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The Storm celebrate Dane Nielsen's try. NRL Rugby League, Round 4 Melbourne Storm v St George Illawarra Dragons at Etihad Stadium, Friday April 2nd 2010. Digital image by Colin Whelan © nrlphotos.com
Here is how I see the NRL faring in their next broadcast rights deal. I have assumed that the ARL Commission is up and running and the NRL have expanded to an 18-team competition by adding new teams in Perth and Brisbane.
Revenue from FTA
Point one: Returning the favour.
Nine forced Seven to pay more in the last two AFL broadcast rights. In the current deal it was because Kerry Packer was genuinely attempting to have both the NRL and AFL on his network by putting in a late deathbed bid, which Seven had to match.
For the new deal, Nine were never really interested in obtaining AFL content, however they knew Seven were desperate to retain AFL rights so they placed a bid to force their bitter rivals to pay more, reportedly to the tune of around $100 million. Expect Seven to return the favour to Nine when the NRL rights are due.
Point two: First and last rights clause.
The first and last rights clause means that the NRL are obliged to show the current rights holder (Nine) the full details of any bid from a competitor (Seven/Ten) and the bid must be for all the content on the current contract. Nine only have to match the bid, not beat it, to retain the rights.
However, the first and last rights clause is null and void if the competitors bid is 20 per cent greater than the current contract. As the NRL is currently so undervalued, and Seven the most profitable FTA network, Seven will pass this 20 per cent mark simply by returning the favour (as explained in point one).
Furthermore it is in Seven’s interests to pass the first and last rights clause as they wish to pick and choose which NRL content they bid on, such as State of Origin, while Nine want the lot.
It is definitely in the NRL’s favour to have the first and last rights clause negated as it will allow competitive tension. For example, Seven can bid directly for State of Origin and Nine will have no idea how much the bid is for. The higher Nine then bids, the more they maximise their chances of retaining this content.
Point three: Ten Network.
Despite the media reports that Ten were unhappy with the current AFL deal, particularly ratings in NSW and Queensland, I assumed that they would pick up some AFL content in the new deal. They have opted not to.
It is considered logical that the FTA networks would want some NRL and/or AFL content. Seven are clearly desperate for AFL content, and Nine desperate for NRL.
Whether Ten opted out of bidding on AFL as they are planning on obtaining NRL content, or if the new Packer/Murdoch ownership of Ten plan to go without any NRL and AFL content is unknown.
If it is the first option, I’m guessing Ten, once the first and last right’s clause is negated, will need to bid big to get Friday night and Sunday afternoon footy from Nine, or State of Origin from Nine or Seven.
Perhaps the NRL will offer a new timeslot gained from a ninth game to the FTA networks, such as a Thursday night or early Sunday afternoon game. Time will tell.
Revenue from Telstra
As the AFL was unable to get an increase in revenue from the FTA networks with their new deal, they sought increases elsewhere. Telstra were offered all the content the AFL have (excluding the NAB Cup) to be shown on mobile phones and T-Boxes.
As more than half the Australian population live in NSW and Qld, it is logical to assume so does at least half of Telstra’s customers. And as the NRL has more content to offer Telstra, I would assume the NRL will get as much, and probably more from Telstra than the AFL.
Revenue from Foxtel
This is where I can see a problem for the NRL.
The bulk of the AFL’s new broadcast windfall has come from Foxtel. With the changes in the anti-siphoning laws, Foxtel are now able to bid directly against the FTA networks for all AFL and NRL content. Foxtel currently shows the four lowest rating AFL games.
In the new deal they will show all nine AFL games per round plus every game in the final series excluding the grand final. By giving Foxtel this huge increase in content the AFL will be receiving almost double from Foxtel in the new deal.
Foxtel can justify this massive increase in funds by the fact they need more AFL content to drive subscriptions in the southern states, which are lagging behind the northern ones.
The ARL Commission will need to play hardball with Foxtel to receive parity with the AFL. While the NRL clearly needs Foxtel’s money, Foxtel clearly needs NRL content to keep their subscription base in the northern states.
The NRL has always been the highest rating sport on Fox Sports and if some of Foxtel’s NRL content, such as Super Saturday or Monday Night Football were to migrate to the FTA networks, this would have to put a sizable dint in Foxtel’s bottom-line.
The deciding factor on how well the ARL Commission do in the next negotiations will depend on how well they can play hardball with Foxtel.
So how much will the NRL get?
Even if they only get $800 million over five years, which I believe would be the absolute bare minimum, that is an increase from the current deal of $91 million per year to $160 million a year.
This would allow an increase of $1 million in funding to all 18 clubs per year which then allows a $1 million increase to the salary cap for every club. If the Storm requires an additional $5 million per year, and the Western Reds an additional $15 million, this still leaves an extra $31 million a year to throw at country rugby league and junior development. This is a dramatic improvement in the game’s health.
However, if the NRL were to get $100 million less than the AFL from Foxtel, $50 million less from the FTA networks and equal to or more from Telstra, they’ve already got $1 billion. Considering the NRL have two less expansion teams to fund and a smaller playing roster to pay for, this could give them more than parity.
Any more than $1 billion for the NRL and the sky is the limit.
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