TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup...

15
TVSPORTSMARKETS • No.165 • 11 TVSPORTSMARKETS SPORTEL BRIEFING RIO DE JANEIRO March 2012

Transcript of TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup...

Page 1: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

TVSPORTSMARKETS • No.165 • 11

TVSPORTSMARKETS

SPORTEL BRIEFINGRio de janeiRo March 2012

Page 2: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

Dear Sportel Delegate,

A warm welcome to the TV Sports Markets Sportel Briefi ng for Sportel Rio 2012. Th e Briefi ng is designed to provide delegates with a recap of the big stories since the last Sportel conference, and a snapshot of the in-depth coverage of the industry that is available to TV Sports Markets subscribers.

You’ll fi nd a selection of articles from the TV Sports Markets newsletter beginning on page 18. Th e selection covers some of the most signifi cant and intriguing stories in the industry since last October, including: Eurosport’s big deals to hang on to French and US Open tennis rights; Al Jazeera’s grab of Champions League rights in France from Canal Plus; the International Association of Athletics Federations ditching IEC in Sports for the European Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia.

We have also produced a selection of feature articles exclusively for the briefi ng, including a top 10 of the most valuable sports rights deals in the world since Sportel Monaco last October, a map and analysis of the explosive growth in domestic league football rights fees in South America, and a feature on the companies trying to stimulate the rights market in sub-Saharan Africa.

For the very latest news from the sports television business, look out for the new edition of the TV Sports Markets newsletter, copies of which will be freely available from the press stand at Sportel Rio.

Our staff will also be present at the conference. Please feel free to get in touchusing the contact details below. For enquiries about accessing TV Sports Markets content, or advertising in the next edition of the Sportel Briefi ng, call Paul Santos, our business development manager.

We wish you a productive and enjoyable Sportel Rio 2012.

Frank DunneEditorTV Sports Markets

frank [email protected](mob) +39 34 95 84 64 23+39 051 523 815

kevin Mccullaghdigital News [email protected](mob) +44 78 55 36 37 06+44 207 954 3509

dan horlockSenior [email protected](mob) +44 75 05 73 67 30+44 207 954 3283

paul santoshead of Sales & [email protected](mob) +44 79 31 39 05 02+44 207 954 3483

hady al-MalaziSenior account [email protected](mob) +44 7866689444+44 207 954 3484

the tV spoRts MaRkets teaM

www.tVSportSMarkEtS.coM

spoRtel bRiefing | March 2012

contents

48 bEyoNd thE old coNtiNENt� e big sports rights agencies are gaining strategic footholds in the ‘Brics’ and other emerging markets.

50 MEtEoric riSES for local footballSouth America’s football leagues are enjoying huge growth in domestic rights fees.

53 thE top 10 dEalS� e 10 most valuable sports rights deals since Sportel Monaco 2011.

54 califorNia StrEaMiNgGoogle and Apple have been linked with major rights buys, but are not expected to seriously challenge yet.

56 ioc aNd uEfa warM to pay-tVHow pay-television shifts could impact audiences for this summer’s biggest sports events.

58 thE froNtiErSMEN� e companies that could reignite rights fee growth in sub-Saharan Africa.

60 thE big dEbatEFour industry leaders on the impact of the mounting Eurozone economic problems on rights fees.

62 NEwS rEViEwCuttings from the news pages of TV Sports Markets since October 2011.

66 adVErtiSEr profilESPro� les and contact details of our advertisers.

Experienced, innovative and with a reputation for delivering high quality services, Infront Sports & Media is one of the leading full-service sports marketing companies in the world, helping to transform the way we all view sport.

As major distributor and producer of live sports content, Infront offers exclusive access to the world’s greatest events.

At SPORTELRio we are presenting our prestigious media rights portfolio, including fi rst class international football rights (e.g. home matches of German national team, Lega Serie A), the FIM Superbike World Championship, the Ironman Series, the IIHF Ice Hockey World Championship and many others.

Infront – Our experience. Shared passion. Your success.

Give your audiences access to some of the most excitingsports coverage the world has yet seen.

www.infrontsports.com

SHARING THE BIG MOMENTS

We look forward to meeting you at

SPORTELRio from 12 – 14 March 2012:

Infront stand B19 – B22

SportBusiness International • No.176 • 03.12 47

Page 3: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

spoRtel bRiefing | March 2012

BEYOND ThE OLD cONTINENT fRank dunne, Editor of tV SportS MarkEtS, lookS at how SEVEral of thE iNduStry’S Major SportS rightS agENciES arE gaiNiNg a StratEgic foothold iN thE world’S MoSt rapidly dEVElopiNg MarkEtS.

The bulk of the value of the global sports rights market lies in two regions, the US and Europe, and will continue to do so for many years. But the tectonic plates of the world’s economy have been shifting irreversibly over the last 20 years and while the US and European economies flatline, there has been exuberant growth in Asia and Latin America.

Agencies have been forced to expand their horizons to make sure that they do not miss out on the potential these markets represent. Major players like IMG Media, Infront Sports & Media, Lagardère Unlimited and MP & Silva are jostling to secure strategic long-term positions in these territories.

Lagardère Unlimited has been expanding its Stadium Solutions division on the bedrock of the work that its Sportfive subsidiary has done in Europe in the sector. With Brazil and Russia set to host the Fifa World Cup in the next six years, two of the world’s growth markets are presenting a golden opportunity. Ulrik Ruhnau, managing director of Lagadère Unlimited Stadium Solutions, told TV Sports Markets that the company intended to be fully involved in both countries. The company is currently heavily involved in talks with potential partners in Brazil.

“Brazil is a highly attractive market for us,” Ruhnau said. “It has a young population

and a good economic growth rate. It is a market which is good for sport, particularly football. There is a really strong emotional attachment to the game there. So it’s a country which is attractive for the entire Lagardère Unlimited group.” A successful stadium venture could open up opportunities in the region for other Lagardère activities, such as football club or federation marketing.

The Brazilian football federation has selected 12 stadiums for the 2014 World Cup and well over $1 billion (€763 million) is expected to be spent on stadium renovation alone. Ruhnau said that Lagardère had “identified several projects where we can integrate our know-how. We want to be involved, post-construction and after the World Cup, in the usage and management of facilities for the long term. Over the last 24 months all the big players have been in Brazil, but with a few exceptions, things are still open.”

The company’s preference is to agree long-term stadium management agreements, which

typically run for between 10 and 20 years. “We position ourselves as a one-stop solution for stadium owners. We have a background in football marketing with many top European football clubs, so we understand marketing and sales and how to manage match-day activities. We want to actively demonstrate what we say when consulting. We are not just some theoretical guys, we are hands-on. We

know how to plan intelligently so that a stadium can deliver for its owners in the long term, not just for three to five matches during a World Cup,” he said.

