Football Federation Australia isn’t alone wrestling with the media-rights dilemma – the Football Association is confronting the same devilish call with regard to the British equivalent of our anti-siphoning list.
Can the FA afford England’s international fixtures continuing to appear on free-to-air? Can it afford them not to be there?
Like the FA, FFA will have more money in its pocket by giving cable operators exclusivity over its flagship. When was the last time football chose accessibility ahead of a bucket of money?
That won’t impress those who see the game’s salvation here as free-to-air exposure. Where confinement to pay-TV leaves the game in the broader public’s mind and other media outlets attitude to it is the big question. Will football find itself out of pocket later on for taking the short view now?
A clue to where we’re heading and why can be found in the wash-up to last year’s World Cup and the indications there that the sponsor-driven free-to-air financial model that’s prevailed the last thirty or so years really has hit the wall.
Marketing-wise the outcomes from South Africa 2010 were markedly different from the eight preceding World Cups in which FIFA’s grew its revenues from sponsorships and media rights from $14 million in 1978 to circa $5 billion last year. On the face of it, Germany 2006 may have been the last of the old paradigm.
According to Dr Nikolaus Eberl, author of BrandOvation: How Germany won the World Cup of Nation Branding, “the biggest winner in 2006 turned out to be McDonald’s with a rise of 24 per cent in event sponsor awareness (85 per cent post-world cup versus 61 per cent pre), followed by Hyundai (50 per cent versus 28 per cent) and Coca-Cola (86 per cent versus 68 per cent).
“In the turnover category, Adidas took the honours by far, scoring a 150 per cent increase in sales of the official tournament ball (15 million sold during the tournament versus six million in 2002), and an astonishing 600 per cent increase in national jerseys purchased (1.5 million versus 250,000 in 2002). Adidas also came out tops in the MIP Brandometer, measuring the success of the seven sports brands represented on the shirts of the 32 competing teams.”
Impressive stuff, but between the South Africa 2010 and the World Cup host nations being decided in December, the comparative data from 2010 came in and the sands had obviously shifted markedly – instead of the 2010 World Cup lifting FIFA’s global partners’ brand recognition, in some cases it diminished over the course of the tournament.
Not even the brand that got the whole sponsor-driven big-sport paradigm underway by ambush marketing the Melbourne Olympics with free shoes could hold its ground. Adidas branded the stadiums to the last blade of grass like it has the last ten World Cups, provided the ball, the winning squad and, to be sure, boots with distinctive orange heels.
A quarter of us still thought Nike was an official FIFA World Cup partner.
The marketers call it “voice”.
Whose voice is being heard? These days with everyone talking at once and messages coming in every which way on all sorts of devices, television isn’t the potent insinuator it was before social media and online activities evolved us off the couch and into keyboard and touch-pad potatoes.
The trends in the numbers but we know the story already because they’re only mapping our changing habits. We know them better than they do. A corporation can pour hundreds of millions of dollars into FIFA’s coffers for the privilege of an official World Cup association but we’ll be as impressed, maybe more by a good viral video.
Thus far the biggest winners from South Africa 2010 have been, as it ought to be, South Africans; apparently the World Cup has done wonders for their tourism industry and vuvuzelas.
The big losers were the multinationals that sank nearly a billion dollars into buying the premium spots on FIFA’s jersey as its “global partners” and walked away with about 0.1 of one per cent the return on investment they’d have picked up from a YouTube ambush.
That’s not just a dud result for FIFA’s bargaining power, it was probably enough to not just tip the scales in Qatar’s favour for 2022 but well and truly awaken pay-television to the possibilities of taking exclusive ownership over football telecasting sooner rather than later. Qatar’s bid appeared not to have the requisite support of the blue-chip multinationals whose marketing objectives have determined World Cup venues these last three decades but it probably didn’t need it because it was unlikely anyone else had it either.
Given the marketing wash-up of South Africa 2010 and the new media’s corrosive impact on the value of the World Cup media rights already, and the rate of change between Germany and South Africa, what might that landscape look like in 2022?
