Premier gains

Premier gains

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Premier gains English Premier League soccer has become the only foreign property guaranteed to drive subscriptions in most television markets around the world. As pay-TV and digital platforms proliferate globally, it is a formula that has resulted in yet another billion-dollar hike in the competition’s international rights haul.

By James Emmett

E

ngland’s Premier League is truly a commercial behemoth.

Having sold its latest threeyear batch of domestic rights for just over UK£3 billion last June, it added at least another UK£2.2 billion in the round of international rights sales that was completed this year. No other sports property in the world can dream of attracting such sums outside its own borders. Speaking to SportsPro at the completion of its own round of international rights sales at the turn of last year – a process believed to have garnered between €240 million and €300 million – the Bundesliga’s Jorg Daubitzer, who runs the German league’s commercial subsidiary DFL Sports Enterprises, said: “It’s not new that they jump from one record to another. If you look what they are doing over the years, especially on the investor side, how they handle their partners, it’s only strongly driven by economic, economic and economic success.”

Richard Scudamore leads Premier League sales

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Although it might have been said with the suggestion of a sneer, Daubitzer’s assessment holds true. Premier League international rights fees have grown by more than 1,000 per cent in a little over ten years. A decade ago they were worth UK£200 million – a figure that even now would be enviable for most major European leagues. In 2010 they were worth UK£1.4 billion. Figures are understandably difficult to confirm and, since rights outside the UK are sold in either US dollars or euros, subject to currency fluctuations. Nonetheless, according to SportsPro sources the Premier League made just under US$3.5 billion for its international rights for the three-year cycle from 2013/14 to 2015/16. And that’s before the quickly growing global clip rights have been accounted for.

The selling process, led by league chief executive Richard Scudamore and director of international broadcast and media operations Paul Molnar, has remained more or less the same for the past four cycles. Bids are invited territory by territory, normally contested by both broadcasters and agencies, and if the competition is fierce enough they go to a second round.

In the wake of the Murphy case last year, which gave legal validation to the process of using foreign satellite decoders within the UK, the league did look to protect the value of its domestic rights in this cycle by clawing back some Englishlanguage elements from its European packages and limiting the number of Saturday matches; by all accounts, there were far more lawyer hours billed this time around.

It was also the first time the Premier League sold a package of more than three

years, with Super Sports Media Group in China committing to a rumoured US$120 million outlay for the right to sublicense games to regional Chinese networks for the next six years.

“I think the Premier League is probably the best property in the world to sell payTV subscriptions with at the moment,” says Andrea Radrizzani, group chief executive of the MP & Silva agency. “There are others, but this is the only one that can give you nine months every year in terms of content and with the biggest brand possible. For every media sports agency the Premier League represents a kind of dream and a big target because it’s probably the most important football league internationally, the most attractive football league, and often the most expensive.”

Pitch International, AMI, Saran Media and IMG all bought packages to sell on in the latest cycle but Radrizzani’s agency became the Premier League’s single biggest client, committing to pay the league almost half a billion dollars for rights in 49 different territories. The largest package to go to MP & Silva was one that incorporated 23 countries across the Middle East. Having failed to attract offers in the same US$350 million ballpark that it received from Abu Dhabi Media Company (ADMC) in the last cycle, the Premier League went with a bid of some US$315 million from the agency in January. “To be honest, we didn’t think we’d be in a position to win in a competitive market like the Middle East,” reveals Radrizzani, whose team spent almost six months attempting to sell the rights on to one of the big broadcasting beasts of the Middle East. Eventually a deal was struck with Qatar’s Al Jazeera, with which MP & Silva has a host of

MP & Silva group chief executive Andrea Radrizzani and Al Jazeera Sport president Nasser Al Khelaifi have agreed partnerships in a number of markets

other partnerships, leaving ADMC to cry foul about the level of the fee. “I cannot hide that it was stressful, it was difficult,” says Radrizzani. “The negotiations with everyone took a really long time and we risked a lot. But we were also confident that a market like the Middle East could not stay without the Premier League.

“We didn’t make much money but it was safe in the end; we packaged with other rights and we had the opportunity to intensify our relationship with an existing partner like Al Jazeera for the next few years.”

Another strand to the MP & Silva/ Al Jazeera partnership will play out over the coming years in Indonesia, where the agency took what Radrizzani describes as a necessarily entrepreneurial outlook, paying more than double the previous rights fee for a package it will use to launch a BeIN Sport platform in the region.

