1. Introduction

CHAPTER 1

Introduction

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 USA, 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 onwards 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

Europe Professional Football Leagues Models

Premier League (England), LaLiga (Spain), Bundesliga (Germany), Serie A (Italy), Ligue 1 (France) and Liga NOS (Portugal)

United States Models

NFL (American football), NBA (basketball), and MLB (baseball)

Brazil Model

Brazilian Championship - Série A

International benchmarking - key figures

An analysis of the amount of revenues earned by different professional leagues yields that the NFL (USA 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 euros for the commercialization of its audiovisual rights.

On a second tier are the Premier League (the main professional football league in England) and the NBA (the USA basketball league), which receive 2.8 billion euros and 2.4 billion euros 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 (the NorthAmerican baseball league), with values ranging from 0.9 billion euros in France to 1.9 billion euros in Spain. 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 to 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.

One of the goals of the already approved centralization of the Portuguese professional football audiovisual rights from the 2028-29 season onwards 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

2,4mM /ano

2016-25

7,0mM /ano

2014-21/22

1,7mM /ano

2014-21

0,9mM /ano

2016-20

1,9mM /ano

2019-22

0,176mM /ano

2019-20

0,4mM /ano

2019

1,5mM /ano

2017-21

/ano1,4mM /ano

2018-21

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.

Distinctive aspects of major world leagues

The audiovisual rights of the six major European leagues and the three largest American leagues generate annual revenues of 20 billion euros

When compared to the distribution of the Portuguese clubs audiovisual rights, the major leagues stand out in the following aspects:

• The major European and American 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.