All the Money around Sports Broadcasting
Sports rights are more important than ever, as worldwide broadcasters compete for their share of tense live-action and viewers remain riveted to their televisions. Sky’s acquisition of domestic rugby rights in New Zealand for a reported $400 million underscores the importance of possessing the top sports rights in each area. High-level sport is one of the few things that draws a regular mass audience in an era when most of us have an abundance of entertainment at our disposal. As Netflix chips away at conventional television, tech titans Apple and Disney plan to launch their streaming services by the end of the year. Broadcasters understand the importance of paying for important athletic events to retain subscribers. First, it was football, then F1, then the Rugby World Cup, and now it’s cricket. Spark Sport has obtained the broadcast rights to New Zealand Cricket in a six-year arrangement. Sky’s megadeal comes as global sports rights auctions approach all-time highs. According to Sports Business Consulting, the worldwide value of sports rights reached $49.5 billion in 2018, up from $36.2 billion five years earlier. According to experts, sports rights are expected to be worth $52.2 billion by 2021
Why are sports broadcasters paying exorbitant fees?
How do they monetize their content? Are big players more concerned with increasing advertising revenue than increasing subscriber numbers? Will broadcasters struggle to make a profit as their costs rise? While New Zealand is a minor market globally, Korean sports broadcasting monacoktv25
the record price for rugby rights follows a global trend. Popular sports rights are in high demand, with an ever-growing field of buyers. Local streaming firms like Spark Sport have entered the competition, while digital behemoths Amazon and Facebook have shown an interest in overseas markets. Now that rugby rights have been secured, the battleground for the next big sports packages will be redrawn. Amazon Prime paid an unknown price for the UK rights to a further fixtures package, while foreign rights have climbed dramatically in value over the last five years. Broadcasters see live sports as an important way to retain subscribers, generate advertising income, and encourage new subscriptions. “Broadcasters pay a lot for sport because it’s the finest live, unscripted drama they can get,” says Dan Jones, director of Deloitte’s Sports Business Group. “It’s best absorbed live, so it’s appointment television, creating a buzz.” Sport, according to Jones, remains the ideal product in an ever-expanding universe of material. In the United Kingdom, broadcasters spent around NZ$9.4 billion for three years of English Premier League Football rights. “Traditionally, broadcasters have paid for something in order to profit from it,” Han explains. “However, they are increasingly paying for something likely to be loss-making to attract a large audience and promote their whole network. As a result, they may market the rest of their program, creating a halo effect.” The sport continues to be the ideal product in an ever-expanding universe of entertainment. How do broadcasters repay their massive investment in sports rights? Han claims that while profiting from the rugby rights will be “difficult,” the agreement will enhance company profitability and “help arrest subscriber losses.” Sports rights are now more precious than ever before. Now that rugby rights have been secured, the battleground for the next big sports packages will be redrawn. For the time being, broadcasters will do everything they can to maintain a piece of the action.