While the rewards in the stadium business can be high, Ruhnau pointed out that there are also risks. “In football stadiums, about 70 to 80 per cent of the economic success is related to the key tenant. In Brazil, as in other

football countries, that usually means the home club. A further 10 to 15 per cent could be linked to concerts and other major events hosted by the stadium. The rest comes from conferences, stadium tours and other activities. There is insecurity in the business plan because a club could be relegated to the second- or third-tier league.”

MP & Silva is another agency with a European DNA which is increasingly looking further afield. The agency has expanded its operations in Asia to the point where business in the region now accounts for over a third of its turnover. Among other sports content,

“China, Brazil and India are complex and difficult markets, and having powerful, well-resourced and influential partners is vital.” iMg Media

48 SportBusiness International • No.176 • 03.12

Page 4: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

the agency distributes football rights for top leagues such as England’s Premier League, Italy’s Serie A and Spain’s La Liga. “Today, we are the leading international agency in Asia for football,” company chief executive Andrea Radrizzani told TV Sports Markets.

The agency has created strong broadcaster relationships in two Asian markets – Japan and Vietnam – where other rights-holders have sometimes struggled to get value. “Our success in those two markets is based on an innovative approach: we offer customised content packages based on the scheduling possibilities and budgets of broadcasters,” Radrizzani said.

“The first phase of our Asian presence,” he added, “was based on supporting rights-holders to penetrate in new and unknown markets. The next phase was to build MP & Silva’s wide portfolio of rights and provide additional services to rights-holders in terms of financial guarantees, distribution, reports and marketing.”

The most recent example of the agency’s development in the region came with the deal in January with the Olympic Council of Asia to distribute the global media rights for the 2014 Asian Games. “Having the chance to be part of the Asian Games’ media strategy and distribution is incredibly rewarding for us,” Radrizzani said. “We will also act as media adviser in order to guarantee the highest level of production guidelines and

innovation – including digital strategy and on social media portals. Our objective is to contribute to the success of the Olympic Asian sports movement and improve its reach to other regions of the world.”

Infront Sports & Media has looked to China and to basketball as part of its expansion. It began working on marketing and development with the Chinese Basketball Association in 2005 and last year renewed its deal through to 2018. The agency has helped to secure more live coverage for the CBA league on state channel CCTV5 and increased exposure on regional networks across China. Perhaps more significantly as a staging post in the league’s growth, it is being broadcast for the first time to the North American market through a deal with One World Sports, the Asian sports broadcaster.

Basketball is likely to be just the bridgehead, with the agency now studying other sports properties in the country. Infront told TV Sports Markets: “Since the beginning of our collaboration with the Chinese Basketball Association, we have established a strong position and reputation in the Chinese sports market. This leading position in China is of high strategic importance for the Infront Group, as it guarantees access to one of the world’s strongest growth markets and a flourishing economy. Infront is connecting internationally successful sport disciplines and brands to

the attractive Asian market and vice versa.” The key strategic instrument in the global

expansion of IMG Media has been the joint venture, which has been the agency’s gateway to China, Brazil and India. “Each is a complex and difficult market for a combination of political and cultural reasons and having powerful, well-resourced and influential partners,” a director of IMG said.

The contacts book of the late Ted Forstmann, the former owner of IMG, ensured that the agency’s chosen partners had those qualities – power, influence and money – in abundance. In 2011, IMG’s Indian joint-venture partner Mukesh Ambani was ninth in the Forbes rich list, with a net worth of $22.6 billion. One place ahead of him was IMG’s partner in Brazil, Eike Batista, chairman of the EBX group, with a net worth of $30 billion. In China, IMG has partnered with the state broadcaster CCTV which, directly or indirectly, controls pretty much everything that moves in the broadcaster market of the world’s most populous nation.

In India, the fruits of the venture have been a 15-year, $160 million agreement with the All India Football Federation to develop the game at all levels in the country, and a 30-year deal with the Basketball Federation of India to do the same. IMG recently held talks with David Stern, commissioner of US basketball league the NBA, about establishing a professional basketball league in the country.

SportBusiness International • No.176 • 03.12 49

Getty Images Sport

Page 5: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

spoRtel bRiefing | March 2012

the south aMeRican sports media market is booming and the region’s dominant sport – football – is central to the rise, dominating the sporting landscape.

International football properties including the Uefa Champions League/Europa League, Italy’s Serie A and Spain’s La Liga have all recently seen huge increases in the region in their new deals. But the most valuable football properties in each territory are the domestic leagues.

The size of some of the percentage increases (see map) highlights the infancy of the media markets in some of these territories and the rapid growth they have experienced in recent years. Brazil and Argentina have the most valuable leagues but, as more mature markets, their rate of growth is slower.

In Colombia, the league’s governing body has targeted a 1,500-per-cent fee increase for the five-year period from 2012 to 2016, compared to the previous contract.

At time of going to print, the Dimayor (División Mayor del Fútbol Profesional Colombiano), the body responsible for the country’s top two divisions, had only managed to raise close to 20 per cent of its $260 million (€198 million) target, signing non-exclusive deals with pay-television broadcasters DirecTV and Supercable, and cable operator Comunitarias TV.

The Dimayor, until now, has stood firm on its strategy of selling the rights on a non-exclusive basis, setting a price for each bidder related to the size of the operator’s customer base. It has refused to accept a joint bid from incumbent rights-holder Alianza, a joint venture between Colombia’s two largest

cable operators Une and Telmex, and telco Telefónica, which is significantly lower than the proposed figure of more than $200 million.

The other reason for the scale of the increase was the extremely low fee in the previous five-year contract from 2007 to 2011, which was the first ever pay-television contract for Colombian football.

First and second-tier league football in Chile is shown on the Canal del Fútbol, the league’s own channel. The 295 per cent increase is based on a comparison of the rights fee in the last season of the last rights agreement between the league and pay-television broadcaster DirecTV in 2002, and the two revenue streams (the rights fee and the profits from the channel’s distribution) generated by the channel in 2011.

The channel was launched in 2003 and turned profitable in 2008, after five years of either making losses or breaking even. In October 2010, the consultancy PricewaterhouseCoopers valued it at close to $700 million.

In terms of a straight broadcaster/rights-holder agreement, the biggest percentage increase in the region was in Paraguay, at 275 per cent. The steep increase from the previous deal was due to intense competition in the market between incumbent rights-holder, sports broadcaster Teledeportes, owned by the Argentinian media group Grupo Clarín, and telco Tigo, a subsidiary of Millicom International Cellular. Teledeportes’ new eight-year deal will begin in 2013.

