogue switch-off, the gloves are off. Let the best team win