International study on sports audiovisual rights Final report August 2021
Preface
4
1. Introduction
7
2. International benchmarking of major football leagues
13
3. International benchmarking of other professional leagues
23
4. Overview of the current situation of audiovisual rights in the Portuguese professional competitions
31
5. Predictable effects of the centralization of audiovisual rights
39
6. Conclusions and recommendations
53
Preface
Pedro Proença Chairman Liga Portugal
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| International Study on Sports Audiovisual Rights
The centralization of audiovisual rights is an inevitable path for the Portuguese professional football. In fact, as we have been defending since our arrival. To the most distracted this might have seemed an obsessive goal. However, the time and the Government have confirmed our perspective: we were on the right path. This study published in a partnership
established since 2019—20. Ligue 1 and
between Liga Portugal and the
LaLiga – where the centralization has also
EY organization explains why the
been implemented by Decree – are on also
centralization of audiovisual rights
an upward trend. Serie A and Bundesliga
must become a reality. Portugal cannot
have registered slight revenue changes
proclaim itself as part of the European
but will finish the next season with
football front row, and even try to
revenues around €1.30 billion.
approach and overtake the 5th place in
This is the maturity level that we want to
the UEFA rankings (currently belonging to
achieve in Portuguese football, aiming
France), with the mindset of the second
that everyone, without exception,
and third tier organizations in terms of
becomes a winner. As an example, the
European football attractiveness, as is the
giants Barcelona and Real Madrid, just to
case of Cyprus – the other country without
mention millionaire clubs from a League
centralized rights.
with whom we work directly – have
If we consider the five main European
now the understanding that they have
leagues regarding notoriety and wealth,
benefited from the centralization process.
we observe that since 2014—15, three
Nothing will be different in Portugal. Liga
registered a growth trend in terms of
Portugal and FPF working together as a
revenues generated by the audiovisual
group, will certainly know how to defend
rights. Premier League is at the top of
the interests of those who truly matter,
this group with €3.01 billion, a value
the clubs.
Miguel Farinha Partner and Leader of Strategy and Transactions at EY
The centralization of audiovisual rights will be a powerful tool for the development of the internal and external competitiveness of the Portuguese Professional Football. International case studies show that the centralization of audiovisual rights was a critical success factor for the hegemony of the main European leagues. It is with great satisfaction that the EY
capacity.
organization presents the International
The analysis of the main professional
Study on Audiovisual Sports Rights.
leagues leads to the conclusion that
The aim of our study is to strengthen
the centralization of audiovisual rights
the information and knowledge available
leads to a significant increase in the
regarding the processes of audiovisual
added value generated by football.
rights centralization. The objective is to
The centralization model was a critical
support those who, in the future, will be
success factor for the hegemony of the
responsible for the commercialization,
main European leagues. Besides higher
in the selection of a model that will
revenues, it promotes an equitable
maximize its value and, consequently,
distribution, while it rewards sports
the value of the Portuguese professional
performance and generates a greater
football leagues.
investment capacity, enabling the
Our report shows that the Portuguese
clubs and the league to reinforce its
football league is the only one among the
competitive conditions and international
most important European professional
reach.
football leagues, where the centralization
There are also other benefits and critical
of audiovisual rights is not yet in place.
externalities, which increase the sport
The absence of a centralized strategy
content quality and economic value,
has been reflected negatively in the
more specifically, a greater capacity
level of the internal competitions and in
to adjust content to the consumer’s
the competitiveness of local clubs in the
demand, more consistency in the
international competitions, which display
communication and brand management,
an important role in the clubs’ financial
and a higher ability to fight piracy.
Technical note: This study is an independent work performed by the EY organization and commissioned by Liga Portugal. It aims to provide information to support the audiovisual rights centralization process, mentioned in the Decree-Law n.º 22-B/2021, which is expected to be implemented in the 2028—29 seasons. The benchmarking of the models implemented in the main professional football leagues has the purpose to provide support and basis for the definition of the model to be implemented in the Portuguese professional leagues. International Study on Sports Audiovisual Rights |
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TER 1 Introduction
International Study on Sports Audiovisual Rights |
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Audiovisual rights: introductory considerations In the current sports context, the centralization of audiovisual rights is seen as a crucial instrument to foster competitions’ competitiveness, strengthen value creation of clubs, and reduce the financial disparities between the larger and smaller clubs. Both in Europe and in the US, it is clear that the centralization of sports audiovisual rights played an important role in the development of the attractiveness of the main sports competitions. In these competitions, the centralization model has specific variations which have contributed to the discussion regarding which model has the most potential, despite the global gains that all models have. The economic crisis caused by COVID-19, which impacted mainly ticket revenues, has sparked various discussions regarding which model is the most adequate for the commercialization of audiovisual rights in the main professional football competitions. There have been renegotiations of existing contracts, the emergence of new commercialization models, and the entrance of new players in the market.
In Portugal, this analysis is particularly relevant, given the absence of a centralized model for the commercialization of audiovisual rights and due to the increasing weaknesses and competitive and financial disparities among clubs. This study is also of particular significance given the recent approval of a Decree-law that specifies the ownership of audiovisual rights for professional football competitions in Portugal and establishes rules regarding their commercialization. This Decree-law establishes that audiovisual rights from the 2028—29 season onward will be commercialized in a centralized manner. The different stakeholders are allowed to reach an agreement earlier than in 2028—29. In this context, this study is meant to analyze the main models of sports audiovisual rights, identify trends, analyze the situation in Portugal and reflect on the potential effects of the centralization of audiovisual rights in the Portuguese Professional Football.
Key leagues and models considered in the analysis
European professional football leagues models Premier League (England), LaLiga (Spain), Bundesliga (Germany), Serie A (Italy), Ligue 1 (France) and Liga NOS (Portugal)
US models NFL (American football), NBA (basketball), and MLB (baseball)
Brazil model Brazilian Championship — Série A
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International benchmarking - key figures An analysis of the amount of revenues earned by different professional leagues yields that the NFL (US American football league) is the one with the highest revenues, and the one with the largest contract for the audiovisual rights. The NFL receives around €7 billion for the commercialization of its audiovisual rights.
On a lower tier are the main professional football leagues in Portugal (Liga NOS) and Brazil (Serie A). Since the clubs negotiate the audiovisual rights individually, the annual revenues tend to be more volatile compared with other countries where the commercialization is centralized. Liga NOS receives 14x less in the commercialization of its professional football audiovisual rights than the Premier League (the football league with the highest audiovisual rights revenues). Around two thirds of the revenues generated value are concentrated in three clubs: FC Porto, SL Benfica and Sporting CP.
On a second tier are the Premier League (the main professional football league in England) and the NBA (the US basketball league), which receive €2.8 billion and €2.4 billion for the commercialization of its audiovisual rights, respectively. On a third tier level in terms of the commercialization of audiovisual rights are the main professional football leagues in Spain, Germany, Italy and France, and the MLB (US baseball league), with values ranging from €0.9 billion in France to €1.9 billion in Spain.
One of the goals of the already approved centralization of the Portuguese Professional Football audiovisual rights from the 2028—29 season onward is to have a more equitable distribution of revenues, promoting a greater balance in the competitions. In parallel, it should promote an increase in the global value of the rights traded in the long term.
Yearly average amounts received for the commercialization of audiovisual rights, nationally and internationally (values in euros)
2,8mM /ano 2019-22
1,5mM /ano
0,9mM /ano
2017-21
2016-20
NBA
2,4mM /ano
1,9mM /ano 2019-22
/ano/ano 1,4mM
2016-25
-
NFL
2018-21
7,0mM /ano 2014-21/22
MLB
1,7mM /ano 2014-21
0,176mM /ano 2019-20
0,4mM /ano 2019
Note: The amounts presented in the illustration correspond to the average amounts (in euros) of the audiovisual rights, considering the information available regarding the latest negotiation in each professional competition. Apart from the audiovisual rights, the value of Liga NOS includes other components (which are not possible to disaggregate), such as marketing properties, advertising, deals with clubs’ own channel, sponsors, among others. 10 | International Study on Sports Audiovisual Rights
Distinctive aspects of major world leagues The audiovisual rights of the six major European leagues and the three largest US leagues generate annual revenues of €20 billion
NFL
MLB
NBA
When compared to the distribution of the Portuguese clubs audiovisual rights, the major leagues stand out in the following aspects: • The major European and US leagues trade their audiovisual rights in a centralized manner. • Negotiation is made in bundles*, allowing a diversification of supply, and therefore a diversification of the rights that buyers have (e.g., Sunday matches for operator A and streaming for operator B). • There is more than one large audiovisual player responsible for broadcasting. Streaming is complementary. • The majority of audiovisual distribution is done through pay-TV and streaming platforms, except in Brazil, where it is predominantly free-to-air. • Most of the leagues analyzed disclose clubs’ revenues in a centralized manner. In Portugal and Brazil this disclosure is done in a decentralized way, meaning that each club discloses its own balance sheet, which means that there are no official grounds for effective benchmarking among clubs.