The projected 240-per-cent increase in Uruguay is based on a value that is yet to be realised in the new deal. Earlier this

year, the Asociación Uruguaya de Fútbol, the Uruguayan football association, which sells the rights for Uruguay’s first- and second-tier football leagues, accepted an offer from incumbent rights-holder the Tenfield agency to extend its contract until 2021. The offer included an increased fee for the remainder of the current contract period, running until 2016, as well as an increase in the new term, beginning in 2017.

However, the association has now taken the unusual step of giving up its collective selling role to allow the 29 clubs to individually negotiate their own media-rights deals. It made the decision, some local experts claim, in an attempt to scupper the collectively-agreed extension with Tenfield. The association has been working behind the scenes to put together a better offer for the clubs, which could include launching its own channel.

Brazil, the biggest market in the region by some margin, has by far the most valuable domestic league, Campeonato Série A, worth about $600 million per season. It is also the most valuable sports-rights property in Latin America.

The 140-per-cent increase in rights fees from the previous deal followed the move from collective selling with Clube dos 13, the organisation which had previously represented the top 20 football clubs in Brazil, to individual selling by the clubs. Brazilian media group Globo negotiated deals ranging from three to four years with individual clubs, covering the period 2012 to 2015.

The Clube dos 13 had issued a tender in mid-February 2011, which was cancelled after Globo and rival

METEOrIc rISES FOr LOcaL FOOTBaLL

dan hoRlock lookS at thE big iNcrEaSES iN doMEStic football rightS fEES iN South aMErica

50 SportBusiness International • No.176 • 03.12

Page 6: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

1500%

140%

35%

20%

5%

275%

240%

295%

140%

broadcaster Record refused to take part. Th e Argentinian Primera División

is the region’s second-biggest league in terms of rights value, although the 140-per-cent increase it achieved for its most recent contract was infl ated due to political intervention.

In 2009, the Argentinian government launched its ‘fútbol para todos’ (‘football for everyone’) scheme in which it acquired the broadcasting rights to the league from 2009-10 to 2018-19 to ensure matches were shown on free-to-air television. Th e government has made huge losses on the rights.

Th e government deal replaced a seven-year agreement, from 2007-08 to 2013-14, between Televisión Satelital Codifi cada, which is owned by the Torneos y Competencias agency and Grupo Clarín, and the Asociación del Fútbol Argentino, the Argentinian football association. Th e matches were broadcast on pay-television under the old deal.

In Ecuador, the expected 35-per-cent rise in the fee for the top-tier football league, Serie A, is based on the prospective centralisation of the league’s media rights from next season by the Federación Ecuatoriana de Fútbol, the Ecuadorian football federation. At present the clubs sell their own media rights. However, the federation faces serious opposition to the centralisation plan. Th e seven clubs that oppose it at present earn close to 80 per cent of the total value of the Serie A rights.

Venezuela is the only South American country where football is not the national sport, although interest is growing, especially in light of the country’s improving national team. Venezuela reached the semi-fi nal stage at last year’s Copa América.

DirecTV and free-to-air broadcaster Meridiano Televisión jointly acquired rights for the Primera División from the Federación Venezolana de Fútbol, the Venezuelan football federation. DirecTV is the senior partner in the agreement, which covers 2010-11 to 2012-13. Th e fee is a 20-per-cent rise on the previous three-year deal with pay-television operator Sport Plus.

Th e top-tier league in Bolivia, the region’s poorest nation, has the smallest media-rights value. State-owned telco Entel signed a six-year deal for the rights, from 2010 to 2015, which was up only fi ve per cent from the previous deal with commercial broadcaster Unitel.

PrOJEcTED aND SEcUrED PErcENTaGE INcrEaSES IN DOMESTIc rIGhTS FEES FOr LOcaL FOOTBaLL LEaGUES

uRuguay

aRgentina

paRaguay

boliVia

bRaZil

chile

ecuadoR

coloMbia

VeneZuela

Page 7: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

the biggest deal of 2011 was signed at the end of the year, as US networks CBS, Fox and NBC acquired rights for American football’s National Football League worth a combined $27.9 billion (€23.3 billion) over nine years, or $3.1 billion per year. The deal, which will begin from the 2014-15 season, was a 63-per-cent increase on the three broadcasters’ current deals worth $1.9 billion per year. The three networks will each televise three Super Bowls during the term of the deals, continuing the current rotation.

Another deal signed in December was US regional sports network Fox Sports West’s reported $3 billion agreement with Major League Baseball’s Los Angeles Angels of Anaheim. The Angels had market conditions in their favour during the negotiations, with Fox keen to secure the rights due to a dispute with another MLB team, the Los Angeles Dodgers, which could have resulted in the broadcaster losing the rights to Dodgers matches. Fox had also lost the rights for National Basketball Association team the Los Angeles Lakers to rival network Time Warner Cable earlier in the year. The Angels’ new deal begins in 2012.

Completing a US top three was the Fifa World Cup deal for 2018 and 2022 with pay-television broadcaster Fox, Spanish-language broadcaster Telemundo, owned by NBCU, and Spanish-language radio operator Fútbol de Primera, worth a combined $1.1 billion. The deal represented a 159-per-cent increase on the $425 million that football’s world governing body generated from the US market for the 2010 and 2014 tournaments.

Fifa’s second entry in the top 10 was for its 2018 and 2022 World Cup rights in Asia, in a deal with the Infront Sports & Media agency worth $600 million. The deal was up over 70 per cent from the $350 million paid by Football Media Services, a joint venture between the Dentsu agency and Infront, for the 2007-2014 rights period, covering the 2010 and 2014 World Cups. Both deals excluded the lucrative markets of Japan, Korea and Malaysia.

At number five, and ensuring US

dominance at the top of the deals table, was pay-television sports broadcaster ESPN’s 13-year extension, from 2011 to 2024, to its deal with the National Collegiate Athletic Association, the US college sport organising body, worth just over $500 million. The deal covers non-exclusive rights outside the US, its territories and Bermuda to the Division I men’s basketball championship – the annual ‘March Madness’ tournament – and rights in the US to 24 other NCAA championships.

The MP & Silva agency’s acquisition of the international rights for Lega Serie A, Italy’s top football league, worth €351 million ($460 million) over three seasons from 2012-13, was the most valuable European deal over the period. The deal represented a 29-per-cent increase on the €90.75 million per season MP & Silva pays in its current two-year deal for the rights.