“We understood that it’s often very difficult to protect the Premier League rights in a country where you are a current rights holder because if you think with a normal rationale you never put the

necessary money to win the rights,” he says of a process that saw IMG trump MP & Silva for the rights in Vietnam and Japan. “In Indonesia, for example, we paid 2.5 times the previous price. To win the Premier League you need to be brave, have an entrepreneurial instinct and not just base your bid on operational numbers, because otherwise it’s very difficult to succeed. Everybody wants this league.”

The Premier League is fond of attributing its vast fee increases to market forces, but the ‘correct’ market forces for such growth depend on a perfect storm of conditions: the size of the particular market, the competitiveness in the particular market, and the wider economic conditions working on the particular market all need to be pointing in the right direction. Huge increases in Thailand, India, Malaysia and across South America can be attributed to such preferable environments. Likewise it is on account of this formula that the rights in France, which escaped the worst of the European economic crisis and has a very competitive pay-TV market, garnered

around €160 million, while the rights in Germany, a much stronger economy but a TV market bereft of competition, are likely to have fetched less than ten per cent of that figure.

Giant uplifts can also be achieved when a key player in a particular market decides to make a key play – witness SkyNet’s breakthrough deal in Myanmar, and on a larger scale NBC’s decision to go big on the Premier League as the US enters the era of the dedicated sports network.

The Premier League will go through this process again from the end of 2015 and into 2016. At some point, one would imagine, the bubble must burst. But, according to Radrizzani, that won’t be happening in the next cycle. “I’m sure that three years ago everyone thought the Premier League could not grow further, and it happened again and it changed the market,” he says. “I suspect it will grow again. The digital industry and the pay-TV industry are growing and I suspect that the only property that will be able to drive subscriptions will be the Premier League.”

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The Americas

US$24m US$255m

Canada

USA

US$8m

Caribbean

US$45m Brazil

US$80m

S America (excluding Brazil), Mexico, Dominican Republic

NB: All figures are reported values and estimates which have not been officially confirmed by the Premer League

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As expected, competition for the US rights to the Premier League was intense.

A joint bid from incumbent broadcaster Fox and sub-licensee ESPN was joined by strong plays from new Al Jazeera-owned channel BeIN Sport and from NBC which sent the process into a second round. Ultimately NBC prevailed with a bid of around US$255 million, some three times more than was paid by Fox in the previous cycle. If the rights were undervalued before, they are now in line with the growing popularity of the league in the US. NBC, having spent heavily on nationwide promotion, is unlikely to be sublicensing the rights as Fox had done previously. The broadcaster will look to maximise both the English-language and Spanish-language rights across its networks. Further north, Canadian broadcasters Sportsnet and TSN both renewed, though TSN bought direct from the league for the first time having sublicensed 50 games per season from Sportsnet in the last cycle. The pair will split the 380 games per season down the middle and are believed to have paid US$24 million for the package, 60 per cent more than the previous cycle.

Status quo was maintained in the Caribbean as SportsMax renewed at roughly the same rate as last time, while there were more increases further south.

Fox Sports marked its entry to the Brazilian market by taking a slice of the rights alongside incumbent broadcaster ESPN Brasil. The fee of around US$45 million, according to ESPN Brasil general manager German Hartenstein, would have been reached even without the involvement of Fox. “The market is bigger,” he told SportsPro. “Everybody knows that there is more money in this market. Without Fox, the price increases would be the same because there are strong players other than them. It was natural. I am curious to see what will happen in the next few years on that.”

Latin America as a whole was worth around US$33 million in the last cycle, but new deals for the entire region excluding Brazil with a pair of Grupo Televisa-owned broadcasters – DirecTV PanAmericana and Sky Mexico – are believed to be worth some US$80 million.

€200m

Scandinavia

US$24m €30m

Netherlands

€24m

Belgium

€12m

Germany

€160m France €6.5m Portugal

€10m

US$60m Poland

US$8m Slovakia

US$8m

€6.5m

US$20m

Baltics, Caucasus, and Central Asia

Romania

US$24m Bulgaria

€25m Greece

€8m

Ukraine Balkans

€36m

Spain

€4m €10.5m

Czech Rep

Italy

Russia

US$25m Turkey

Malta

US$370m

South Africa, Nigeria, Sub-Saharan Africa EMEA Technically, the first European deal to be signed in the latest rights cycle was

by Modern Times Group (MTG) for Sweden and Denmark. Broadcaster competition in Scandinavia as a whole saw rights fees rocket in the previous process and MTG, which had previously bought its rights from the Medge agency, was more or less alone in its reluctance to cede English-language rights back to the Premier League. To protect the value of its domestic rights the league needed to get a deal done in the region early, and hammered it out directly with incumbent MTG in May 2012 – a full month before the UK packages were sold.