*The negotiation of the bundles is made through bids which can be by matchday, by timeslot or in different platforms.
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TER 2 International benchmarking of major football leagues
Distribution models in football The international benchmarking analysis of major professional football leagues sought to answer specific questions, by gathering concrete examples of action regarding the process of centralization of audiovisual rights in Portugal. It aimed to develop a deeper understanding of the ability of this model to generate higher added value for clubs and for national professional competitions.
In that sense, it sought to understand and systematize the modus operandi of the major professional leagues in terms of ownership of audiovisual rights, the way they are negotiated and commercialized in national and international markets, the number of matches broadcasted live, how revenues are distributed among the clubs and the main challenges associated with the process.
10 What are the main challenges?
01 Who owns the rights?
09 What is the evolution of revenues?
08 How are negotiations performed?
07 How are the contents distributed?
06 How many matches are broadcasted?
02 What is the commercialization model?
Dimensions of analysis
03 How are the agreements established?
04 How are international rights commercialized?
05 What is the revenue distribution model?
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Who owns the rights and how is commercialization performed? According to the reality presented previously and the table below, in 2019, the professional football leagues with the highest audiovisual revenues were those that have implemented a centralized model for the commercialization of audiovisual rights. In all these leagues, the team that plays “at home” is the owner of the rights. In Spain and Italy, the transition to a centralized model for the commercialization of audiovisual rights was processed through legislative initiatives of the national governments. This reality
League
Holder
Commercialization model
contrasts with that of England, Germany and France, where the centralization of rights was processed by the clubs and leagues’ own will. Among the benchmarked leagues, the Liga NOS and the Brazilian Série A are the only professional competitions where the negotiation of audiovisual rights is undertaken individually by clubs.
How commercialization agreements were achieved
Home club
Decentralized
Individual negotiations. 17 clubs closed deals with a single media group. SL Benfica broadcasts their matches at home through Benfica TV.
Home club (mandatory concession to the league)
Centralized
The agreement established between The Football Association (The FA) and the 20 clubs in the first edition of the Premier League marked the beginning of the centralized commercialization of audiovisual rights.
Home club (mandatory concession to the league)
Centralized
Royal Decree 05/2015 put an end to individual club negotiations, with LaLiga taking over the centralization of audiovisual rights.
Centralized
The Melandri-Gentiloni Decree established a centralized model headed by Lega Calcio. It aimed to reduce income disparities between clubs and reduce the possibility of further manipulation of results after the scandals of 2008.
Home club (mandatory concession to the league)
Centralized
Clubs and the DFL communicated to the European Commission their intention to commercialize audiovisual rights in a centralized manner, similarly to what happened in UEFA and the Premier League. With the approval in 2003, Clubs began negotiating in a centralized way.
League (co-ownership)
Centralized
Law 84-610 of July 16, 1984 established that ownership of rights belongs to the events’ organizers. In football, rights are centralized by the Ligue de Football Professionnel, organizer of Ligue 1 and 2.
Home and visitor club
Decentralized
After the end of the “Club of the 13”, which centralized the commercialization of rights, Brazilian clubs began negotiating individually.
Home club and league (co-ownership)
Source: SportsPro Media, MIDIA Research, LaLiga,, Ligue 1, Sports Business Institute Barcelona, The Guardian, Football Benchmark.
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How are matches negotiated and broadcasted? All the professional football leagues analyzed, except the Portuguese and the Brazilian have a centralized commercialization model in which a rule of “no single buyer” applies. This clause prevents audiovisual rights from being transferred solely and exclusively to one media operator. In addition to not having an exclusive buyer, major professional football leagues tend to commercialize audiovisual rights by structuring them in packages or bundles.
Broadcast matches
League
Distribution channels
This practice consists of creating groups of matches considering the match day, time or platform. The strategy and criteria defined for this grouping is under the responsibility of the leagues. Finally, it should be noted that the matches of the main European leagues are broadcasted through the subscription of premium sports channels or streaming platforms, while in Brazil broadcasting in open signal is more important.
Do negotiations include packages/bundles?
Pay-TV
Liga NOS matches are broadcasted by two channels, Sport TV and BTV. Sport TV broadcasts all matches, except SL Benfica’s matches at home, which are broadcasted by the club’s channel.
Pay-TV and streaming*
Seven packages were negotiated with specific characteristics in terms of time, days and number of matches. BT (52 matches), Sky Sports (128 matches) and Amazon (20 matches) were the buyers of the current season Premier League rights. Premier League matches are broadcasted to 188 countries around the world.
380
Free-to-air, pay-TV, PPV** and streaming
Eight packages were negotiated with specific characteristics in terms of time, days and number of matches. Mediapro (one match per week and broadcast in public spaces, bars and restaurants) and Telefónica (nine matches per week and sunday matches) were the buyers for the 2019—20 to 2021—22 seasons.
380
Pay-TV and streaming
Packages were negotiated with two companies: one with 266 matches with Sky Sport (Pay-TV) and another with 114 matches with the media group DAZN (Streaming).
306
Free-to-air, pay-TV and streaming
Seven packages** of live content were negotiated with specific characteristics in terms of days and number of matches. Sky acquired 200 matches on Saturdays (pay-TV); DAZN (streaming) 106 matches on fridays and sundays; and ProSieben/Sat1 acquired 9 specific matches for open channel broadcasting.
380 (280 in 2019—20 because of the COVID-19 pandemic)
Free-to-air, pay-TV, PPV** and streaming
Packages were negotiated with two companies: eight matches per week for Téléfoot and two matches per week for Canal+.
380
Free-to-air, pay-TV and PPV***
Decentralization does not favor bundles’ negotiation. The two rightsacquiring media groups decide the platforms on which they will broadcast (Free-to-air, Pay-TV, PPV).
306
380
* A pivot test for the commercialization of Premier League matches in PPV mode was recently performed. However, it had limited success. Additionally, in response to the COVID-19 pandemic, matches from the 2019-20 season were broadcast free of charge. ** - Additionally, there are 5 highlight-packages, pay- and free clips, audio and DOOH (digital out of home). *** PPV – pay-per-view. Source: SportsPro Media, MIDIA Research, LaLiga,, Ligue 1, Sports Business Institute Barcelona, International Study on Sports Audiovisual Rights | 17 The Guardian, Football Benchmark.
Who commercializes leagues’ rights internationally? All analyzed leagues, with the exception of Liga Portugal, negotiate their international audiovisual rights using a centralized model. The highest rated professional football leagues place a special focus on the centralized commercialization of international audiovisual rights. They recognize it as the main tool in the internationalization strategy of their tournaments and clubs, fueling growth in the number of fans and supporters.
League
International rights commercialization model
Furthermore, the centralization of audiovisual rights, through a more equitable distribution of revenues, increases competitiveness among clubs, promotes football as an energizing show and attracts a larger fan base. The expansion of that base in international markets generates larger audiences. In turn, it enhances the value of audiovisual rights to progressively boost the competitiveness of professional football and clubs.
Distribution of revenues of international rights
Internationalization strategy
Individually
Non-existent.
-
Through the League
Rules apply to all clubs. Starting in 2020, any increase in the current value will be distributed according to performance (not affecting the equitable component).
The Premier League always allocates one “big six” club to the premium time in the Asian market. Additionally, the Premier League has hired several professionals with regional expertise.
Through the League
Are integrated in the national revenue commercialization model.
In El Clásico, the first of two yearly matches is on a Saturday at lunchtime to reach the Asian market, and the second is on a Sunday night to reach the American market.
Through the League
Integrated in the national revenue commercialization model.
-
Through the League
50% based on the last five years performance, 25% in equitable shares, 25% based on the number of European matches played.
-
Through the League
Integrated in the national revenue commercialization model.
-
Collectively through the National Football Commission (since 2020)
Equal share to all clubs*.
Testing process for the next four years focused on market penetration, even if it affects negatively revenues in the short-term.
