Every so often a deal is signed that has the potential to transform the commercial outlook for a sport in a given territory or region forever. In South American soccer, such an agreement was announced a little over a year ago.
In September 2017, Conmebol, the continent’s highest soccer authority, put pen to paper on a wide-ranging partnership with agency powerhouse IMG and Perform Group, the digital media specialist which recently rebranded as DAZN Group. Under the terms of the four-year deal, which covers the period 2019 to 2022 and is reportedly worth in the region of US$1.4 billion, the two entities would team up to create FC Diez Media, a 50/50 joint venture that would work exclusively to package and commercialise media and marketing rights to Conmebol’s top continental club competitions, including the elite Copa Libertadores and the second-tier Copa Sudamericana.
While the price tag garnered much of the attention - the guaranteed minimum represented more than double the income of Conmebol’s previous agreement - the significance of the deal did not go unnoticed. For the first time in its 100-year history, Conmebol had issued a formal invitation to tender for some of its most coveted and lucrative rights - a process implemented after many of the confederation’s top executives were embroiled in the 2015 Fifa corruption scandal that centred on the awarding of these types of commercial contracts.
“This contract represents a huge advance towards our strategic goal of generating more value for the development and growth of South American football,” Conmebol president Alejandro Domínguez said after accepting IMG and Perform’s offer. “We believed in big, we did things well, and today we achieved a great result.”
Last year Conmebol accepted a US$1.3 bilion offer IMG and Perform’s FC Diez joint venture to manage South America's top continental club soccer competitions
Spanning consultancy in the areas of audiovisual media rights, sponsorship, licensing, broadcast production, competition growth and digital strategy, FC Diez Media’s remit is broad. Overseeing that expansive mandate is acting chief executive Bruno Rocha, who, as chief commercial officer at Perform Content, had previously headed up business development and broadcast sales for the company’s other media-focused joint ventures with the Women’s Tennis Association (WTA) and the International Basketball Federation (FIBA).
Looking back, Rocha says FC Diez Media has “come a long way” in just one year, having managed to get through an “outstanding” amount of work during that time. Legal entities and offices have now been established in Asunción, Buenos Aires and Sao Paulo, he says, while dozens of executives specialising in sponsorship, marketing and media distribution have been hired on a full-time basis. A permanent chief executive is set to be installed by the end of the year, at which point London-based Rocha will step into a different capacity.
“A big part of what we had to do is communicate well with [Conmebol] and make sure they understood and were in agreement with a lot of the things that we’re doing,” explains Rocha. “We think a lot of things we are executing now will impact the value of their rights for many years to come, way beyond the term of our agreement - the way we’re structuring the broadcast agreements, for example. There might not be some value generated in the very short-term with the amount of rights that we’re retaining - highlight rights for sponsors, for other licensing opportunities - but hopefully Conmebol will be able to take advantage of that moving forward.”
We think a lot of things we are executing now will impact the value of their rights for many years to come, way beyond the term of our agreement.
FC Diez acting chief executive Bruno Rocha
FC Diez Media initiated its tender process for broadcast rights to the Libertadores in February, inviting bids covering two territories: one for Brazil, and another for the nine countries that comprise Spanish-speaking Latin America. Crucially, it was the first time the rights to the region’s flagship club competition had been sold separately from the Sudamericana, and while, at the time of writing, no deals with established broadcasters have been formally announced, Rocha says appetite for the Libertadores has proved stronger than expected.
“That was a very interesting process and I think it was a very successful process for us,” he says. “We not only achieved our financial targets but also really changed the way the contracts were done and set a very good precedent for Conmebol for growth moving forward.”
If interest has been piqued by the implementation of a transparent tender process, it is not only traditional broadcasters that have been circling. In early October, Facebook secured a deal for a package of Libertadores matches in all ten Conmebol territories, having recently acquired Olympic and Uefa Champions League rights in Latin America. Speaking prior to the deal’s announcement, Rocha notes the company’s “aggressive” tactics in the region but says some digital players may not be so willing to invest at this time.
“For us, the more bidders we can have for any property, the better,” he says. “Given some of the market conditions and the volatility that we’ve seen in Argentina, and Brazil to a lesser extent, I think some of those companies might be a bit more cautious to make offers now, especially some of those that haven’t been in the region before in this capacity.
“We’re certainly hoping there’ll be a good level of interest. Again, there are not many local properties like this that are available for sale in a transparent process like this, in a process where any company can come in, submit a bid and have a fair chance of winning. A lot of the local leagues are sold directly and many of them are locked for many years, so to have the chance to acquire local football rights in the region is a pretty unique opportunity.”
While the Copa Libertadores tender appears to have been fruitful, the Copa Sudamericana has been a tougher sell
While the Libertadores tender appears to have been particularly fruitful, the sales process for the Sudamericana has been altogether more challenging. FC Diez Media opened its tender for that competition to broadcasters and media companies in May, only to terminate the process in July pending ‘further internal deliberations’.
The original tender included rights covering two territories: one for Brazil, and the other for the Latin American region, as well as Mexico, the Caribbean and Central America. Two rights packages were made available: one including the first pick of ties in the Sudamericana and the final exclusively, and the other comprising the second pick of ties with exclusive rights to the Recopa, an annual match featuring the champions of the previous year’s Libertadores and Sudamericana.
