By Robin Tozer
The Indian Premier League (IPL), the world’s biggest cricket competition, recently announced a TV rights deal worth a record US$6.02bn (£5.13bn), doubling the previous deal. The IPL is now one of the most valuable global sports leagues alongside the NFL in the US and the English Premier League.
The biggest sporting properties can still command huge premiums as media groups use Sport to build audiences. However, across the whole sporting landscape, the picture is mixed, and things may be about to change. In the UK, the sports rights market is in flux with some big new entrants and a change of approach amongst some of the traditional rights buyers.
The UK sports rights market was effectively born 30 years ago when Sky acquired exclusive rights to the newly formed Premier League, to accelerate the demand for its TV subscriptions. And it worked, generating considerable wealth for both. Other UK sports like Cricket and both codes of Rugby, went fully or partly behind a paywall.
The BBC and ITV, who had traditionally dominated the sports broadcasting world, couldn’t compete, and had to rely on events like the Olympics and World Cup, which the government had declared ‘crown jewels’ that must be freely available.
The next big shock was the launch of BT Sport, and in 2013, it took the rights to the Champions League, previously held by Sky and ITV. The stage was set for BT to build a genuine competitor to Sky Sports.
However, almost a decade later, it announced it was selling a stake in BT Sport to Discovery, with the expectation that Discovery would buy the whole thing.
One of the bidders for BT Sport was sports streaming service DAZN, which has a US$1 billion (£800 million) deal with Anthony Joshua’s promoter, Eddie Hearn’s Matchroom (which had previously been with Sky), to broadcast his fighters’ bouts to US viewers. DAZN is backed by Leonard Blavatnik and is building a portfolio of rights across Europe, including La Liga in Spain and Serie A in Italy. DAZN is spending billions on rights but is losing billions.
And for TV companies, here is the problem. How do you generate a return from all that investment? The cost of Premier League rights keeps going up, meaning customer subscriptions also need to keep going up. The first Premier League deal was £300m for Sky to own the rights exclusively, and the last in 2021 was £4.8 billion for three years, with packages bought by three companies – Sky, BT and Amazon.
Even with more games being broadcast the cost per game is over £10 million, and audiences for matches vary. Manchester United versus Liverpool generates a big audience, Norwich versus Burnley, not so much.
At Sky and BT, priorities are beginning to shift. For BT, its focus is on the rollout of superfast broadband where it can make a much bigger return. Sky is pumping more money into original comedies and dramas and deals with HBO and others. Sport doesn’t drive subscriptions like it used to. Younger consumers in particular, are very hard to reach.
It had been long-assumed that the big streaming services like Netflix and Amazon might one day become big players and fill any void. Amazon has dipped a toe into Sport with Tennis, some Rugby, and the Premier League at Christmas to get people to sign up to Prime. However, a £1 billion Lord of the Rings prequel series soon to be launched, suggests that Sport will not be a big focus of its investment. Netflix’s resources are now looking stretched.
So, as prices rise, subscription services multiply, and the cost-of-living crisis bites, something has got to give. The worry is that paying for Sport might be the first to go as part of any household cost cutting.
Sports like Rugby and Cricket are looking again to free to air. Falls in grassroots participation are in part blamed on a generation of children who lacked access to see their heroes regularly on TV. In England, a new cricket competition was created called The Hundred, in part to encourage the BBC to show the Sport again. Channel 4 is now showing rugby union and league as Rugby looks to grow the game.
Sports themselves can’t afford to see TV income drop. Football clubs are wrestling with continued wage inflation. PSG recently agreed to a contract with star player Kylian Mbappe worth €450million. So, they must generate more and more income. To keep interest up, clubs need to keep offering TV companies more. More games, more access to the players, even cameras in the dressing rooms has been suggested, which is common in the US. Anything to make the rights more valuable or to create social media moments that companies can monetise.
The next few years may see a tipping point. One idea long-mooted is that the likes of the Premier League cut out the middle man and create their own streaming service. Go direct to consumers around the world. If you can own the relationship with the viewer directly, then that also opens up a world of other selling opportunities. Premier League TV maybe on its way.