Monday, November 30th, 2020

Sports rights up for grabs

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Two stories caught my interest in last week’s national papers, The Australian and The Australian Financial Review. The stories both concerned the ongoing negotiations for V8 Supercars’ new media rights deal, which will commence next year.

The Australian’s article focused on Ten’s play for the rights, which if successful would see the network return to being the ‘home of motorsport’.

In the Fairfax press discussion centered on Google’s play for international streaming rights to V8 Supercars. Telstra, the sport’s platform sponsor is the current holder of international streaming rights for the growing sport.

The news of continuing negotiations over V8 Supercars rights emphasises the current battle between Australia’s major sporting codes to sign new media deals. These deals are crucial to securing each sports’ immediate future.

Following the A$1.2 billion that Foxtel, Seven and Telstra agreed to pay the AFL over five years for media rights, current deals up for renewal include the NRL and V8 Supercars rights. Deals that will no doubt be negotiated within the next 18 months also include the A-League (FFA) and Cricket Australia broadcast rights.

There has been speculation that the NRL will seek around $1 billion for its next rights deal, whilst the V8s will look for around a $300 million contract. The problem is the pot of money that media organisations can pay for sporting rights is not bottomless. This is especially the case given the tight advertising market.

The key as noted in a variety of media reports concerning the NRL broadcast rights is to split the rights into packages in order to maximise value, whether this be in terms of games or the platform. Each sporting body can split its rights into domestic FTA partners, subscription partners, online partners and mobile partners.

Clearly most money per broadcast can still be extracted from FTA TV given its reach, but we have seen slowly FTA broadcasts being simulcast across pay-TV and mobile. This potentially devalues the FTA rights money available, unless the simulcast takes a direct FTA feed, which includes that FTA station’s commercials. An example would be Telstra Bigpond’s simulcast of Seven’s V8 Supercars coverage.

The difficulty for the NRL, V8s and A-league will be finding the right broadcast partner(s) who can provide maximum coverage at the right price. There is no doubt that the NRL and V8s will find an FTA broadcast partner, it just depends in what form and which network.

The NRL†has long suffered from a lack of FTA coverage in southern markets. If Nine are to purchase the rights, would it be willing to show games on GEM in southern markets in much the same way Seven†will show its AFL games on 7mate in northern markets. If Seven were to purchase some NRL rights, would the NRL receive enough air on a network that broadcasts 4 weekly AFL games. Does Ten have the base audience numbers to grow the game nationally the same way it did with a reinvigorated V8s in the late-90s and early 2000s. If Fox Sports was able to extend its coverage from 5 LIVE games per week to all games LIVE, would Foxtel create a separate ‘Fox League’ channel as it has done following the its AFL rights purchase. How much are the State of Origin rights on their own worth? There are many factors to consider.

Taking a moment to look at the V8s, the sport is clearly booming both locally and internationally. Under any new rights deal, should they include more rights for pay-TV, apart from just replay rights? V8s is one of the few Aussie sports where all coverage premieres on a FTA channel. If a new deal was signed with Seven, would this mean too many clashes with AFL broadcasts causing a lot of content to live on 7mate? Would this devalue the brand? Over recent years we have seen how swimming fell from the national conscience as coverage was only on One. This week is the first time in a while that Swimming coverage has been on Ten. If V8s sold broadcast rights to Ten, whilst this may create a ‘home of Motorsport’ branding for the network, would V8s take second fiddle to the world’s premier racing category F1, which now has a prime time broadcast slot on Ten for every European based GP. Also if Australia lose the rights to host an F1†Grand Prix, how will this effect Ten’s commitment to broadcast motorsport?

The advantage that V8s has over other sports is its international appeal. V8s have a FTA agreement with TV3 in NZ, along with ESPN Star across Asia and through Speed in the US. In fact Speed brought its own commentary team last year to cover rounds at Bathurst and on the Gold Coast. Whilst Australia remains its most important broadcast territory, it can rely more heavily on international broadcast contracts compared with Australian-centric sports such as the AFL or NRL . Cricket Australia is in a similar position as the V8s due to the sports popularity in Central Asia and the UK. ESPN Star covered the recent summer of cricket in Australia with its own commentary team and graphics packages.

The A-league also faces a difficult problem. After signing Foxtel for a $125 million broadcast contract a number of years ago to cover all soccer (except the World Cup), the next rights deal will be more difficult to negotiate. Whilst the sport has reportedly grown, does the A-league seek to have some games broadcast on FTA? Would any network other than SBS be interested? Would Foxtel†be willing not to have exclusive rights to all games. Also with Socceroo qualifiers now on the Anti-siphoning list how will this impact rights negotiations and finals rights values?

The key for professional sporting bodies will be to find that balance between coverage, cost and brand development. Because now more than ever media rights are the life blood of sports in Australia, and as shown with the AFL media rights agreement a well-balanced contract can guarantee a professional sport’s future success in the crowded Australian market.

Sources

Network Ten gears up to wrest Seven’s V8 grid spot†[subscription required]

Google puts pedal to the metal for V8s

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