The first of two French deals in the top 10 was for the rights to the Uefa Champions League for three seasons from 2012-13. Pay-television broadcasters Al Jazeera and Canal Plus paid €183 million and €150 million respectively for the rights, giving Uefa a combined income of €333 million, or €111 million per season, up from about €56 million per season at present. The deal marked a new era for the competition in France, as rights-holder Uefa,

European football’s governing body, agreed for all live matches except the final to be shown exclusively on pay-television for the first time.

The biggest deal in the UK over the period was the England and Wales Cricket Board’s renewal with pay-television operator BSkyB, understood to be worth about £240 million (€286 million/$377 million) over four years from 2014 to 2017. The amount was down by eight per cent on the value of the ECB’s current deal, which expires in 2013.

The second deal in France to make the top 10 was Al Jazeera’s €240 million, four-year deal with the Ligue de Football Professionel, the French football league, for a package of live domestic rights for the top-tier Ligue 1. The deal covers pay-per-view rights for six live Ligue 1 matches per week, plus a weekly highlights show. Al Jazeera is paying a further €360 million in the same cycle for two other live matches per week under a deal with the league agreed last year. Al Jazeera plans to launch two pay-television channels in France this year.

Concluding the top 10 is UK public-service broadcaster the BBC’s £41 million-per-year deal for Six Nations rugby union rights. The fee remained flat from the previous agreement and shed light on the broadcaster’s priorities, as it implements a 15-per-cent cut in its sports-rights budget.

ThE TOP 10 DEaLS dan hoRlock lookS at thE MoSt ValuablE SportS rightS dEalS SiNcE SportEl MoNaco 2011

top ten deals since Sportel Monaco 2011

Property SportTerritories covered Value

Duration (years) Buyer

1 NFL American Football US $27.9bn 9 CBS/Fox/NBC

2 MLB: Los Angeles Angels of Anaheim Baseball US $3bn 20 Fox Sports West

3 Fifa World Cup and other events Football US $1.1bn 8 Fox/Telemundo

4 Fifa World Cup and other events Football Asia* $600m 8 Infront Sports & Media

5 NCAA US College Sport US $500m 13 ESPN

6 Italian Serie A Football International $460m 3 MP & Silva

7 Uefa Champions League Football France $436m 3 Al Jazeera/Canal Plus

8 England and Wales Cricket Board Cricket UK $377m 4 BSkyB

9 French Ligue 1 Football France $314m 4 Al Jazeera

10 Six Nations Rugby Union UK $257m 4 BBC

Based on the exchange rates on January 31: €1 = $1.31 / £1 = $1.57*Deal excludes the markets of Japan, Korea and Malaysia.

spoRtel bRiefing | March 2012

SportelRio_223x275mm.indd 1 10/01/12 12:03:56

SportBusiness International • No.176 • 03.12 53

Page 8: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

THE BIGGEST DEAL of 2011 was signed at the end of the year, as US networks CBS, Fox and NBC acquired rights for American football’s National Football League worth a combined $27.9 billion (€23.3 billion) over nine years, or $3.1 billion per year. The deal, which will begin from the 2014-15 season, was a 63-per-cent increase on the three broadcasters’ current deals worth $1.9 billion per year. The three networks will each televise three Super Bowls during the term of the deals, continuing the current rotation.

Another deal signed in December was US regional sports network Fox Sports West’s reported $3 billion agreement with Major League Baseball’s Los Angeles Angels of Anaheim. The Angels had market conditions in their favour during the negotiations, with Fox keen to secure the rights due to a dispute with another MLB team, the Los Angeles Dodgers, which could have resulted in the broadcaster losing the rights to Dodgers matches. Fox had also lost the rights for National Basketball Association team the Los Angeles Lakers to rival network Time Warner Cable earlier in the year. The Angels’ new deal begins in 2012.

Completing a US top three was the Fifa World Cup deal for 2018 and 2022 with pay-television broadcaster Fox, Spanish-language broadcaster Telemundo, owned by NBCU, and Spanish-language radio operator Fútbol de Primera, worth a combined $1.1 billion. The deal represented a 159-per-cent increase on the $425 million that football’s world governing body generated from the US market for the 2010 and 2014 tournaments.

Fifa’s second entry in the top 10 was for its 2018 and 2022 World Cup rights in Asia, in a deal with the Infront Sports & Media agency worth $600 million. The deal was up over 70 per cent from the $350 million paid by Football Media Services, a joint venture between the Dentsu agency and Infront, for the 2007-2014 rights period, covering the 2010 and 2014 World Cups. Both deals excluded the lucrative markets of Japan, Korea and Malaysia.

At number five, and ensuring US

dominance at the top of the deals table, was pay-television sports broadcaster ESPN’s 13-year extension, from 2011 to 2024, to its deal with the National Collegiate Athletic Association, the US college sport organising body, worth just over $500 million. The deal covers non-exclusive rights outside the US, its territories and Bermuda to the Division I men’s basketball championship – the annual ‘March Madness’ tournament – and rights in the US to 24 other NCAA championships.

The MP & Silva agency’s acquisition of the international rights for Lega Serie A, Italy’s top football league, worth €351 million ($460 million) over three seasons from 2012-13, was the most valuable European deal over the period. The deal represented a 29-per-cent increase on the €90.75 million per season MP & Silva pays in its current two-year deal for the rights.

The first of two French deals in the top 10 was for the rights to the Uefa Champions League for three seasons from 2012-13. Pay-television broadcasters Al Jazeera and Canal Plus paid €183 million and €150 million respectively for the rights, giving Uefa a combined income of €333 million, or €111 million per season, up from about €56 million per season at present. The deal marked a new era for the competition in France, as rights-holder Uefa,

European football’s governing body, agreed for all live matches except the final to be shown exclusively on pay-television for the first time.

The biggest deal in the UK over the period was the England and Wales Cricket Board’s renewal with pay-television operator BSkyB, understood to be worth about £240 million (€286 million/$377 million) over four years from 2014 to 2017. The amount was slightly down on the value of the ECB’s current deal, which expires in 2013.

The second deal in France to make the top 10 was Al Jazeera’s €240 million, four-year deal with the Ligue de Football Professionel, the French football league, for a package of live domestic rights for the top-tier Ligue 1. The deal covers pay-per-view rights for six live Ligue 1 matches per week, plus a weekly highlights show. Al Jazeera is paying a further €360 million in the same cycle for two other live matches per week under a deal with the league agreed last year. Al Jazeera plans to launch two pay-television channels in France this year.

Concluding the top 10 is UK public-service broadcaster the BBC’s £41 million-per-year deal for Six Nations rugby union rights. The fee remained flat from the previous agreement and shed light on the broadcaster’s priorities, as it implements a 15-per-cent cut in its sports-rights budget.