* In the international negotiation for 2020-24, an equitable distribution system is expected to be implemented. Source: SportsPro Media, MIDIA Research, LaLiga,, Ligue 1, Sports Business Institute Barcelona, The Guardian, Football Benchmark.
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How are revenues shared between clubs? With a model of individual negotiation and commercialization of rights, the difference in revenues between the first ranked clubs and the last becomes wider. Liga NOS and Série A (Brazil) are the professional football leagues that have the greatest disparity when comparing the audiovisual rights revenue of the highest earning club and the median value of that league.
League
With the exception of these two leagues (Portugal and Brazil), all other have a centralized negotiation and employ a distribution model for the revenues of audiovisual rights. This includes a fixed and equal component for all clubs, a component indexed to sports performance, and a component indexed to audiences and ticketing. Some have a share linked to the involvement of younger players in the matches.
Distribution of national rights
Direct and individual sale.
Difference in clubs’ revenue*
15,4x
50%/25%/25%: 50% are equally distributed among clubs; 25% based on audiences; and 25% based on the club’s performance.
1,6x
50%/25%/17%/8%: 50% are equally distributed among clubs; 25% based on club performance in the past five years; 17% based on audiences; and 8% based on the average number of tickets sold in the past five years.
3,5x
50%/20%/15%/10%/5%: 50% are equally distributed among clubs; 20% based on the dimension of the fan base; 15% based on club performance in the last season; 10% based on club performance in the past five years; and 5% based on historical performance.
4,7x
70%/23%/5%/2%: 70% based on club performance in the past five years; 23% linked to club performance in the past five years, but divided by 36 clubs (Bundesliga 1 and 2), with different shares for each club with the exception of the top six, that receive the same amount; 5% based on club performance in the past 20 years; and 2% based on the use of under-23 years-old players (an incentive to develop and empower youth).
3,5x
50%/30%/20%: 50% are equally distributed among clubs (30% fixed and 20% regarding licensing agreements with the league, related e.g., with infrastructure, financial ratios, among other factors); 30% based on club performance (25% regarding the current season, 5% the past five seasons); and 20% based on broadcasted matches (national and international).
3,1x
Globo - 40%/30%/30%: 40% are equally distributed among clubs; 30% base on club performance; and 30% based on broadcasted matches. In PPV, distribution is based on subscribers.Turner 50%/25%/25%: 50% are equally distributed among clubs; 25% based on club performance; and 25% based on audiences of the club’s matches. Fortaleza receives fixed revenues through a contract with Turner**.
6,4x / 5,2x**
*Difference between the club with the highest and lowest revenue of that league. **In the negotiations with Turner, Fortaleza competed in Series C and decided to settle for a fixed fee of 9 million Brazilian reais for the transmission in a private signal instead of a variable fee. Subsequently, the clubs that negotiated with Turner decided to equitably divide the variable fee of 140 million Brazilian reais , in which Fortaleza did not participate. Excluding Fortaleza from the analysis, the difference would be 5.2x. Source: SportsPro Media, MIDIA Research, LaLiga,, Ligue 1, Sports Business Institute Barcelona, International Study on Sports Audiovisual Rights | 19 The Guardian, Football Benchmark.
The evolution of the value of audiovisual rights In professional football competitions, the adoption of a centralized model for the commercialization of audiovisual rights is a key instrument to increase the competitiveness of tournaments and clubs.
Regarding the Premier League, the existence of a centralized model and the competitiveness and attractiveness of its football led to an increase in the value of audiovisual rights of 43% in the 2016—17 contract renewal.
Income growth, coupled with an equitable distribution of revenues, increases the clubs’ investment capacity and consequently improves and raises the quality of the sport. Additionally, the centralized commercialization of the international audiovisual rights is essential to increase commercial returns and leverage promotion and awareness in international markets.
In the Spanish case, centralized commercialization began with Royal Decree 05/2015 and allowed LaLiga’s audiovisual revenue to grow by 34%. No club has seen a decrease in revenue compared to previous seasons. This has also reduced the disparities in revenue among clubs.
The Premier League and LaLiga have consistently and continuously increased, not only their internal and external competitiveness, but also their international projection. Highquality football and the centralization of audiovisual rights have been key to these developments.
Bundesliga, despite having less 74 matches than the other European leagues, holds the third place in audiovisual revenues. The last renewal of audiovisual rights contracts in Brazil was the only one that did increase substantially total value for clubs. The value for Ligue 1 for the 2021—22 season does not consider Mediapro’s breach of contract, which will require new negotiations.
Audiovisual rights of major professional football leagues (values in billions of euros)
3.0 2.7
2.8
3.0
3.0
3.0
2.1
2.1
2.1
1.5
1.5
2.8
2.5
2.0
1.9 1.8
0.5
1.3
1.2 1.0 0.9 0.7 0.6
0.9
1.7
0.1
1.2 1.2
0.1
1.3 1.4
1.3
1.3
1.3
1.1
1.1
1.3
1.0 0.8
0.8
0.4
0.4
0.2
0.1
0.7 0.4
0.2
0.0
1.6
1.5
1.5
1.0
1.8
0.9
0.9
0.4
0.4
0.4
0.4
0.2
0.2
0.2
0.2
Notes: For seasons 2019—20, 2020—21 and 2021—22, the amounts in the chart refer to total values divided by the number of seasons, with the exception of LaLiga in 2019—20, which until now was the only one to disclose these values in 2020. For the 2021—22 season, Bundesliga commercializes its audiovisual rights for a period of fours years. Source: SportsPro Media, MIDIA Research, LaLiga, Ligue 1, Sports Business Institute Barcelona, The Guardian, Football Benchmark, Statista. 20 | International Study on Sports Audiovisual Rights
How is football reacting to the impact of COVID-19? Broadcasting of matches through open signal channels In 2020, after the COVID-19 outbreak and to minimize the impact of banning audiences from stadiums, the Premier League and the rights’ owners (Sky, BT and Amazon) broadcasted the remaining matches of the 2019—20 season through open signal, or granted free access via streaming platforms (for Amazon). Note that this procedure was not applied for the 2020—21 season, in which matches were once again broadcasted in a closed model, as before the COVID-19 outbreak.
Changes in the distribution of revenues from the commercialization of audiovisual rights During the pandemic, Bundesliga was the first league to negotiate the commercialization of national audiovisual rights of the four seasons that follow 2021—22. The negotiation resulted in a 5% reduction in the value of the current contract (close to €60 million). The reduction in the value of audiovisual rights became a trend before COVID-19. In 2019, the English league registered a reduction of 8%, despite the increase in the commercialization value on international markets. The DFL changed its distribution model for upcoming seasons to support the clubs with the mitigation of the long-term financial impact of the pandemic: •
Fifty-three percent of revenues from the commercialization of rights in the domestic market in seasons 2021—23 will be equally distributed among clubs, 42% based on team performance in the past four seasons, 3% based on the use of under-23 years-old players and 2% based on “club interest”*. For the following seasons (2023—25), the distribution will be based on a 50%, 43%, 4% and 2% model, respectively.
•
The distribution of international revenues will be made as follows: 35% of the amount distributed equally among the 18 clubs and the remaining 65% according to performance in European competitions.
Launch of a “media company” with the involvement of investment funds The Italian League, with the support of the Serie A clubs, created a new media company to manage the commercialization of audiovisual rights. Aiming to provide greater liquidity to the market that was severely affected by COVID-19, and also to boost revenues from the commercialization of audiovisual rights, Lega Calcio is negotiating the commercialization of 10% of the media company’s shares to private equity funds CVC Capital Partners, Advent International, and the Italian fund (Fondo Strategico Italiano, 1%). The total value of the contract is approximately €1.7 billion. Broadcasting matches through streaming platforms The transmission of matches via streaming platforms such as Amazon Prime Video and DAZN has been on for some seasons. However, as a way of involving more and new fans, some Brazilian clubs broadcasted their matches through streaming channels within the e-sports universe of Twitch. Recently, the clubs of Série A and Série B of the Brazilian championship negotiated their international audiovisual rights with the company GSRM, which transmits the matches via its streaming platform.
* “Club interest” of Bundesliga and Bundesliga 2 will be analyzed through market research, with a survey of 23 thousand people, representative of the German population aged 14 years-old and older. The distribution of this portion of revenue is made at the end of the season. Source: SportsPro Media, Reuters. International Study on Sports Audiovisual Rights | 21
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TER 3 International benchmarking of other professional leagues
What is the competitive model of United States leagues and how is it structured? The major USA professional leagues have a competitive model different than the one observed in football. Therefore, to better grasp the distribution and commercialization of audiovisual rights in these leagues, it is crucial to understand their competitive structure. The number of teams is considerably different from the usual number of clubs competing in football professional leagues. The NFL, MLB and NBA have at least 30 teams per competition, divided between two or three conferences. Each of these conferences is segmented down into three or four regional divisions.
