There was a period this year where it felt like sport only existed in theory.
Since the start of the Covid-19 pandemic, we have all heard and probably had our share of conversations about whether the improvisations of the last few months might stick. Would models and formats thrown together in the hopes of getting competitions finished have a lasting appeal? How far would broadcasters, after these months of mutual collaboration, be willing to sacrifice a little short-term growth in the name of a healthy experiment?
The answers to questions like this tend to have a dollar value propping them up somewhere and, just now, we are beginning to find out what some of those are. For example: how much did it cost Uefa’s broadcast partners to switch to week-long finals tournaments for soccer’s Europa League and Champions League?
“We are in the process of finalising the accounts with Uefa with a reduction of around €575 million for the international club competitions,” said Juventus president Andrea Agnelli, speaking to representatives of 250 other teams in his capacity as chairman of the European Club Association (ECA) on 8th September.
That €575 million (US$680 million) is being returned to TV companies in compensation for the loss of second-leg fixtures in the quarter-final and semi-final stages, and the shift to less productive dates in the calendar. It is not yet clear how much of that shortfall will show up in cuts to prize money, and how much will be worn by Uefa itself.
Those concertinaed finales drew a decent critical reception, with the nightly drama of winner-takes-all contests on neutral ground filling some of the gap left by Uefa’s own Euro 2020. There is a trade-off between the fun of different competitive set-ups – and their fairness, in some contexts – and commercial performance.
Uefa knows this well: its rights sales partner, Team Marketing, builds detailed financial projections for all manner of formats, with the eventual result produced when those calculations meet the political reality of what clubs will accept. Indeed, Agnelli himself was pushing in March for long-term changes to the Champions League that would recognise the historical importance of teams like, well, Juventus.
Financial shocks have their consequences. Agnelli now says that talks about the future shape of European club competitions “need to stall”, for the time being at least.
Uefa’s rebates are tough news for organisations already feeling the pinch of compromised seasons. Agnelli warned of a potential €4 billion (US$4.73 billion) dip in projected revenues over the next two years, raising the possibility of sponsor rebates and smaller partnerships. It is impossible to say with much certainty when stadiums will reopen and matchday revenues will flow again; harder, even, given a recent uptick in Covid-19 cases across Europe and subsequent tightening of restrictions.
In England, Premier League chief executive Richard Masters has said that continued venue closures would cost teams as much as UK£700 million (US$908 million) over the course of 2020/21. Speaking to the BBC amid news of fresh limits on social gatherings and a tweak to pilot schemes for socially distanced sports crowds, he reiterated the league’s hope to see some fans return to matches by 1st October.
At the start of the month, the Premier League had made the “difficult decision” to terminate a UK£564 million deal with one of its Chinese broadcast partners, PPTV. That came after what Masters described as “some contractual dispute with them that we couldn’t resolve” – namely, a failure on PPTV’s part to pay a UK£160 million instalment of its rights fees in March.
The company blames the pandemic and a failure to compromise; there are observers who sense the effects of geopolitics. Either way, it is a pretty significant reset to take on a few days from kick-off.
Masters is getting used to redrafting plans on the fly. In the UK, a late U-turn means that all 28 Premier League games will be available live on one platform or another through the month of September. In effect, that extends the conditions under which the ‘Project Restart’ portion of the 2019/20 season was screened, when broadcasters were looking to recover value lost in the spring interruption.
It also follows a campaign by the Football Supporters’ Association, which has welcomed the chance for fans locked out of venues to follow their teams, and hopes the innovation can be retained as long as venues remain below full capacity. Still, there is a more practical impetus. The league will be keen to disincentivise piracy and stop any kind of ethical justification forming around it when fans have no other access to games. This week, incidentally, it has also launched a major anti-piracy publicity campaign in Hong Kong and Malaysia.
On the other side of the coin, broadcasters’ own travails will limit what change is possible in the years ahead. Certainly, for all the trends accelerated by this year’s events, some big visions for the future may be slower to arrive.
Global over-the-top (OTT) player DAZN has spent much of the past few months looking for up to US$1 billion of investment, with the pause to live events coming at a bad time for a young subscription channel which had spent aggressively on rights. The Financial Times reported this week that DAZN is cutting two per cent of its global workforce, primarily in its offices in the US and Brazil. It is difficult news – not least in a week where boxer Canelo Álvarez is suing DAZN and promoter Golden Boy for US$280 million after claiming they had failed to create fights.
It is also said to herald a strategic shift from deep-rooted local operations to a more globalised offering. That may have implications in the competition for local rights in some key markets, and it also points to a different baseline focus.
DAZN is on a rationalising streak: its August restructure of a US$2.1 billion deal with Japanese soccer’s J-League, with annual rights outlay cut in favour of a broader share in profit and risk, is understood to be the template for its future discussions in sport. Before Covid-19 and the cashflow crisis it wrought, the aim was rapid expansion. Now, as the numbers crunch earlier than expected, it needs a faster route towards stability. It is hardly alone in that reset.
All of this might only represent short-term discomfort for the biggest beasts. Premium rights holders, perhaps even more than they did in 2019, now offer a flight to safety; the biggest media companies in the world have been consolidating for years. The turmoil, and the real upheaval, could come further down the pyramid.
The case of UK Athletics is a sobering one. It is heading for 2021 without a domestic broadcast deal, facing a considerable hit to its income and the visibility of its sport. It will hope to find a solution in time but there is no doubt that for rights holders in the second and third tier, the figures may be lower but the stakes are sky-high.
This is where creative solutions could really tell in the next couple of years. There is a case for smaller properties to band together in going to market, particularly where they can find shared audiences or compelling grounds for alignment. They might just find ideal partners in challenger media brands designed to serve specialist audiences. Equally, in those groups or on their own, some are going to explore the value of athlete-led content, or of data, or of digital communities, to reduce the pressure on rights sales.
Necessity will breed innovation but make no mistake, the accent is on the former in all too many cases. Right now, the numbers really do need to add up.