THE TOP 10 DEALS DAN HORLOCK LOOKS AT THE MOST VALUABLE SPORTS RIGHTS DEALS SINCE SPORTEL MONACO 2011

Top Ten Deals since Sportel Monaco 2011

Property SportTerritories covered Value

Duration (years) Buyer

1 NFL American Football US $27.9bn 9 CBS/Fox/NBC

2 MLB: Los Angeles Angels of Anaheim Baseball US $3bn 20 Fox Sports West

3 Fifa World Cup and other events Football US $1.1bn 8 Fox/Telemundo

4 Fifa World Cup and other events Football Asia* $600m 8 Infront Sports & Media

5 NCAA US College Sport US $500m 13 ESPN

6 Italian Serie A Football International $460m 3 MP & Silva

7 Uefa Champions League Football France $436m 3 Al Jazeera/Canal Plus

8 England and Wales Cricket Board Cricket UK $377m 4 BSkyB

9 French Ligue 1 Football France $314m 4 Al Jazeera

10 Six Nations Rugby Union UK $257m 4 BBC

Based on the exchange rates on January 31: €1 = $1.31 / £1 = $1.57*Deal excludes the markets of Japan, Korea and Malaysia.

SpORTEL BRIEfING | MArcH 2012

SportBusiness International • No.176 • 03.12 53

Page 9: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

upfront guarantees for the IPL and Copa America on YouTube are understood to have been about $1 million – relatively small figures for live and international rights for top sports content. Given Apple and Google’s standing in the smartphone market and need to push their television products, how close are they to ramping up their interest in sports rights, and competing for top-end content like English Premier League domestic live rights?

The evidence to date suggests that the world’s leading sports broadcasters are not under threat from Apple’s and Google’s billions in the short term. Google looks most likely to acquire sports content, but only where it can do so cheaply and the content will drive large audiences to YouTube.

YouTube is understood to be having conversations with most major rights-holders. The company’s focus is on live rights for premium sports in territories where internet penetration is high and so the potential audience large. However, it is thought to be targeting rights valued with “six or seven zeros rather than eight,” one insider said.

The English Premier League rights in China would fall perfectly into this bracket. The rights are currently valued at $12 million per year and have the potential to attract tens of millions of viewers. Streaming the matches for free on YouTube in an advertising-funded business model would be sensible business for Google and could also be attractive for the Premier League as it would mean wide exposure in a strategically-important

market. Especially considering the only broadcaster offering nationwide free-to-air coverage – state broadcaster CCTV – is notorious for paying low rights fees.

Google’s recent recruitments suggest that its appetite for sport is growing. Stephen Nuttall, former commercial director at BSkyB, joined in January as YouTube’s senior director for sport in the Europe, Middle East and Africa region. He will work alongside the likes of former Eurosport head of business development Tomos Grace (strategic partner and development manager of sport for Europe, Middle East and Africa) and former Terra head of content distribution and Globosat head of content sales and distribution Federico Goldenberg (content partnerships at YouTube Brazil).

Apple is considered less likely to enter the races for premium exclusive sports content. For a start, it has no online streaming platform like YouTube. Apple’s iTunes media download service is a successful retail system but is set-up for on-demand, not live content.

There are similarities in the two companies’ current business models that suggest the time is not right for them to take a big step into sports content acquisition.

Both Apple’s and Google’s television products are so far targeting the video-on-demand market rather than the live content market. As such, Apple TV and Google TV are considered platforms that consumers use in addition to pay-television, rather than offering an alternative to existing services.

Two digital media experts who have

worked closely with the companies say that neither Google nor Apple is yet in a position to challenge established television broadcasters for exclusive premium pay-television sports rights in major markets. Both say that Apple and Google’s positions in the mobile, tablet and connected television spaces mean the two already make money from live sports broadcasting without having to pay rights fees. There is as yet no need for them to make the leap from being the partner of sports broadcasters to being their competitor.

“YouTube would be crazy to go ahead and compete with established broadcasters for high-value sports rights, competing against people that they are and should be working with,” said one. “And why should they pay to acquire second- or third-tier sports rights when they don’t have to? The business model they have at the moment – partnering with rights-holders and broadcasters and giving them a revenue share of advertising – is a good one.

“The broadcasters remain in the best position to keep control of the sports distribution business, as the visionary ones continue to grow their service offering to consumers. They have existing rights and they are in the best position to extend their reach to additional platforms. Adding a new platform – web, tablet, smartphone and even OTT (over-the-top – television delivered via the internet) – is less effort for them because they’re already investing in the sports business.”

SportBusiness International • No.176 • 03.12 55

Page 10: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

sportel briefing | march 2012

UefA, eUropeAn footbAll’s governing body, and the International Olympic Committee have enjoyed massive and growing television audiences in Europe’s top five markets for the European football championships and the Summer Olympic Games in the last two decades.

But changes in broadcast rights sales strategies by both rights-holders is set to hit the overall number of television viewers for each event this year. Coverage in some territories has shifted to pay-television for the first time as the rights-holders have sacrificed viewer numbers to protect their rights fee income.

Until now, the Euro and the Summer Olympic Games were staple programming for free-to-air broadcasters. The free-to-air exposure yielded big audiences in France, Germany, Italy, Spain and the UK. For Euro 2008, the last edition of Uefa’s European football championships, the total average live audience per match across the five markets was 40 million viewers, according to a special survey by Eurodata TV Worldwide. The highest average in the period surveyed was for Euro 2004, which attracted 41 million per match.

By comparison, the Olympics in 2008 attracted a total average audience for live coverage of 7.6 million viewers. The top average of the last 20 years for an Olympics was also in 2004, drawing just over 11 million.

olympics pAy-tV shiftThe European Broadcasting Union, the consortium of public service broadcasters, has been the traditional buyer of Olympics rights in Europe. But the 2012 Olympics could be the last bought by the EBU, as the IOC has embarked on a market-by-market sales

approach for the 2014 and 2016 Olympics. The EBU’s grip had slipped already in the

sale of 2012 Olympics rights. Italy was carved out of the deal between the EBU and the IOC for the 2012 Olympics because Italian public-service broadcaster Rai refused to make the financial commitment expected by the EBU. The IOC was left to negotiate a deal for the Italian rights itself and did so with pay-television operator Sky Italia.

Rai will still show 200 hours of coverage of this year’s Games as Sky was obliged – both by the IOC and Italian listed events legislation – to sublicense some rights to a free-to-air broadcaster. In 2008, when it had the rights via the EBU, Rai broadcast 328 hours on its Rai 2 channel. With the majority of coverage this year being on Sky Italia’s premium channels, which have a limited penetration, the average Italian audience for the Olympics will drop.