League
NFL
Conferences/Leagues
The NFL has 32 teams divided into two conferences: NFC (National Football Conference) and AFC (American Football Conference). Each conference has four divisions: North, South, East and West.
MBL
The MLB is composed by 30 teams divided in two leagues: American League and National League, each one composed by 15 teams. These two leagues are divided in three divisions each: Central, East, West.
NBA
The NBA has 30 teams which are divided in two conferences: East and West. Each of these conferences is then divided into three divisions each: the Eastern Conference has the Atlantic, Central and Southeast divisions; the Western conference has the Northwest, Pacific and Southwest divisions.
Therefore, the commercialization of audiovisual rights includes not only the regional matches between teams of the same conference and between conferences, but also the nationwide matches disputed between the champions of each conference, the regional champions in each conference, and also the teams with the best performance in each of them. The final events generate strong television audiences, leading to high value in advertising campaigns (e.g., Super Bowl).
Regional matches*
National matches
Regular season matches: home and away matches against teams of the same division. These also include the matches defined by drawing against teams of the same and of a different conference, as well as two more matches defined through a calculation system adopted by the NFL.
Postseason (playoffs) matches and the final between the champion of each conference (Super Bowl). At this stage, the teams playing are the champions of each conference (eight from the AFC and eight from the NFC), plus the two best-performing teams in each conference (wildcard).
Regular season matches: played between teams of the same league and of different leagues. Each one of the 30 teams plays 162 matches at this stage.
Postseason (playoffs) matches and the final between the champion of each league (World Series). At this stage, the teams playing are the regional champions of each league (three from the American League and three from the National League), plus the two best-performing teams in each league (wildcard).
Regular season matches: matches between teams of the same conference (East or West), and against the teams of the other conference.
Postseason (playoffs) matches and the final between the champion of each conference (NBA Finals). At this stage, the teams playing are the regional champions of each conference (eight from the Eastern Conference and eight from the Western Conference).
*Regional matches with high broadcasting demand can be broadcasted nationwide (e.g., Clippers versus Lakers). Source: SportsMediaWatch, Investopedia, Sport Business Media, Forbes, LA Times, Statista, Harvard Business Review, Kansas City Star, ESPN, FanGraphs, Bola Presa, Torcedores, and Blog do Beisebol. 24 | International Study on Sports Audiovisual Rights
Who owns the audiovisual rights and how is the commercialization done? The commercialization model of audiovisual rights in the major US professional leagues tends to mirror the specific characteristics of their competitive structure.
In this context, the current model has encountered criticism, since the clubs with more supporters and followers are able to negotiate audiovisual rights for figures significantly higher than other clubs.
American football (NFL), baseball (MLB) and basketball (NBA) teams centralize the commercialization of audiovisual rights through the leagues. Nevertheless, it is important to state that MLB and the NBA only centralize the commercialization of audiovisual rights on nationwide matches. Regional matches are commercialized individually by clubs.
League
Rights owner
NFL
NFL
Centralized
MLB
National: centralized Regional: individual
NBA
National: centralized (NBA) Regional: individual (teams)
MBL
NBA
Commercialization model
MLB (baseball) teams receive more than half of their total revenue from the commercialization of regional rights, making them the league with the highest revenue in this component, followed by the NBA (basketball) and NFL (American football).
Commercialization model
Criticism to current model
Through the leagues
-
Through the leagues
In the distribution contracts of audiovisual rights for regional matches, larger clubs are able to negotiate audiovisual rights for significantly higher values than its competitors.
Through the leagues
In the distribution contracts of audiovisual rights for regional matches, larger clubs are able to negotiate audiovisual rights for significantly higher values than its competitors.
Source: SportsMediaWatch, Investopedia, Sport Business Media, Forbes, LA Times, Statista, Harvard Business Review, Kansas City Star, ESPN, FanGraphs, Bola Presa, Torcedores, and Blog do Beisebol.
International Study on Sports Audiovisual Rights | 25
How are the matches’ audiovisual rights traded and broadcasted? The centralization of audiovisual rights enables the definition and structuring of packages/bundles of matches, increasing the interest of potential buyers and boosting the value of audiovisual rights.
The NFL, MLB and NBA negotiate their audiovisual rights of national matches through packages that allow different media operators to broadcast each match on specific days on their platforms and/or on other communication channels.
In this context, the value of audiovisual rights depends on the number of matches included in the packages, the time of the year in which they are broadcasted, the hour in which they are broadcasted, and their competitiveness (e.g., a package that includes the Super Bowl will be more valuable than the others).
The matches that are not broadcasted nationwide are broadcasted by regional media groups, this being the main explanation for the disparities in audiovisual revenue between the larger and smaller clubs in each of the leagues.
League
NFL
MBL
NBA
No. of broadcast matches
+250
+2400
+1300
Distribution of audiovisual rights
Is the negotiation made in packages/bundles?
Pay-TV, streaming, free-to-air
Five packages are negotiated, two of them for regional matches (AFC and NFC). In each package, it is already defined the number of matches included, in which weeks the matches will be broadcasted, one or two “wildcard” matches (playoffs), and whether the match will be broadcasted in prime time or in the Thanksgiving national holiday. The Super Bowl is broadcasted every year by a single broadcaster. The owners of the rights are CBC, Fox, NBC, ESPN and ABC.
Pay-TV, streaming
Each channel broadcasts a specific matchday (Monday, Thursday Night Baseball), national holiday matches or wildcard matches. The media operators that broadcast MLB matches are FOX, ESPN, Turner and DAZN (as of the current season).
Pay-TV, streaming
For national matches, the broadcasting distribution is as follows: ABC - 19 matches (Christmas, Saturday night and Sunday afternoon), some playoff matches and the end of season matches (NBA Finals) until 2025; ESPN - 82 matches on Wednesdays and Fridays and 20 playoff games; TNT - 67 matches on Thursdays and 45 playoff matches; NBA TV - 106 matches on Sundays, Mondays, Tuesdays and Saturdays, and nine postseason matches until 2025.
Source: SportsMediaWatch, Investopedia, Sport Business Media, Forbes, LA Times, Statista, Harvard Business Review, Kansas City Star, ESPN, FanGraphs, Bola Presa, Torcedores, and Blog do Beisebol.
26 | International Study on Sports Audiovisual Rights
How are revenues distributed among clubs? Among the main US professional leagues, the NFL stands out, as a competition in which, in 2019, all teams received the same amount from the commercialization of audiovisual rights. In baseball (MLB) and basketball (NBA) there are significant differences, as the commercialization of audiovisual rights for regional matches is done through individual negotiation, with clubs selling the audiovisual rights related to their home matches.
League
To foster competitiveness among clubs, these three leagues distribute the national audiovisual rights (centralized) equally among all the clubs participating in each competition. Additionally, MLB clubs have created a revenue pool model, where all clubs share a percentage of their income which is subsequently distributed equally among all clubs, reducing the gaps generated from the commercialization of the audiovisual rights for regional matches (negotiated individually).
Distribution model
NFL
In the NFL, audiovisual rights are distributed equally among all clubs, allowing each NFL club to earn approximately US$255 million in revenue per year.
MBL
Revenues from national matches’ audiovisual rights are distributed equally. With the current contracts, each team receives approximately US$60 million. Audiovisual rights of regional matches are sold individually by the clubs. However, there is a collective agreement among clubs which determines that, during the season, each team places a fixed percentage of their income in a revenue pool. The full amount of this pool is distributed equally among all clubs.
Clubs’ revenue disparity (2019)
1x
(equally distributed revenues)
3,9x
Total audiovisual rights: US$310 million (Los Angeles Dodgers) US$80 million (Miami Marlins)
12,5x
Regional matches’ audiovisual rights: US$250 million (Los Angeles Dodgers) US$20 million (Miami Marlins)
1,9x
NBA
The NBA distributes the audiovisual rights revenues from national matches equally, with each club receiving approximately US$90 million. The audiovisual rights from regional matches are sold individually by each club.
