Sports on television is big business worldwide. It has the most complex license fee structure of all TV content. Sports TV licensing is going through a structural change because of the second screen. And sports is considered the lifeline for FTA. For this reason, sports leagues are leveraging this strength by increasing license fees. For example, in Italy the Serie A football league’s annual budget of 2.4 billion euro is 54 percent covered by TV rights.
The figures attached to this form of programming are mind-boggling. According to the World Sports Encyclopedia, around the world there are 3,000 sports, but the Summer Olympics have only 28 sports and the Winter 15 (some of them with multiple disciplines).
Yet, there are just 10 top sports on TV: Football (soccer) with 3.5 billion followers, cricket (2.5 billion), field hockey (2 billion), tennis (1 billion), volleyball (900 million), table tennis (850 million), baseball (500 million), golf (450 million), basketball (400 million) and American football (400 million).
Naturally, football (called soccer in the U.S.) dominates outside the States, while “the big four” in the U.S. are (in order of importance): American football, baseball, basketball and ice hockey. Then, there are world events like FIFA’s World Cup and the Olympics.
So, it can be estimated that about 20 sports account for most of the over five million hours of yearly worldwide programming for an audience that could reach four billion viewers, or 57 percent of the world population, and almost all of the globe’s 1.7 billion TVHH.
Therefore, it is not surprising that there are more than 730 sports channels worldwide. India, with 114 sports channels (78 national plus 36 local), is the world’s largest. In comparison, the U.S. has 46 sports channels. These channels are in addition to sports programming on FTA general interest networks.
The business models for most of these niche channels are a combination of subscription fees and advertising revenues. Many channels depend also on pay-per-view. VideoAge couldn’t pinpoint global subscription revenue figures for those niche TV services, but the key 20 sports TV channels in the U.S. (out of the aforementioned 46) generated $16 billion from subscription fees alone in 2015.
In terms of international TV content sale revenue, Mark Benmore, vice president, Sales and Distribution, Content Television reported, “You might expect higher revenues/license fees from a pay TV channel over free TV, but a larger free TV channel will deliver a higher audience, which, in turn will lead to better sponsorship deals. PPV delivers for highly marketed one-offs and is not something we’ve seen strong returns on to date. In my opinion, subscription (live or otherwise) on demand has not yet cracked sports, mainly because it hasn’t been pushed with enough marketing support or scale to date.”
In 2015 New York City-based consultant group Deloitte estimated the total worldwide TV rights expenditures for that year had been $28 billion, while London-based Pricewaterhouse Coopers (PWC) reported that in 2015 global media rights reached $35 billion, which represents (in VideoAge’s estimates) 40 percent of worldwide TV licensing revenues. PWC divided those rights by region: North America with 38 percent; EMEA with 13.4 percent; Asia Pacific with six percent and LATAM with 2.9 percent. Plus, PWC stated that 75 percent of the total value of media rights are generated by 10 sports.
If TV advertising revenues and production costs are added, the worldwide sports TV sector could easily be a $50 billion-a-year industry. By including ticket sales (gate revenue) and sponsorships, Chicago-based management consultant firm A.T. Kearney estimated that (excluding merchandising) the global market for sporting events was worth $80 billion in 2014. On the other hand, PWC puts the total figure (including $20 billion for merchandising) at $145.3 billion in 2015.
However, compared to other forms of TV programming rights, sports TV rights are a highly controlled commodity. Excess supply (which can lower license fees) is controlled by various sports organizations, such as FIFA, NFL, IOC, etc. At the same time, a short supply (that can increase licensee fees) is controlled by cartels such as the EBU. David Jones (pictured above with Prince Albert of Monaco), the official marketing and sales agent for Monaco’s SPORTEL, one of the world’s premier sports TV markets, calculated that of the some 840 companies attending SPORTEL Monaco 2015 (VideoAge’s count), only 17 percent were content providers. Jones is also CEO of Oceanworx, a Majorca, Spain-based sports producer, marketing and sales agent specialized in the extreme sport segment.
In addition, worldwide sports rights are licensed differently from other TV fare, in the sense that they are controlled by some 20 sports marketing groups, mostly located in Europe (and in the U.K. in particular), of which New York-based IMG and Wanda Sports are two of the largest. Last year, Chinese conglomerate Dalian Wanda acquired Zug, Switzerland-based Infront Sports and Media, renaming it Wanda Sports. The Wanda group is also the world’s largest cinema chain operator (in the U.S. it owns AMC Theaters).
David Gandler, CEO of New York City-based fuboTV, said, “As a virtual MVPD, we don’t acquire programming directly, but rather we secure carriage deals with leading TV programmers such as Univision Networks, beIN SPORTS, GolTV, Benfica TV and others that have live sports rights, and then distribute these linear channels to our subscribers.”
Indeed, the business of selling and buying sports rights is very complex, but, according to 7A Media’s Cesar Diaz, the “easiest sports rights to buy are those of boxing because they are handled by the match promoters themselves.”
A unique operator in the sports TV business is Connecticut-based-based WWE, which sells — in the U.S. and around the world — TV rights of their own wrestling productions, both live, canned and specials, similar to a Hollywood studio.
In addition, sports TV programs don’t follow a traditional “windowing” schedule.
Commented Content’s Mark Benmore: “Rather than windowing, we see the strongest demand for live-events sport. EFC: Extreme Fighting Championship does this very well with 44 live events to date and more than 120 supporting episodes including weigh-ins, televised press conferences, and half-hour warm-up shows.”
However, he added, “Our sports feature documentaries do move through the window model with a theatrical release then EST and Home Video/pay-TV and SVoD/ Free TV and AVoD windows, such as our Mr. Calzaghe, a feature documentary.”
Media consultant Russ Kagan pointed out that within sports television there are live events and sports programming, and for the former “windowing” has been replaced with packages, which, in the case of NFL for American football, consist of four packages, plus NFL’s own TV channel. While the NFL sells U.S. rights themselves, internationally they use London-based MP & Silva. Recently, the NFL put the right to stream up to 18 regular-season games up for bids. CBS and NBC, which each paid $225 million to broadcast five NFL games apiece, also have the rights to stream those games on their own platforms.
Last fall Yahoo paid about $20 million to stream a regular-season NFL game.
VideoAge asked fubo TV’s Gandler if there is a value in re-runs of live sporting events. “There is indeed a value for re-runs. Many of Europe’s best games take place early in the morning and therefore re-runs are required as a retention tool,” he answered.
But according to SPORTEL’s David Jones, the sports licensing industry has been slow in reaching out to second-screen rights. The large agencies that handle big international tournaments tend to look at the big picture, which is represented by the major TV networks, neglecting Internet rights in the process and protecting broadcasters along the way. For this reason, reported Jones, tournament associations like LaLiga of Spain are making efforts to reach fans on multiplatforms. LaLiga has Barcelona-based Mediapro as a strategic partner for certain projects, while all media licensing and second screen is now dealt by LaLiga itself.
Similarly, San Francisco-based Go Pro executive Claude Ruibal commented that there is an “ongoing push to move to IP distribution of live content, and it is impacting sports rights fees.” According to Ruibal, “Sports is the last remaining live content provider that is essential to broadcasters, and sports leagues (such as NFL) and agencies are leveraging this strength by increasing license fees and in some cases splitting rights, including Internet rights. Some agents, like Barcelona based Dorna Sports, are even creating their own second screen offering, such as the MotoGP Videopass.”
(By Dom Serafini)
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