The IOC will hope that Sky Italia’s commitment to extensive coverage – it has said it will show as much of the 5,000 hours available as it can, backed up by aggressive marketing and promotion – combined with Rai’s exposure will ensure the cumulative number of viewers in Italy across the 17 days of the event will remain unchanged.

One factor which could increase audiences for the event in the top European markets beyond the 2004 record is the two-hour time difference between the 2004 Olympics and this year’s event, which means that there will be more live coverage later in central European primetime schedules, when many more viewers will be watching television.

In addition, it is likely that viewing in the UK will be unusually strong as it is the host country. The extent to which UK average audience levels will increase will be mitigated

by the fact that public-service broadcaster the BBC will be showing coverage across a number of channels, fragmenting the audience. The fragmentation should on the other hand boost the cumulative audience figure.

For the IOC, while average and cumulative audiences across Europe may not match previous Olympics, it is achieving the widest possible exposure in Italy in terms of the sports that will be shown on television, and also maximising its financial return in terms of rights fees.

Public-service broadcasters with a wide programming remit like Rai are limited in how much Olympic coverage they can show on their free-to-air channels. Although some show additional content on digital channels and their websites, they cannot match the combination of breadth of coverage and the money pay-television broadcasters are willing to offer.

UefA considers pAy-tVUefa has indicated that it may consider a sales strategy mixing free-to-air and pay-television in the top five European markets. Uefa, along with football’s world governing body Fifa, has unsuccessfully challenged the UK’s listed-events legislation, which states all matches at the Euro must be broadcast free-to-air, in the General Court of the European Union.

As this publication went to press in late February, the Qatari pay-television broadcaster Al Jazeera was reported to be bidding strongly to acquire the rights for Euro 2012 and Euro 2016 in France. Uefa has faced tough negotiations in the country after free-to-air broadcasters failed to meet the federation’s financial expectations.

If Al Jazeera acquires the rights, French listed events legislation and Uefa’s own rules

IOc aND UEFa Warm TO PaY-TVCHANGING RIGHTS-HOLDER STRATEGIES COuLD HIT TELEVISION AuDIENCES FOR THIS YEAR’S FOOTBALL EuRO AND OLYMPICS. sportbUsiness intelligence AND eUrodAtA tV worldwide EXPLAIN WHY.

56 SportBusiness International • No.176 • 03.12

Page 11: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

spoRtel bRiefing | March 2012

Eurodata TV Worldwide

The only official provider of sport TV audiences

across all competitions from all over the world Order your Yearly Sport Key Facts

2011 issue including RWC, F1, UEFA CL

WE SPEAK TVContact:

Louis MAURAN, Head of Sport ServicesTel: +33(0) 1 47 58 36 56 - +33(0) 6 46 38 42 47

Email:[email protected] www.eurodatatv.com

will ensure that a certain number of matches are shown on free-to-air. Listed events legislation says that the fi nal and semi-fi nals must be free-to-air. Th e French press has reported that Uefa would demand 19 matches were shown free-to-air. If the remaining matches were on pay-television, the average French audience would drop signifi cantly.

By selling Euro 2012 rights to Al Jazeera in France, Uefa would also scupper any chance of beating the total average audience record in the top European markets set in 2004. If free-to-air coverage in France is maintained, the record could be challenged.

Th e UK audience for the tournament will increase as the England team, which missed out on Euro 2008, has qualifi ed. Audiences for Euro 2008 in the UK dropped by 35 per cent compared to the previous event thanks to England’s absence from the tournament. Th e cumulative average across Europe didn’t drop signifi cantly only because of increased audiences in Germany and Spain as the respective national teams progressed to the fi nal.

total average audience in the top fi ve european markets for the uefa european championships and the summer olympic games

(000’s)

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5000

01992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Summer olympic games uefa European championship

Source: Eurodata TV Worldwide/Mediametrie/AGF Fernsehforschung/Auditel/BARB/Kantar Media

Page 12: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

spoRts Rights-holdeRs and agencies pondering the future of rights fees in sub-Saharan Africa should keep a close eye on three projects currently underway in the region.

The pay-television sector, which looked monopolised by pan-regional operator Supersport after the withdrawal from the market of would-be rivals GTV and HiTV, contains several ambitious new players, with the chasing pack led by Chinese company StarTimes.

In free-to-air television, two agencies are pursuing two very different sales strategies to generate fees from a notoriously difficult sector. The Sportfive agency, selling the Africa Cup of Nations and qualifiers, has taken a controversially hard line on rights fees with broadcasters that are not used to paying for

rights. The Octagon agency is going softer on rights fee demands, and boosting revenues by taking control of advertising inventory.

Sub-Saharan Africa ’s recent economic development, and its population and number of television homes, point to huge potential for rights fee growth. The region contained six of the world’s 10 fastest growing economies in 2000 to 2010 according to The Economist. It has 152 million households, of which only 37.5 million have a television and 7.5 million have pay-television.

However, the region still contains many of the poorest and most corrupt countries on earth, and the under-developed media industries mean that securing good rights fees, and rights fee growth, is anything but guaranteed.

Rising staRStarTimes is the focus of hope for growth in pay-television rights fees. European club football rights fees in particular soared from 2007 to 2009 when two pay-television operators emerged to challenge Supersport, the dominant force in the sector.

But the massive rights fee commitments made by pan-regional operator GTV and Nigerian operator HiTV proved too much for the companies. GTV went bust in 2007. HiTV withdrew from the market for top sports rights in 2010 after having difficulty making payments for its English Premier League and Uefa Champions League rights. Local press reports have said the company has subsequently experienced further financial difficulties.

ThE FrONTIErSMEN

keVin Mccullagh oN thE coMpaNiES who could kick-Start rightS fEE growth iN Sub-SaharaN africa.

58 SportBusiness International • No.176 • 03.12

Getty Images Sport

Page 13: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

spoRtel bRiefing | March 2012

StarTimes has shown more caution in the rights market so far. But it has played a role in recent fee growth. It bid for pan-regional rights for the English Premier League and the Uefa Champions League – two of the region’s biggest pay-television subscription drivers – the last time they were sold. It only narrowly lost out to Supersport last year in the bidding for Champions League pay-television rights.

StarTimes is one of a new breed of pay-television operators in sub-Saharan Africa trying to tap the market by offering a low-cost service – Star’s typically costing around $10 per month – with a relatively small number of channels. Multichoice, Supersport’s parent company, has built its business on expensive subscriptions – up to over $60 per month – and a larger selection of channels. Multichoice last year followed the new players into the low-cost market with a new service called GoTV, launched in Kenya, Nigeria, Uganda and Zambia.