Total audiovisual rights: US$212 million (Los Angeles Lakers) US$110 million (Miami Heat)
6,1x
Regional matches’ audiovisual rights: US$122 million (Los Angeles Lakers) US$20 million (Miami Heat)
Source: SportsMediaWatch, Investopedia, Sport Business Media, Forbes, LA Times, Statista, Harvard Business Review, Kansas City Star, ESPN, FanGraphs, Bola Presa, Torcedores, and Blog do Beisebol.
International Study on Sports Audiovisual Rights | 27
Evolution of the audiovisual rights value in the US leagues As opposed to what is regularly observed in the main European professional football competitions, USA leagues audiovisual rights contracts have a longer duration, providing greater stability in revenues coming from audiovisual rights.
matches, and the launch and broadcasting of the NBA Awards event. It should be noted, that this contract, provided higher flexibility for broadcasting matches (TV and streaming), allowing more people to access a greater number of matches.
In the 2016—17 season, the NBA signed a nine-year contract with ESPN and Turner. This contract has a value 3x higher than the previous eight-year contract.
The 2022 audiovisual revenue decline in the NFL and in the MLB relates to the fact that the renewal agreement with ESPN has not yet been operationalized.
This contract included the broadcast of more matches for each station (ESPN, Turner), the broadcasting of more playoff
Audiovisual rights in the main professional American leagues (values in billions of euros)
8.0 7.0
7.0
6.4
6.5
7.0
7.0
7.1
6.6
6.0 5.0
5.2
4.0 3.0
2.4
2.0 1.4
1.4
0.8
0.8
1.4
2.4
2.4
2.4
2.4
1.5
1.7
1.7
1.7
1.0 0.0
* There has not been a renewal with ESPN yet. ** Deal value with Fox and Turner. There has not been a renewal with ESPN yet. Source: SportsMediaWatch, Investopedia, Sport Business Media, Forbes, LA Times, Statista, Kansas City Star, ESPN, FanGraphs. 28 | International Study on Sports Audiovisual Rights
2.4
1.1**
CHAPT
TER 4 Overview of the current situation of audiovisual rights in the Portuguese professional competitions
Distribution model of the national clubs Currently, the commercialization of audiovisual rights for professional Portuguese football competitions is done individually by each club. Clubs negotiate directly with potential buyers, resulting in agreements encompassing different content types (e.g., rights, sponsorships) and deadlines. In the supply side there are audiovisual rights owners, namely football clubs (which commercialize the league matches), the Federação Portuguesa de Futebol (responsible for organizing the Portuguese Cup and Cândido de Oliveira Super Cup), the Liga Portugal (which centralizes the audiovisual rights of the Allianz Cup) and UEFA (organizer of the Champions League and Europa League). On the demand side, there are telecom operators, television channels (free and paid) and intermediaries. After several changes over the last few years, the number of audiovisual rights buyers for professional competitions in Portugal has been reduced to one intermediary (Olivedesportos) and two telecom operators (NOS and Altice). These entities sell the rights to
2008 - 2012 • Until 2013, Olivedesportos held the audiovisual rights of all matches, distributing them through Sport TV. • Benfica launched its own TV channel in 2008 to generate revenue through in-house distribution and the acquisition of other leagues’ rights (Premier League, Serie A) in 2013.
2013 • In 2013, the Competition Authority declared that it was illegal for Olivedesportos to own the clubs’ rights for periods exceeding three years.
channel providers (e.g., Sport TV, Benfica TV, Sporting TV), later to be broadcasted through telecom operators (NOS, Altice and Vodafone). It should be noted that telco operators are present at all stages, as they have joint ownership of Sport TV. This position has raised some competition issues, leading the Competition Authority to issue a recommendation favoring the centralization of audiovisual rights. The changes mentioned have significantly increased the value of the domestic first division rights. Even so, the individualized negotiation of rights does not allow a definition of criteria that promotes a more equitable distribution among the various clubs. This has resulted in the weakening of the financing model, reflected in the loss of internal and external competitiveness. Recently, the centralization of sports audiovisual rights in Portugal was negotiated, and will begin in the 2028—29 period.
2015 • NOS acquired the rights to Benfica TV, starting a bidding war between operators, leading to an increase in the value of audiovisual rights for clubs. • Altice and NOS purchased the rights of several clubs in the national professional leagues and established long-term agreements (>10 years), including other elements in the contract (e.g., sponsorships).
2017 • Altice, NOS and Vodafone established an agreement for the co-ownership and shared distribution of rights through Sport TV.
2018 - 2021 • The Competition Authority criticized Sport TV’s long-term agreements and capital structure, recommending a centralized commercialization process and the establishment of other measures to promote competitiveness. • Eleven Sports acquired the rights of the Champions League and LaLiga and entered into platform agreements with major operators. • In February 2021, the Portuguese Government approved the DecreeLaw determining the centralized commercialization of audiovisual rights starting in 2028—29.
* Study conducted by Graphite (commissioned by Liga Portugal) and EY analysis.
International Study on Sports Audiovisual Rights | 33
Fans’ access to audiovisual content In Portugal, access to professional football audiovisual content is granted exclusively through telecom operators (e.g., NOS, Altice, Vodafone, Nowo), however, Nowo’s consumers do not have access to Sport TV. An exception was observed with the entry of Eleven Sports in Portugal, which in addition to broadcasting through telecom operators, also broadcasts matches through its own platform.
The distribution of matches between several TV channels, the requirement of subscribing complete packages and the absence of pay-per-view models (in which users only pay the value of the sports events they watch), discourages the subscription of premium sports channels, leading supporters to search for alternative sources such as illegal streaming platforms, illegal IPTV services or card-sharing practices.
National fans have access to the events and related content by subscribing to premium sports channels, made available by the various telecom operators. Although some matches are broadcasted live on free-to-air channels (RTP, SIC and TVI), most matches involving national clubs are only accessible through premium sports channel subscription.
In this context, the absence of a joint approach to the commercialization of audiovisual rights has hampered supporters’ access to content and limited the value of audiovisual rights for owners and buyers, due to a greater incentive to piracy.
Specifically, football fans in Portugal have to subscribe to at least two premium channels (Sport TV and Benfica TV) to watch all matches. To view the Champions League, fans need to subscribe Eleven Sports.
As in most European leagues, from 2028—29 onward, the centralization of audiovisual rights will allow the creation and distribution of more coherent products, also enabling the structuring of more competitive audiovisual packages for fans.
Mapping of audiovisual rights for professional football leagues in Portugal (since 2008) Owner of rights
Buyer of rights
Channel supplier
Retail operator
Final consumer
Second division clubs Eight first division clubs*
NOS Olivedesportos
Others
Sport TV
Altice
Benfica TV
Vodafone
Altice SL Benfica NOS Sporting CP FC Porto
* Includes Académica, Arouca, Belenenses, Braga, Marítimo, Nacional, Paços de Ferreira and Vitória de Setúbal. ** Does not have access to Sport TV. Source: Study conducted by Graphite (commissioned by Liga Portugal) and EY analysis. 34 | International Study on Sports Audiovisual Rights
Nowo**
Consumers have access to all matches Consumers do not have access to all matches
Mapping and length of the contracts currently in place The centralization of the commercialization of audiovisual right contents is currently expected in 2028 (taking into account the length of the contracts currently in place). Most of the contracts signed by Liga NOS clubs expire in 2023. This means that efforts to ensure the centralization of audiovisual rights can begin. However, it should be noted that the contracts of greater value, namely the contracts of FC Porto, SL Benfica and Sporting CP, expire between 2026 and 2028.
attractive product, specifically if the ultimate objective is to have a robust strategy of promotion and penetration in international markets. Even so, alternatives can be developed with current audiovisual rights’ buyers for improving the profitability in international markets. From the 2028—29 season onward, audiovisual rights will be commercialized in a centralized way, with no room for individual negotiations. The centralization will be implemented through an entity created by Liga Portugal and the Federação Portuguesa de Futebol.
