How is the new TV rights deal actually going to work?
For those who have just returned from their week long vacations on Mars, the last ditch efforts of a desperate, defiant and debt laden Channel Nine along with Fox Sports managed to snag the Australian NRL TV broadcast rights for the next five years.
For quite some time certain journalists and industry experts had in fact scoffed that such an amount – $1.025 billion including $100 million in advertising – was even achievable.
Until the networks finally came out and made public announcements to the effect, many scoffed at suggestions that Seven and Ten were even interested, let alone trying to buy the rights to every game.
The pundits were not only proven wrong on that front but also on regaining fixed scheduling, guaranteeing national coverage and breaking the Super League-era remnants of first and last rights. Rugby league is now free to choose its own best destiny.
So which destiny will they choose? When you observe the fan-base’s criticism of the deal, two key points emerge: the lack of live free to air coverage and a soft-footed approach to expansion.
For the record, I have been a critic of Channel Nine’s coverage for some time. Over their 21 years they have become somewhat complacent and conceited. While there are some personalities who have the character to put the game first and foremost, others have become apathetic or even cynical, which in turn has had a negative effect on the audience.
We’re still all waiting for the retooling of the Footy Show. Nine have also made promises that they have failed to keep (remember all that tantalising HD coverage on Gem?) and until this year, when faced with pressure from other networks, their performance outside NSW and Queensland has been absolutely dreadful.
What the ARLC needs to be doing is exerting its influence over Nine in all these departments. It already has legal guarantees for some, what it needs to do is get Gyngell and Steve Crawley to genuinely commit to a long needed redevelopment (and not just by adding more tools). The former NRL board never pushed this point but, for the meantime, I am willing to give the freshly minted ARLC the benefit of the doubt to keep Nine on their best behaviour.
That said, the critics of Nine’s winning bid also need to understand the nature of the negotiating process. Of course everyone wants as much money as possible and as much coverage as possible. Sometimes though, you need to deal with the reality of what’s there on the table.
People have accused David Gyngell of pure arrogance at the press conference. Perhaps they’re right – but don’t forget that he was also on about five seconds sleep and had just had his bank vault raided for a lot more than he was probably willing to give.
In the end though, the Commission went with the deal they believed would serve the game best for the next five years and, when you consider what they need to do, I tend to agree with them. But to circle back, when David Gyngell says we need to delay the Sunday game to shove in ads, I can understand the logic behind it.
That said, perhaps the fans need to put some pressure on Channel Nine here. By extending the coverage from 3:30pm onwards with an NFL style presentation, they’d be picking up more ad dollars than what they get with a black and white Humphrey Bogart film. In fact we’ve seen Nine do this at other times for this express purpose – for the Good Friday game and finals.
Kick off could begin at around 4:10pm, with an extended 15 minute half time and a final siren at 5:55pm to then lead into the news.
In effect though, this would mean that in mid-winter, games become partial twilight matches and we revert to one full day match only. But before you start writing your complaints, there is a way to keep the same amount of afternoon games – expansion.
We’ve had Todd Greenberg’s opinion on this, “In the next five years it is about a national footprint, playing games in new markets and developing new markets rather than adding new teams.”
However for those taking that as gospel, remember he’s not the CEO. John Grant spelled out the Commission’s opinion at the press conference, “The proof of this deal is there is not a lot of value placed on that ninth game, that doesn’t necessarily negate expansion but it forces us to put much more rigour around that in terms of financial analysis and long-term sustainability remembering that our first commitment is to existing clubs.” In my opinion that isn’t the definitive no – at least not at this stage.
Back when LEK was doing the heavy strategic lifting for the broadcast rights, they developed three scenarios: $1 billion, $1.2 billion and $1.4 billion. Once the remaining New Zealand, mobile and internet rights are added, along with several other future properties such as the 2017 World Cup, expanded World Club Challenge, 9′s tournaments etc., it may well be that the final media rights value is above that middle target.
For a competition that has indeed been run on the smell of an oily rag, does anybody truly believe that there’s not even a jerry can for expansion out of this new super tanker? And if we are talking about developing, as Greenberg puts it, a “national footprint”, then surely the best way to get people in places like Western Australia to follow the game is to give them an actual Western Australian based team to follow?
Also, if money is indeed the sole deciding factor here until 2017, then what if these new expansion clubs were able to fund a significant portion of their operating cost by themselves? By any estimates it takes around $20-$25 million to run a club. This comes from gates, memberships, sponsorships, hospitality, club grants etc. Tony Sage has made the claim that he’s willing to put up securities of up to $100 million to gain a bid.
Now in my opinion the West Coast Pirates bid is actually the superior option there, but if there was a way of genuinely getting Sage to stump up the cash and to develop a working body that includes the WARL bid board members, then surely the whole the financial argument is sorted.
Similar requirements could be presented to the other bidding groups in Queensland, NSW and Papua New Guinea. The NRL would develop a set of criteria with a key component being a major financial security source in the years 2015 to 2017.
So circling around yet again, the financial question is potentially answered at a timeline that balances the needs of both the existing and expansion markets: we would have the miraculous ninth game in 2015 or 2016.
The question that truly needs to be asked: what provisions did the NRL allow for this in these negotiations? If the NRL does choose to expand, which network owns this game? No one at the press conference asked this rather glaring issue.
If it hasn’t been sold yet, then perhaps this game could be a simulcast game on both Nine and Fox. If as we’ve been told, it’s worth nothing, then no party should be displeased by that (however I don’t buy that). The NRL may even get some additional dollars for it. Channel Nine might get a shiny new Queensland team to drool over.
What we then might also see is a Sunday smorgasbord – 12pm live on Fox (mostly New Zealand games), 2pm live on Fox and Nine, 4pm live on Nine and of course the occasional live Sunday night game on Fox. That would be a win for the NRL, the networks, the expansion markets and the fans.