Multichoice’s small number of subscribers outside its home territory of South Africa is indicative of the small size of the market for expensive pay-television in the region. The company had 5.2 million subscribers at the end of September 2011, of which 3.7 million were in South Africa, and 1.5 million in the rest of the region, of which around 600,000 are thought to be in Nigeria.

One of the reasons for local industry watchers’ confidence that StarTimes will seriously challenge Supersport is the Chinese company’s heavy infrastructure investment. It distributes its service on digital-terrestrial television networks which it builds itself, and via set-top boxes which it also builds itself.

StarTimes is the “one credible competitor” to Supersport, said one local agency executive. “They understand what it takes to survive in sub-Saharan Africa. They have the economic capacity. They are building their own infrastructure. If anybody competes with Supersport in Africa, it will be them.”

Star is not Multichoice’s only up-and-coming pay-television rival in the region. In Angola, satellite service Zap TV launched in the first quarter of 2010, joining DSTV and cable operator TV Cabo in the market, and had over 90,000 subscribers at the end of the second-quarter of 2011, paying an average of over $35 per month each. In East Africa, where the key territories include Kenya and Uganda, the Wananchi Group,

which owns cable-television platform Zuku, plans to challenge Multichoice’s dominance by launching a satellite platform. Satellite delivery will allow Zuku to reach more homes at a lower cost.

Supersport is not expected to be dislodged from its position as the region’s strongest sports broadcaster in the short term. The good news for rights-holders is that it has traditionally been aggressive in keeping hold of its content, paying rights-fee increases to keep out would-be rivals.

fRee-to-aiR battlesThe Octagon agency is currently pursuing an experimental sales strategy with the free-to-air rights for the London 2012 Olympic Games that it hopes will generate profits in a notoriously difficult market. Free-to-air broadcasters in the region generally have little money, and a reputation for late and non-payment of rights fees. Octagon is selling the rights at relatively low prices to maximize exposure, then topping up its revenues by selling advertising on the pan-regional Olympics broadcast feed.

Octagon hopes to avoid the problems that the Sportfive agency had in the last year selling rights for the Africa Cup of Nations football tournament and its qualifiers. Several broadcasters balked at the prices Sportfive was asking. Corporate sponsors and governments stepped in to help the broadcasters pay the fees, and the agency suffered a storm of negative publicity in the local press.

Octagon’s model was pioneered by the agency and Fifa, football’s world governing body, in the sale of the free-to-air rights for the 2010 football World Cup. Under a three-way deal, Fifa and the African Union of Broadcasters – the pan-regional consortium of free-to-air broadcasters – worked together to sell the rights to broadcasters, and Octagon sold advertising time on the World Cup broadcast feed.

The agency sold a mixture of broadcast

sponsorship and 30-second spots to advertisers. Soft drinks company Coca-Cola and mobile phone operator MTN acquired a mixture of both, while pan-African bank Ecobank agreed a deal for 30-second spots only.

Octagon charged about $11,000 (€8,400) for a 30-second spot on the pan-regional feed. Audience measurement in the region is unreliable, so airtime cost cannot be sold on the usual cost-per-thousand (viewers) standard. As one rights-holder said, deal valuations are therefore often “seat of the pants stuff.” Octagon set the prices for its 2010 World Cup advertising spots by surveying broadcasters’ rate cards for advertising at the 2006 World Cup, and drawing on its own experience representing corporations advertising in the region.

Crucially for advertisers in such an unstable market, Octagon provided accurate measurement of the amount of airtime exposure advertisers got during the World Cup. This turned up some worrying results for the agency, and the future of their model. Some broadcasters did not

fulfil commitments to show all the central advertisers’ advertisements. The agency ended up having to pay compensation to the advertisers.

The project was a success for Fifa, which is understood to have quadrupled its income from the free-to-air rights in the region. It was considered a success for broadcasters, who got the rights at a low price, and

also benefited from a Fifa-funded training programme in football television production. Fifa used revenues from the sales to pay for workshops in match production and commentary which were attended by over 1,000 television industry professionals.

The project was not a total success for Octagon – the agency is understood to have at best broken even, partly because of the compensation paid to the advertisers. However, the sales were encouraging enough that it is pursuing the model again in the 2012 Olympics sales.

“We know there is a market. There are pan-African brands crying out for pan-African television exposure,” said Jonathan Riley, Octagon’s head of sales, broadcasting and media in the region. “We just have to make sure the broadcasters comply with the agreements to show centrally sold advertisements.”

“StarTimes understand what it takes to survive in sub-Saharan Africa. If anybody competes with Supersport in Africa, it will be them.”

SportBusiness International • No.176 • 03.12 59

Getty Images Sport

Page 14: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

we all know the rights market is a game of long-term deals. This, in theory, should help smooth any economic impact. However, the cyclical economy means rights-holders inevitably sell rights at the top of the market, potentially to bullish new entrants or agencies that do not have the stability of an established broadcaster. And these are the players who suffer when the downturn comes, as ITV Digital and Setanta have demonstrated in the UK.

Reduced competition, and falling advertising revenue leads to a downward adjustment in rights fees, before rights prices continue their seemingly ever increase upwards. But this pick-up hasn’t materialised given the wider economy flat-lining. To make matters worse, the ad market continues to shift from television to online. And let’s throw in Karen Murphy to complicate matters further.

What does this mean for rights-holders? Paradoxically, for premium rights we are seeing values holding up fairly well, as broadcasters allocate scarcer resources to quality events. For rights-holders too, a flight to quality makes sense, potentially sacrificing income to secure a stable broadcast partner. With sponsors also seeking quality, a broadcaster with a wide reach also appeals more in a downturn. The advantages to those rights-holders who have maintained long-term broadcaster relationships rather than chasing the cash now become apparent.

But there are positive trends. Those sports growing in Asia are partially insulated from the European malaise. How long before premium rights such as the English Premier League start generating more income outside Europe than in? With the likes of Apple, Google and Microsoft sitting on huge cash mountains, and Middle Eastern companies entering the market, there will always be competition.