In this context, the beginning of centralization without the inclusion of these clubs may not generate a sufficiently
2021
AC Viseu, CD Mafra, Varzim SC, Leixões SC, Estoril Praia
Santa Clara, FC Famalicão, Gil Vicente FC, CD Tondela, Portimonense, Boavista FC
2022
Casa Pia AC, CD Feirense, GD Chaves, SC Covilhã, UD Vilafranquense
FC Vizela
2023
CD Nacional, SC Farense
2024
Estrela Amadora, CD Trofense
Moreirense FC
2025
SL Benfica, SC Braga, Belenenses SAD, Marítimo M., FC P. Ferreira, FC Arouca
2026
A. Académica
2027
FC Porto, Sporting CP, Vitória SC
2028
Rio Ave FC
*CD Cova da Piedade and FC Penafiel not included. Source: Liga Portugal. International Study on Sports Audiovisual Rights | 35
Asymmetries in clubs’ audiovisual rights revenues Liga Portugal is the only of the top 15 European leagues that does not have a centralized model and is the one that records a greater disparity in income among clubs. Besides the disparities in average revenue per club compared to other European leagues, asymmetries among clubs in Portugal threaten internal competitiveness. Approximately 73% of revenue generated by audiovisual rights is concentrated in the top three clubs. Furthermore, this inequality left a number of clubs at the survival threshold during the crisis. The outcome of the crisis is still uncertain for some of these clubs.
The asymmetries in revenues among Portuguese clubs also harm the internal and external competitiveness of Portuguese professional football. A significant share of clubs are relegation candidates in Liga NOS. Additionally, the low value generated by commercialization of audiovisual rights increases the dependency of revenues from players’ transfers. The commercialization of talent has a negative impact in the competition and quality of the sport.
Average annual TV revenue per top three clubs, 2019—20
Annual TV revenues of the first and last clubs in the league table, 2019—20
(millions of euros)
(millions of euros) 176 million euros is the approximate value of all TV rights in Portugal
*Value in 2020-21 season Source: Graphite (2019), Support on central selling and the valuation of the potential value of the media rights for Liga Portugal
First place Last place
*Value in 2020-21 season Source: SportsPro Media, MIDIA Research, LaLiga, Ligue 1, Statista
TV revenue of top three clubs compared to the median revenue of first division clubs
Source: European Club Footballing Landscape 2020.
36 | International Study on Sports Audiovisual Rights
The potential of international audiovisual rights Weight of international rights in the overall value of audiovisual rights
The absence of an integrated strategy and the depletion of part of revenue sources have made it difficult to promote a strategy that enhances the value of Portuguese football internationally. Internationalization is of a strategic importance to promote the competitiveness and commercialization of Portuguese football. However, the international rights of the national football are not yet sufficiently developed, despite the existence of a great potential to do so (e.g., countries with a high incidence of Portuguese emigrants, countries with Portuguese players / coaches, countries with players in Portugal). Despite its potential, Portuguese football lacks a strategy to generate value abroad. Through the centralization of audiovisual rights, the value generated abroad could be substantially higher. This has happened in the main European leagues and allowed the development of a solid internationalization strategy.
Source: Graphite (2019), Support on central selling and the valuation of the potential value of the media rights for Liga Portugal
Main football consumers in the globe
Countries with Portuguese emigrants
Countries with players in Portugal
(number of individuals interested in football, in millions, 2017)
(Portuguese immigrants, in thousands, 2019)
(Foreign players by nationality in Liga NOS, from 2012—13 to 2019—20)
CHN
CHN
IND
IND
BRA
BRA
MEX
MEX 94
RUS
RUS 56
RUS 56
TAI
TAI 54
ALE
187 FR A
CHN 187 IND
125
SUI125
125
MEX94
SUI 214
604BRA
BRA 604
214ARG
52 ARG
BRA 527
52
527
AR G
169
ESP
34 ESP
34
ESP
34
94RU
RU 165
RU 165
165
CBV
34 CBV
34
CBV
34
56
EUA
EUA 162
EUA 162
162
COL
33 COL
33
COL
33
54TAI
54
CAN
CAN 161
CAN 161
161
GNB
31 GNB
31
GNB
31
ALE 50
50ALE
50
ALE
ALE 115
ALE 115
FRA
30 FRA
30
FR A
30
TUR
TUR 45
45TUR
45
ESP
94ESP
94 ESP
94
NIG
29
NIG
29
NIG
29
ITA
41ITA
41 ITA
41
ANG
ANG 93
93 ANG
93
SEN
23
SEN
23
SEN
23
RU
34 RU
LUX
73 LUX
73 LUX
SER
22
SER
22
SER
22
RU
34
115
73
527
52
BRA 169
34
BRA 108
SUI214
FRA 604
BRA 169
108
BRA 108
187FR A
Source: Nielsen World Source: Football NielsenReport World Source: Football Nielsen Report World Source: Football Portuguese Report Source: Migration Portuguese Observatory. Source: Migration Portuguese Observatory. MigrationSource: Observatory. Liga Portugal. Source: Liga Portugal. Source: Liga Portugal. 2018 and World 2018 Bank.and World Bank. 2018 and World Bank.
International Study on Sports Audiovisual Rights | 37
CHAPT
TER 5 Predictable effects of the centralization of audiovisual rights
The centralization and potential value of audiovisual rights in Portugal In Portugal, several recent studies* estimate that with a centralized model the value of audiovisual rights could increase significantly. Estimates for different scenarios range between 275 million euros and 325 million euros of total revenues, meaning a potential increase between 56% and 85% (vs the current situation). Three alternative scenarios were considered to calculate the potential value of national and international audiovisual rights: • Best practices - benchmarks • Single operator scenario
The adoption of a centralized model for the commercialization of audiovisual rights could lead to an increase in value, thereby being one important tool for the development of leagues’ competitiveness. The centralization of audiovisual rights creates a range of other benefits apart from the increase in audiovisual revenues, such as: • Greater ability to adjust content according to the demand of operators and consumers • Better brand management
• Single channel scenario
• Equitable distribution while rewarding sports performance
The maintenance of a solution similar to the current one could generate a value close to 150 million euros, less than the sum of the value of the existing contracts (176 million euros).
• Greater investment capacity and internal competitiveness • Higher international exposure of competitions and clubs • Integrated and more effective measures against piracy
Total value of audiovisual rights in Portuguese professional competitions (values in millions of euros)
Single channel
Current value
Single operator
€144m -18%
€176m
€275m +56%
LaLiga growth
€317m +80%
Benchmarks
€325m +85%
Source: Graphite (commissioned by Liga Portugal). * Study conducted by Graphite (commissioned by Liga Portugal) and a study conducted by McKinsey (commissioned by Federação Portuguesa de Futebol) predicts potential revenues for the Portuguese football audiovisual rights of between €275 million and €325 million. 40 | International Study on Sports Audiovisual Rights
Audiovisual rights revenue increase The adoption of a centralized model for the commercialization of audiovisual rights has a wide range of advantages. These advantages support its implementation in European professional competitions. For the audiovisual rights owners – football clubs – the centralization of the commercialization of audiovisual rights generates a higher commercialization value compared to individual commercialization, as it currently happens in Portuguese professional football. Specifically, the adoption of an integrated approach provides a greater bargaining power, and stimulates the commercialization of packages/bundles. This enhances competition and, consequently, the global value of audiovisual rights. Additionally, the added gains generated by the adoption of a centralized model will result in higher revenues, enabling the implementation of distribution models that are more equitable. Higher income and equality foster clubs’ investment capacity, increasing sports competitiveness and the quality of football matches. Better matches attract a greater share of supporters,
boosting the value of audiovisual rights. This will allow the distribution of higher revenues, stimulating the development of a virtuous cycle. The main professional football competitions in Europe have placed the centralization of audiovisual rights and the focus on the creation of a strong brand as one of the main pillars of competitiveness and financial sustainability of clubs. One successful example of adoption of a centralized model for the commercialization of audiovisual rights is Spain - considering the disparity of values among clubs before centralization. The application of a centralized model through legislation allowed the increase of LaLiga clubs’ audiovisual rights revenues. National rights grew 80%, while international rights increased by 28%. In the Premier League, the centralization has been in practice for a long time and has allowed continuous revenue growth (with the exception of the most recent negotiation regarding the domestic market).
Audiovisual revenues evolution in LaLiga and Premier League (values in millions of euros)
National International
National International
Source: Sports Business Institute Barcelona.
42 | International Study on Sports Audiovisual Rights
Greater ability to adjust content to the demands of operators and consumers What distributors look for: Critical mass of content
Tradable assets
Platforms require a critical mass of content within the sport to provide a differentiated service and stimulate demand:
Distributors want high quality assets so that they can use them in television and telecommunication services:
• The subscription model is the main monetization method for most of the audiovisual rights owners.
• Featured events foster/stimulate engagement and adoption.
• Supporters want to have as few subscriptions as possible, so bundling is a key aspect.
• High profile events (e.g., season kick-offs, title matches) are the main focus of marketing activities and drive consumer acquisition.
• “The Home of…” will monetize the sport in a more effective manner.