MTG went on to renew deals for other territories in Scandinavia, as well as for its Nova channel in Bulgaria, and completed

its collection with the purchase of a Baltic package – Estonia, Latvia, and Lithuania – from Turkish agency Saran Media.

Saran also renewed its deal in its native Turkey for an estimated US$25 million, selling on to broadcaster Digiturk.

The fragility of the European economy meant the league had to take a couple of fee decreases. IMG took the Spanish rights for around €10 million after a much higher deal with little known agency Multi Media Sports Group fell through, Greek rights fell only marginally to around €25 million as OTE replaced rival pay-TV platform Nova, while in Italy, the London-based Pitch International agency took its only package for some €36 million, bringing MP & Silva on board to offer a full suite of rights to Fox’s new channel in the country.

An option remains for Sky Italia, the previous broadcaster, to come in for the

US$315m Middle East

rights again after two years.

There was a small uplift in Portugal, meanwhile, as Benfica’s in-house club channel came in for the rights, taking them away from underpaying incumbent Sport TV. Sensing the rise of a similarly unconventional broadcast model in the Netherlands, MP & Silva ensured a rise in that territory, paying an estimated €30 million before playing incumbent broadcaster Sport1 off against the Eredivisie’s part News Corp-owned inhouse channel, which eventually prevailed.

South African-based broadcaster SuperSport was able to renew its deal for large swathes of Africa. Like MTG, it was offered the chance to negotiate early almost as a token of gratitude for having bailed the Premier League out in the previous cycle, when Nigerian broadcaster HiTV was unable to provide bank guarantees.

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US$60m

US$50m S.Korea

China

US$47m Japan

US$190m

US$145m

US$39m Myanmar

India

Hong Kong

US$34m Vietnam

US$310m

Thailand, Cambodia, Laos

US$2m

Philippines and Taiwan

US$240m Malaysia Asia and Oceania Huge increases in Asia were largely responsible for the Premier League’s international triple-digit growth three years ago. The market, taken as a whole, has steadied somewhat, but there were still one or two monumental uplifts.

Thailand was overwhelmingly the standout territory. The previous agreement in the country had garnered around US$38 million but even with a highly competitive market in which five broadcasters made bids, the eightfold increase to around US$310 million was unexpected. Cable Thai Holdings saw off rival operators TrueVisions, GMM Grammy, RS and Channel 7, which joined Malaysian operator Cubic Associates on its offer.

There was growth in Malaysia as well with Astro Malaysia Holdings, whose relationship with the league began in 1997, retaining its rights for some US$240 million. Having surged in the last cycle, Hong Kong and Singapore plateaued: PCCW’s Now TV platform replaced i-Cable in British expat haven Hong Kong for a slightly reduced fee of around US$190 million, while SingTel’s Mio Stadium renewed in Singapore for roughly the same US$270 million fee it paid last time.

The MP & Silva agency has made its name as an Asian specialist but found itself ousted from two key territories it held in the last cycle via very competitive bidding from IMG. The Japanese rights went for around US$10 million more than last time, with IMG then selling them on to incumbent broadcaster J Sports, while 6 | www.sportspromedia.com

US$270m Singapore

US$94m

US$0.5m

Indonesia

Pacific Islands

US$48m Australia

US$2.5m

New Zealand in Vietnam the fee rose from around US$9 million to some US$34 million this time. Scared off by the heat in Japan and Vietnam, MP & Silva was then able to concentrate its budget on Indonesia, paying around US$94 million, more than double what the territory was worth last time.

Those rights will not be sold on, but used for the launch of an MP & Silva-managed BeIN Sport platform in the region.

In South Korea SBS-ESPN retained the rights with a marginal uplift in fee, largely due to currency fluctuations. Frontier market Myanmar is now opening up, with local broadcaster SkyNet willing to pay

some US$39 million for its package. It was the first time the rights had been offered on a standalone basis in the country.

There was another substantial rise in India, with the now 100 per cent News Corp-owned ESPN Star retaining its rights with a bid of some US$145 million – US$100 million more than last time and US$20 million more than its rival MSM bid.

Australian rights held steady, with Fox Sports retaining, while MP & Silva drummed up surprise competition in New Zealand, where Sky NZ was ousted for an innovative proposition from Coliseum and free-to-air broadcaster TVNZ.