Sports Television: Right Investments in Changing Times

The world of sports television is and has been changing for now a number of years. This being triggered by new technologies, shifting demographics, the bidding wars over TV rights and the rise & fall of different sports. This does make it for a slightly complicated web of what attributes to what but what is known for sure…technology and how we watch + consume live sport is here to stay.

A Symbiotic Relationship

Sports coverage is part of the bread and butter for TV networks and sports leagues. TV rights are what contribute to the sport leagues revenues. Below you find the Premier Leagues break down of revenues from 2012 to projections (Source: Deloitte Analysis).

Screen Shot 2017-06-13 at 10.34.04 AM

These changes in sports television have put major tv networks under pressure of putting the money in the right areas, the gamble and risk.

Yet the same exists within  Sport Leagues, investing and creating links with Social Media platforms and selling rights to the right buyers. However there is the new player, the ‘disruption’ in the media…which goes by DAZN, the Netflix of Sports per say. Available in only Germany, Switzerland, Japan and Austria. Simple, unlimited sport live and on-demand for a monthly fee. Only just a few days ago did they clear a deal with Sky Deutschland to sub-license UEFA Champions League.

Personal views on DAZN, brilliant idea. But definitely with the power that companies like Sky Sports, BT Sport, and ESPN have…breaking this mould could prove slightly difficult. Yet, as mentioned the relationship between sport leagues and television is a ‘scratch my back and I’ll scratch yours’. If sport leagues begin to see the value or are willing to take the risk and approach; or vice versa by someone like DAZN…rights could be shifted around. Demographics & Technology being the biggest factor in bringing change to how we watch sport.

Demographics

In a recent study by Nielsen, the average age of people (U.S Population only) that tune into a number of sports (24) has gone up. The study reflecting and comparing on figures from 2000, 2006 and 2016. The only sports to have not significantly changed being the NBA, MLS and WTA. Rugby however not included within this research…however this is bound to change.

Currently top 3 sports with the oldest average age at 64 is PGA Tour Champions, PGA Tour and Figure Skating. The three youngest all being within football: Liga MX (Mexico) (32), International Football (35) and MLS (32). Potential reasoning behind this being the international interest of football plus it now being one of the first games a child takes active participation in when young. Football players to are very much engaging on their digital networks plus strong brands within the Premier League and international moves from players like David Beckham, Jermaine Defoe, Frank Lampard and Steven Gerrard highly influence.

The most significant jump in average age being the NHL…from 2000 the average age has jumped 16 years (33-49 years old). In 2000 it had the youngest average viewer. This being drastic in over 16 years in comparison to the NBA (+2 ) and NFL (+6). Personally I think the move by the NHL to not include themselves within the 2018 Winter Olympic Games will do further harm. As the Games aim to be younger and appeal to a further wider audience than ever before.

Study brief found here.

Investing at the right time…

Just towards the end of April this year it was signed off that NBC will have exclusive US broadcast rights to the Mens and Women’s Rugby World Cups, U20 Championships and Sevens World Cup until 2023.

Rugby is one of the fastest growing sports in the US and now has over 40 million fans. Factors contributing being its addition to the Olympic programme in 2014, plus the exposure it receives from the 7’s game. Not to mention the Rugby Sevens World Cup is being held in San Francisco next year. The rights sharing the game on all of NBC’s platforms. NBC’s aim is to be the the US destination for rugby coverage.

Secondly, and one to watch for…Formula 1. NBC and Formula 1 struck a deal in 2013 under the previous owners, Delta Topco. Which since then have been taken over  by Liberty Media in 2016. The deal coming to an end this season. The rights being originally bought for just around $3 million and F1 being shown on NBC Sports not on NBC itself. Liberty Media since taking over have criticised this price as too low and want networks to realise the value of F1 by increasing revenues and creating a what you could say a bidding war. For the UK Formula 1 broadcasting rights there was Sky, BT and BeIN. Liberty are aiming to have a similar situation occur in the States. If NBC were to turn down and not be willing to invest much further in F1, I personally think this would be a poor deal. Why? Formula 1 this season has already seen further engagement on digital platforms and events surrounding the F1 meets. Take a look at CSM’s research into the new F1 fan segments, one of which is the ‘New Wave’.

Not to mention NBC have the rights to the Premier League for the next 6 years.

Over-investing and little return…time to cut the costs.

Case example: ESPN. It made headlines, ESPN in late April this year let go of 100 staff members including on air anchors and writers. Essentially it comes down to the maths, over the past 5 years ESPN have lost near 10 million subscribers. Less subscribers, less revenue, less advertising of course something has to give in order to make up for the loss in numbers. And overall this hasn’t happened to just ESPN, near all TV networks have lost subscribers.

However ESPN has paid outright enormous sums of money for sports that are taking a hit from viewership numbers example: Monday Night Football (American). Paid= $1.9 billion. Lowest audience of all prime time games.

It is reported that ESPN will spend around $7-8 billion on content alone this year with all rights they hold. In 2009 their content cost was $4.75 billion. 2009 was a very different time, Snapchat didn’t even exist and is now a go to app for some people to see behind the scenes and receive sport news. The over-investment into television content as the age of digital media has grown is ESPN’s downfall.

Plus it has been realised with the lay offs, NHL coverage will suffer. Again not helping with the mix of other factors going on within the sport currently.

However of course people have their arguments as to why ESPN is suffering. One of the big reasons being, sports has become too politicised. People are cutting the cord due to not being able to ‘escape’ the political scene when tuning into sport. This idea mainly seemingly coming from the right wing saying ESPN has gone too liberal (Breitbart, HuffPost, National Review, 2017). From reading a number of articles with a number of takes on this (I don’t think I will forgive myself for actually reading something from Breitbart). I can see the slightest reason, yes people want to escape, escapism being one of the great qualities of sport. No one even likes to talk politics at the family dinner table. BUT the world has changed very much socially and these heavily implicating onto sports and society. Racism, misogyny, environmental impacts of matches and events are now I believe part an parcel of sport and need to be discussed. This I can imagine being another post…

Sources: The Drum, Clipboard, Recode, Huffpost, SB Nation, NBC, World Rugby.

 

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