How centralization helps: Package structuring - creating consistent and transparent packages allows potential buyers to plan and develop sustainable strategies for the monetization of rights. Additional content - centralization allows a more effective use of a wide range of extra content (e.g., pre-match and postmatch interviews, social media, multi-device). Duration of rights – the definition of consistent terms for the use of the rights allows distributors to have more certainty when planning and allocating investment.
Exclusivity and ownership - the ability to be associated with a premium asset presents high added value for distributors. Centralized commercialization clarifies the message to distributors and consumers. Premium branding and specific events – centralization can contribute to the creation of a brand that can be commercialized and sold, which is particularly important in international markets (e.g., Premier League success in Asia versus other properties).
Product
Competitive sales process
Value creation
Audiovisual rights owner’s ability to create an offer that suits the preferences and requirements of potential bidders
Audiovisual rights owner’s ability to create a commercialization process that attracts multiple bidders
Centralization enhances the value of the rights, allowing brand growth and more solid solutions for international positioning
International Study on Sports Audiovisual Rights | 43
Better brand management and message consistency From a brand management perspective, the adoption of a centralized model for the commercialization of audiovisual rights also leads to several benefits. By enabling commercialization in bundles, centralized commercialization allows the development of sports channels with content aligned with the preferences of consumers. The centralization of audiovisual rights enables the implementation of a structured and clear communication and a internationalization strategy under a common brand (e.g., Premier League, LaLiga, Liga Portugal).
rights goes to the competition’s organizer, LaLiga, for the promotion of professional football competitions in the national and international markets. After the centralization of the audiovisual rights, LaLiga has worked extensively on communication and brand promotion in international markets, increasing the number of followers worldwide.
As a matter of fact, the centralization of audiovisual rights enables a more consistent approach to the market, because in commercialization agreements there may be clauses that promote the standardization of the brand’s content and communication.
Changes in the commercialization of audiovisual rights allowed LaLiga to invest heavily in the promotion of Spanish football, leading to an increase in its fan base. The design and implementation of strong communication and promotion strategies, combined with a sophisticated audiovisual production, fostered the attraction of not only avid football fans, but also of sports and football casual supporters and entertainment fans.
In Spain, the Royal Decree 05/2015, which determined the centralization of audiovisual rights, established that 1% of the amount raised from the commercialization of the audiovisual
Improvements in brand management and message consistency make the audiovisual product more attractive to potential buyers, leading to an increase in its value. Key aspects • Analysis of potential unique selling points (foreign fans, international players) • Analysis of existing commercial practices and offers • Benchmarking and best practices analysis Potential buyers • Analysis of key international markets, currently covered geographies and existing gaps • Analysis of the different markets segmentation possibilities, while checking whether it is preferable a direct approach or through an agent Go to market • Identification of audiovisual product main strengths and areas for improvement • Review of proposals and commercialization processes, identifying areas for improvement • Benchmarking and best practices analysis
44 | International Study on Sports Audiovisual Rights
Equitable distribution while rewarding sports performance The centralization of audiovisual rights promotes greater competitiveness of internal competitions, mainly because it allows the adoption of more equitable distribution criteria, linked to sports performance. In the main European leagues, the distribution of audiovisual revenues follows a set of criteria that seeks to guarantee competitiveness and equality among the different clubs. It is important to state that the amounts earned by clubs at the bottom of the classification are clearly higher than the average revenue earned per club in Portugal, and in some cases above the amounts earned by the major Portuguese football clubs. In Spain, it is established that 90% of the rights value goes to clubs participating in the first division, with the remaining 10% going to clubs in the second division.
allocation rule takes into consideration the classification in the previous five seasons, with the last season weighting 35%, the preceding 20% and the remaining ones 15% each. In the second division, only the last season is taken into account. A compensation fund allocates 3.5% of the rights value to relegated clubs. The charts below demonstrate the impact of the centralization of audiovisual rights in LaLiga. There was not a drop in the audiovisual rights revenues of the two clubs with the highest revenues (Barcelona and Real Madrid), and all the other clubs saw their revenues growing significantly and progressively - from the positions at the top of the table to those at the bottom (5.6% Tier 1 versus 179% Tier 6).
In the first division, the Royal Decree 05/2015 establishes a rule for allocating revenues based on the rank position. This
LaLiga audiovisual rights revenue distribution in the 2019—20 season shows that the process of solidarity and equitable distribution has evolved, as there is currently a greater proximity between clubs with higher revenues and the remaining.
LaLiga audiovisual rights revenue distribution before and after centralization
LaLiga audiovisual rights revenue distribution in 2019—2020
(millions of euros)
(millions of euros) Variation
Source: Palco 23 and LaLiga. 46 | International Study on Sports Audiovisual Rights
Variation
Position
Position
A more equitable distribution did not mean less income for clubs with higher revenues from audiovisual rights. On the contrary, Real Madrid and Barcelona increased revenue by 13% and 20%, respectively, between the 2014—15 and 2019—20 seasons. However, the weight of the amount received by the two Spanish clubs in the total value decreased by around 17 percentage points. All the medium and small clubs registered increases in audiovisual revenues. It is important to note that in the 2019— 20 season, the audiovisual revenue of the club at the bottom of the Spanish league was higher than the average revenue of the top three clubs in the Portuguese league.
it is added a conditional amount, which is linked to sports performance which is calculated based on the club position in the league ranking in the last season. English clubs also receive facility fees, which is an income item based on the number of broadcasted live matches. The live broadcasting of at least 10 matches per season is guaranteed to each club. Until 2020, revenues from the commercialization of the Premier League international audiovisual rights were distributed equally among the clubs. From 2020 onward, the additional value obtained from the subsequent negotiations will be distributed based on sports performance.
In the Premier League, around 50% of the audiovisual rights value is distributed equally among all clubs. To this value
Premier League audiovisual rights revenue distribution in 2019—2020 (millions of euros)
Source: Statista.
International Study on Sports Audiovisual Rights | 47
Premier League: greater investment capacity and internal competitiveness The centralized commercialization of audiovisual rights is essential to increase commercial return and clubs’ competitiveness. More specifically, the strengthening of the negotiating power from a centralized model allows an increase in the audiovisual rights received by clubs and establishes a set of criteria that guarantees an equitable distribution of resources. A more equitable distribution of the audiovisual rights revenues makes it possible to ensure that the various clubs are able to invest in talent and infrastructure, consequently improving the competitiveness and quality of their football.
£1,400 million per year on international audiovisual rights revenue (2019)
1,000 million households with access to the Premier League worldwide
686,000 international viewers
£555 million spent by international viewers
The Premier League is a paradigmatic example in this regard. The continuous and consistent increase of its international projection is based in the development of internal competitiveness, due to the clubs’ greater investment capacity.
Success factors Strength of the audiovisual offer Highly committed fan base Competitiveness and quality of football
Greater internal competitiveness has also been an essential aspect of the internationalization process of professional competitions, assuming a major role in the fan base expansion and in the increase of commercial revenues.
1. Promote vibrant and engaging competitions that enhance
1. High qualityfootball
attractiveness among the fans
2. Convert fan interest into business results and sustainable growth 4. Improvement andinvestment
2. Commercial success
3. Distribute resources in an equitable manner, so that clubs at all levels can invest in talent and infrastructure
4. Invest in the development of talent, resources and 3. Equitable distribution
Source: EY (2019), Premier league – Economic and Social Impact.
48 | International Study on Sports Audiovisual Rights
technologies that foster competitiveness
LaLiga: increased internationalization of competitions and clubs Currently, internationalization is a strategic component in fostering competitiveness and commercialization in professional football competitions. The two leading competitions in UEFA ranking - Premier League and LaLiga - are also the ones with the larger global audiences. The strategy of these two leagues places a significant importance on internationalization. The commercialization of international audiovisual rights is a key component in this strategy. Revenues from both leagues have shown a high growth trend, reaching considerable figures. The adoption of a centralized model of commercialization of audiovisual rights emerges as fundamental for the competition’s internationalization, as the revenue growth increases the capacity to invest and allocate funds to promotion efforts.
In Spain, the Royal Decree 05/2015, which established the centralized model, defined that 1% of the value of audiovisual rights should to go to the promotion of professional football. LaLiga has managed to implement an effective internationalization strategy, which stands out for its value creation and for the diversification of revenue sources, while having a positive impact on the value of audiovisual rights.