Amidst the gloom, let’s not lose sight of the fact in the multi-platform world, live sport will continue to out-perform other content genres.

the current economic European crisis, during which the Eurozone will shrink by 0.5 per cent in 2012 according to the international Monetary fund, could lead to a 1930s-style great depression across the continent if some economists are to be believed.

financial experts are trying to accurately predict how protracted and how profound the economic contraction will be, but one thing is certain: the notion that the trading of media rights for top sport is a recession-proof business will be put to the test in 2012 and beyond.

a director at one sports rights agency told TV Sports Markets in january that although some premium properties like the fifa world cup, and some territories such as brazil, russia, india and china, would still enjoy significant growth, the “fundamental paradigm” of the industry had changed for the worse since the recession of 2008 and was likely to deteriorate further this year.

the recession of four years ago left its mark on the sports industry, as advertisers slashed budgets, sponsors and investors throttled back and local currencies deflated against the dollar. in 2008, even the uS National football league, the world’s most wealthy sports rights-holder, had to trim its work force by 10 per cent as a direct response to the recession, and two of Europe’s biggest domestic football leagues, germany’s bundesliga and france’s ligue 1, were only able to maintain existing rights income by agreeing four-year instead of three-year deals. other examples of belt-tightening and streamlining of business are plentiful.

if the rate of growth for most sports rights in most European territories is going to be slower in coming years than it was from the 1990s until 2008, what does that mean for sport generally? for many observers, dark clouds are gathering over the agency business given wider industry trends that, in addition to the harsh economic climate, could have a negative impact on traditional agency business models. these include ‘disintermediation’ – the process by which content owners cut out intermediaries – which is likely to grow as sports rights-holders get increasingly savvy about rights exploitation, and the removal from agency portfolios of European national football team qualifier rights as the rights become centralised under uefa control. So will it be the agencies, the rights-holders or the broadcasters that are the biggest losers of the European recession? and what strategies need to put in place to minimise losses? or is anyone immune?

here’s what our panel of experts had to say.

daVid MuRRayhEad of rightS, thE bbc

how Much of a NEgatiVE EffEct will thE EuropEaN EcoNoMic criSiS haVE oN thE ValuE of SportS MEdia rightS iN thE coMiNg yEarS?

DEBaTEthE big

“With sponsors seeking quality, a broadcaster with a wide reach appeals in a downturn.”

spoRtel bRiefing | March 2012

60 SportBusiness International • No.176 • 03.12

Page 15: TVSPORTSMARKETS SPORTEL BRIEFING...Broadcasting Union; and Fifa’s big fee increases for World Cup football in Asia. We have also produced a selection of feature articles exclusively

oliVeR cieslaMaNagiNg dirEctor, thE SportSMaN MEdia group

philipp gRothechiEf ExEcutiVE, kENtaro

geRaldine paMphileSENior dirEctor, iNtErNatioNal MEdia diStributioN, Nba aSia

spending on television rights is generally directed more and more towards premium must-have sports content that is of high domestic demand and of global appeal. For premium sport, there remains strong competition in most markets and for premium rights-holders, television income shows little sign of decreasing despite the economic crisis.

In markets where this is not the case, global rights-holders may still find that “over-performing” emerging markets elsewhere reduce any immediate negative financial impact.

A concentration of broadcasters’ budgets and airtime on premium sports can, however, create difficulties for “second-tier” rights-holders, who, as a consequence, risk suffering diminished television income and exposure.

In response to reduced financial offers from broadcasters, creating tailor-made rights packages for television and new media platforms is key for rights-holders; their media offer must optimise the balance between revenues and the best possible exposure for fans, their own brand and their sponsors.

Alternative revenue sources can be developed by focusing on the broad exploitation of available video material, video streaming on rights-holders’ own platforms, direct interaction with fans through social media, improved online-marketing and cost-efficient signal production. Here the Sportsman Media Group and its sister company Laola1 provide interconnected solutions “out of one hand.”

Moreover, streaming via internet and mobile devices increasingly offers a valuable solution for premium rights-holders in conjunction with their television agreements, and to all other rights-holders as a valuable up-to-date alternative to television. The offering of sports content across new media platforms and its acceptance among fans, users and sponsors is growing rapidly.

the cuRRent econoMic situation in Europe is focusing minds at all levels and across all sectors. However, it is important to note that the global sports rights market – and Kentaro for that matter – has continued to enjoy positive growth across 2011, albeit at a rate lower than was experienced in Latin America, the US, Africa and parts of Asia.

The absolute value of broadcast rights in Europe, especially within football, remains extremely high relative to the other growth markets across the world and, other than certain US league properties, the bulk of income for sports media rights still comes from Europe. This is unlikely to change dramatically moving forward.

Much of the reason for this continued growth is the strength of the very top properties which consistently aim to refine and sharpen their product offering and benefit accordingly. As always, the process tends to be more challenging for the smaller properties in difficult economic times and often it is the smaller sports for which the effects of an economic slowdown are felt most, often in the sponsorship space as well as within broadcast.

Broadly, I see no significant change in the underlying rate of growth in broadcast rights, as the bigger properties will need to continue to internationalise and innovate to remain at the top of the sports-rights tree. Those that do not have global appeal, however, will need to be consistently more innovative in finding ways to create new income streams.

I would never suggest that any rights-holder, sport or indeed business will ever be totally immune from the effects of an economic slowdown; but those who are most creative, innovative and forward-thinking in their strategic approach will surely have the best opportunity to grow and, indeed, exploit the many opportunities an uncertain economic outlook so often brings.

MajoR Rights-holdeRs should maintain most of their value. Minor sports do not rely on television revenue to any great extent so it is those in the middle who will be squeezed.

At the National Basketball Association we focus on deep, longer-term partnerships with broadcasters, that give them a large say in how the property is scheduled and marketed. We have also made a solid local commitment – we have multiple offices worldwide including a Europe-wide presence – which supports the growth of the NBA.

To minimise losses, rights-holders need to integrate in their media strategies the trends and the changes in the consumption habits of fans and an understanding of the television industry’s adoption of digital. This migration is gradual, but has a deep-seated impact on the industry. The NBA, for example, has robust digital assets in nba.com and nba.tv – our direct-to-consumer portal – which are both destinations of choice for our fans. They provide excellent complementarity to our television offer and are great platforms for global partners.

No-one is immune to the economic crisis. But a slower rate of growth in media revenues does not imply that growth for a league or a property as a whole will slow down. Sports properties should build sustainable businesses that spread across several business lines: media rights, sponsorship, events, merchandising and so forth. It is important to build and maintain the local affinity of the sport via initiatives like grassroots operations where the public can interact with the game. Each season, we organise international events, from overseas pre-season and regular-season games – which Europe has been hosting since 1985 – to ‘clinics’ where NBA players, coaches and doctors provide NBA expertise for local athletes.

“Streaming via internet and mobile devices increasingly offers a valuable solution.”

“Those who are most creative, and forward-thinking will have the best opportunity to grow.”

“Rights-holders need to integrate in media strategies changes in the consumption habits of fans.”

spoRtel bRiefing | March 2012

SportBusiness International • No.176 • 03.12 61