Asked whether the decision to suspend the tender was a result of the Sudamericana being a tougher sell than the Libertadores, or if FC Diez Media had perhaps misread market appetite, Rocha disagrees. Citing uncertainty brought about by difficult market conditions, he specifically blames a struggling Argentinian peso, this year’s presidential elections in Brazil, and the impact of consolidation in the media market owing to Disney’s acquisition of 21st Century Fox assets and the merger of AT&T and Time Warner.
“There were a lot of factors that led to offers not being at the level that we wanted, or companies not being able to make an offer at that time,” he explains. “That led us to take a step back and engage in direct negotiations with the companies to understand if there were changes we could make to make the rights more attractive for them, and if we could time this properly to actually allow them to be in a position to make an offer.”
Rocha is nevertheless confident the decision to sell the Sudamericana separately from the Libertadores will pay off in the long-term. He notes the “intrinsic value” of both competitions, pointing out that last December’s Sudamericana final, won by Rio de Janeiro-based Flamengo, was among the highest-rated matches of 2017 on Brazilian television. “We felt that by bundling those two events together, we wouldn’t necessarily get the appreciation of the Sudamericana that we felt was fair,” he says. “That’s why we decided to split the events and then create individual packages.”
Spanish agency Mediapro recently secured a four-year deal to produce and distribute the international signal for both the Libertadores and the Sudamericana
In addition to managing the ongoing tender processes, including those for Conmebol’s equivalent women’s and youth competitions, FC Diez Media was heavily involved in this summer’s decision to award next year’s Libertadores and Sudamericana finals to Santiago and Lima respectively. That process was yet another innovation brought about by the new partnership: for the first time, the climaxes of both competitions will be played in a single-game format in 2019, rather than the traditional two-leg system, mirroring the format used in Uefa’s European competitions.
On the production side, meanwhile, FC Diez Media is collaborating closely with Conmebol in a number of areas. “We work with them to essentially put tenders together, set the production standards and do the inspections of all companies in the region,” says Rocha. “We had a team working really hard, visiting production companies in every single country to understand their infrastructure and their capability to deliver the production at the level that we need.”
In September, Spanish agency Mediapro secured a four-year deal to produce and distribute the international signal for both the Libertadores and the Sudamericana. As part of that arrangement, a production hub is now being set up in Buenos Aires, with content from more than 260 matches set to be made available in Spanish, Portuguese and English. Match highlights, social content and promotional videos will also be produced to fulfil obligations to all commercial partners.
From a production standpoint, Rocha says the strategy is to identify best practices from other properties around the world and apply those to the Latin American market. Much of that knowhow has been gleaned through IMG and Perform’s extensive portfolio of work elsewhere, but FC Diez Media has been conscious of pushing the envelope too far too soon.
“A lot of the work was done pre-tender, even before we won the rights, because in order for us to determine how much we would offer for those rights, we spent a lot of time thinking about the landscape, how we would package the content in a way that we felt would allow Conmebol to maximise value,” he adds. “We looked a lot at the volume of the schedules and thought about what packages we could create that would allow us to maximise the value but also generate greater exposure to the content.”
FC Diez Media is looking to finalise agreements with up to eight Libertadores partners
From a sponsorship perspective, FC Diez Media is looking to finalise agreements with up to eight Libertadores partners, some of which are likely to be renewals with existing sponsors such as Santander, Bridgestone, Amstel, DHL, Tag Heuer and Nike. Limiting the number of partners will “preserve the premium aspect” of the competition, says Rocha, but while the number of companies involved will not necessarily rise, the assets at their disposal most definitely will.
When the new partnership was announced last year, IMG was already serving as the exclusive sponsorship sales agent for the Libertadores having been appointed to that role by Conmebol in February 2017. Since then, the company has been working with the confederation to overhaul and modernise its commercial programme. That process should bear fruit for the coming three-year cycle, says Rocha.
“A big part of what we spent time doing was trying to create new assets for sponsors of the Copa Libertadores that traditionally had invested with the mindset of securing field billboards and brand association, but not necessarily having a lot of other assets to activate the partnership because of the way the rights were sold previously,” he explains. “To give you an idea, sponsors in Conmebol didn’t retain rights for sponsorship activation so they would have to acquire highlight rights from Fox, for example, to be able to use highlights in their sponsorship activations.
“We spent a lot of time liaising with sponsors to really educate them on the new assets and the new things we could do in terms of digital activation and other assets that we could create together. We tried to generate more value for Conmebol on that basis.”
As for what the future might hold for IMG and DAZN Group’s partnership in South America, Rocha reveals there are “no conversations to go after new rights together”. For now, he says, the focus is “on delivering value to Conmebol and having a great case study” that might just open more doors on the continent further down the line.
“We’re not thinking about anything else until the end of the year when all the contracts are finalised and executing,” he adds. “There’s a lot to be done after the deals are done in terms of delivering the events, managing the production, and advising Conmebol on all the different areas of their operation, which was a big part of our commitment as well.
“A lot of people are just thinking about the media and sponsorship agreements but there is so much that we’ll do with Conmebol, and is expected from us, in terms of revenue distribution to the clubs and best practices that Conmebol can implement that they’re not thinking about - in terms of youth academies and general sponsorship practices and club relationships. There is so much to be done that I don’t expect this to be over anytime soon.”
There is so much to be done that I don’t expect this to be over anytime soon