LaLiga strategic pillars 1. International expansion 2. Digital 3. TV and audiences 4. Brand awareness 5. International communication
Strategy pillars of LaLiga internationalization Business development
Development of sponsorship deals Licensing agreements Development and execution of new business models
Brand awareness
Improving brand’s reach and awareness in each market Support to local broadcasters Development of new international events New opportunities for LaLiga Foundation
Digital development and communication
Customized content for each market GLOCAL strategy
Club’s international development
Local support to the development of new markets Consulting regarding new market opportunities Support clubs’ international projects
Institutional
Strategic alliances with leagues, federations and other institutions LaLiga representation at local events
Priorities
Value creation Audiovisual rights revenue increase
International Study on Sports Audiovisual Rights | 49
An integrated and more efficient fight against piracy to increase the value of rights The fight against piracy is fundamental when negotiating audiovisual rights. Piracy reduces the economic value to both audiovisual rights owners and also to all other stakeholders surrounding them, namely clubs, fans, competition organizers and the State. The adoption of an effective strategy to combat piracy safeguards and reinforces the value of audiovisual rights, as the buyers have a guarantee that the acquired assets are unlikely to be targets of counterfeiting. The fight against piracy is therefore a priority in professional football competitions with large media impact. Investing in anti-piracy technologies is seen as an essential instrument to highly valued audiovisual rights, both in the domestic and international markets.
campaigns focused on the negative impact of counterfeiting in the industry. The adoption of an anti-piracy strategy is essential to protect and enhance audiovisual rights. The centralization of rights is an important step for this. It allows the release of funds to invest in more sophisticated tools to combat piracy contributing to increase the value that buyers receive. Additionally, centralization promotes a better identification of acquirers and distributors. It implies having greater control over broadcasting and higher effectiveness to implement strategies against piracy. The structuring of competitive packages can also result in offering products more in-line with consumer preferences reducing the incentives for piracy.
The two largest football leagues in the world are excellent examples: the Premier League and LaLiga. Both have been investing heavily in solutions to combat piracy by adopting cutting-edge technological tools and creating awareness
Estimate* of revenues lost due to counterfeited audiovisual contents in Portugal (includes more than sports and professional football) Clubs, channels and theaters
• •
Interveners
(e.g. players, referees, managers, fans, producers)
55% of the actual annual audiovisual rights value of Liga NOS Between 30% and 35% of rights value in a centralization scenario
Owner of rights
Content distributors
Portuguese State
Lost revenues*
Non-declared taxes
(estimated values)
(CIT, VAT)
Users
Revenues
Card sharing
171,000
€28.1
€34.9
Streaming & IPTV
371,000
€69.2
€14.2
€12.5
€6.3
TOTAL €109.8 million
TOTAL €55.4 million
users
Theater tickets *EY estimate based on own studies and other studies by Adobe, ANACOM, Deloitte, EUIPO and ICA.
50 | International Study on Sports Audiovisual Rights
E-commerce (ISP)
users
-
million
million
million
million
million
million
CHAPT
TER 6 Conclusions and recommendations
The road paved by major leagues should constitute an inspiration to Portugal In the current sports context, the centralization of audiovisual rights is a key element to promote the competitiveness and attractiveness of competitions. The main European and US leagues have adopted a centralized model for the commercialization of rights, creating a virtuous cycle for competitiveness. The integration of supply associated with centralized models increases the value of audiovisual rights. A more equitable distribution criteria, allows clubs to have greater capacity for financial investments, thus enhancing the quality of their squads, training capacity and talent retention; ultimately improving, at all levels, their competitiveness, both nationally and internationally. It was based on this approach that the Premier League, LaLiga, Bundesliga, Serie A and Ligue 1, in Europe, and the NFL, MLB, NBA, in the USA, have fostered the athletic, commercial and financial success of their tournaments and clubs.
Centralized marketing promotes higher consistency in messages, brand management and increases the capacity to invest in the fight against piracy. Strong brand promotion and anti-piracy strategies amplify the international reach of tournaments and clubs. All this while giving a higher value to sports rights. For instance, the Premier League, LaLiga and Bundesliga, are able to sell regional advertising boards and sponsorships customized to the markets where the matches are broadcasted, enhancing the value of rights in international markets. Portugal has not yet implemented a strategy for the commercialization of audiovisual rights. This is visible in its internal competitive asymmetries, and in the decline of clubs’ ability to compete internationally. In addition to weak competitiveness vis-à-vis other leagues, the value of the first division rights is concentrated in the top3 clubs. This disparity is the widest, among the major European leagues.
The progressive reinforcement of competitiveness, based on the increase of audiovisual rights value, has allowed competitions to attract a growing number of fans at a national and international level.
The difference between those who earn more and those who earn less is the main barrier for the development of any integrated strategy. In the recent case of centralization of audiovisual rights of LaLiga it was necessary to ensure that centralization Real Madrid and Barcelona would not lead to a decline in in revenues.
Commercialization of audiovisual rights in international markets often represents a sizeable portion of the overall value of audiovisual rights. In some cases, it is as high as the domestic market value (e.g., 46% in Premier League, 43% in LaLiga). The Premier League, in its most recent contract renewal, managed to leverage its international revenues, thereby offsetting reductions in their domestic market. Today, it broadcasts matches in 188 out of the 193 countries recognized by the UN.
The absence of a centralized model also makes the existence of a sustained international strategy difficult. In fact, international audiovisual revenues of Liga Portugal are marginal compared to total revenues. In the case of centralizing Spain’s LaLiga, it was important to clearly present its benefits, specifically the greater potential for international competitiveness and globalization of brands.
The advantages of adopting a centralized commercialization model go beyond an increase in the value of audiovisual rights, a greater investment capacity and internal competitiveness. The centralized model also entails a set of benefits in the commercial and marketing domains.
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Despite recent efforts, the lack of centralization also limits the strategy definition against piracy, as well as the capacity to finance it. Taking into consideration the inherent benefits of centralization, in February 2021, the Portuguese Government
regulated the centralization of the commercialization of audiovisual rights. It shall begin in 2028—29 (respecting contracts currently in place). Liga Portugal and the Federação Portuguesa de Futebol will implement the centralization through a society created for the sole purpose of managing the centralized negotiation process. The business model will be presented by the end of the 2025—26 season.
The strategy to be implemented should take into account the benefits presented in this study, the risks associated with the process, as well as the governance structure and regulatory environment in Portugal and Europe, to leverage commercial and audiovisual rights’ revenues. Ultimately it should take Liga Portugal and the Clubs to a higher level of international development while substantially increasing competitiveness.
1
Major sports leagues use a centralized model to commercialize their audiovisual rights.
2
By centralizing audiovisual rights, major sports leagues increased significantly their overall value. In Portugal, a centralized approach could have an estimate impact in revenue growth of 56% to 85% (revenues ranging between 275 and 325 million euros).
3
The value of audiovisual rights in international markets is higher after centralization.
4
The centralization of audiovisual rights allows a more equitable revenue distribution among clubs, increasing investment capacity and boosting football’s national and international competitiveness.
5
Even in sports leagues with larger revenue disparities among clubs before centralization, it was possible to define centralization models that protected the different clubs from revenue reductions.
6
Strategies for increasing the value of the tournaments, brands and content value are more consistent in leagues with centralized audiovisual rights.
7
Leagues with centralized audiovisual rights have a greater capacity to combat piracy and create additional content to attract a larger fan base.
8
The internationalization process of Portuguese football is easier if done in a coordinated and integrated manner (vs club individual manner).
9
The current momentum in Portugal is adequate to discuss and design the most suitable model of centralization for audiovisual rights of professional football tournaments.
The centralization of audiovisual rights was a paramount factor for major European football leagues to reach higher competitive levels to create a wider lag between them and the remaining leagues.
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Contacts Miguel Farinha Ernst & Young S.A. Portugal, Partner Phone: +351 217 912 000 E-mail: miguel.farinha@pt.ey.com
Hermano Rodrigues Ernst & Young S.A. Portugal, Principal Phone: +351 932 596 144 E-mail: hermano.rodrigues@parthenon.ey.com
Pedro Daniel Ernst & Young, Brazil - Consulting, Executive Director Phone: +55 11 2573 5213 E-mail: pedro.daniel@br.ey.com
Gustavo Hazan Ernst & Young, Brazil - Consulting, Senior Manager Phone: +55 21 3263 7174 E-mail: gustavo.hazan@br.ey.com
Rui Ferreira Ernst & Young S.A. Portugal, Manager Phone: +351 932 599 300 E-mail: rui.ferreira@parthenon.ey.com
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