How much would you gamble on getting return on your investment? Once FIFA’s prospective “global partners”, not being charities, saw the writing on the wall if seems doubtful any of Qatar’s competition for 2022 had the blue-chips digging in behind them.
We all know what it is, we’re just arguing over the price and Qatar probably only got it because it got it cheap since it didn’t have to compete with the combined wills of Coke, Sony, Adidas or Great Wall – just some relatively insignificant nation states with some relatively insignificant budgets and the likes of Peter Hargitay racing around on their behalf to talk turkey to ExComm’s deadwood but without any lead in their pencil because the corporations juries were still out. Coke surely had a preference but does a wise business commit money now backing in the value of media rights in 12-years time when they appear to have peaked already?
Maybe it was just a dud World Cup that foreshadowed the dud marketing outcomes? Perhaps, but the Asian Cup was a better tournament and the story is likewise – the jury is out on how much that reflected upon the AFC’s partners and sponsors or what that means might mean for their future investments.
FIFA can control a lot of things but not a Wild West social media’s potential to diminish an event’s value in the eyes of prospective sponsors, and if television exposure is no longer the best way for corporations to sequester football into their brands and they look for a better return on investment and scale back their spending on big-sport – it’s already happening – where to next for not just FIFA’s media-rights revenues but the FA’s and FFA’s now television commercials, branded balls and boots or even ground signage aren’t worth quite what they were before videos went viral and we were all stunned into indifference by the clutter of advertising that’s led to the free-to-air television model being in the strife?
Now formal marketing partnerships are no longer the surefire feather in a corporation’s marketing cap they once were, to who is televised football worth the most?
Pay-TV obviously; subscription viewing with no middleman corporation picking up the tab and defraying those costs by increased sales and production and economies of scale combined with the wonders of tax deduction, or at least not to anywhere near the extent we’ve grown used to. To make up the shortfall we will have to pay on the nose.
To think that we thought we could beat the system by watching for nicks and flicking over while the ads were on. Blame it on the remote control.
The Cattery
Roar Guru
The Fans' forum, on right now, has moved onto the subject of TV rights. I'll pass on relevant tweets as they come in, this should be interesting. BB: game is robust enough to get a good TV deal. Wants FTA component. Pay TV. Mobile Device. Tablet device. Across as many devices as possible. Don't want to confuse competitions. #fanforum
Jon
Guest
Interesting development with Fox trying to buy Austar. I read this as a lack of faith in the NBN and a fear that cable TV will not be as competitive as a sat-dish. Fox monopoly of the pay TV market should be approached with caution. The FFA needs a spread of media coverage to reach those that dont have pay TV but still want their daily hit of football news feeds.
ItsCalledFootball
Roar Guru
There is a world of difference between the FFA's TV rights and FIFA's WC TV rights. If FIFA were to sell their WC TV rights for Pay TV only, they would probably get more than the FTA rightys becasue the demand is enormous and Pay TV companies around the world would easily pay for it. Fox would have no hesitation to buy it. The FFA are in a dilemma because their demand is not that great - especially for the A-League so they are not in a strong bargaining position like FIFA. They are faced with more of a "take the best we can get for it" scenario, which is negotiated cap in hand in a very competitive and limited Australian sporting market. The English FA would have done their number crunching too and are doing very well out of their Pay TV for EPL model. FIFA would probably make more money in the short term if they went Pay TV only, but they would restrict the spread of the game to poorer countries in the long term.
Peter Wilson
Roar Guru
http://www.perthnow.com.au/business/citigroup-warns-1bn-rights-may-be-too-high/story-e6frg2rc-1226027987100 "Citigroup global markets analyst Justin Diddams said in a report that on a combined basis, the AFL rights lost money for the free-to-air television broadcasters -- "generating $75m in ad revenue per year and costing $93m to acquire (plus production costs)" -- and that that scenario was unlikely to change with TV audiences continuing to fall. "Any step up in the cost of the next AFL deal should drive earnings downgrades," Mr Diddams said. "The 'win at all costs' mantra for FTA on sports rights appears outdated, given the poor economic returns and less 'intrinsic' appeal."
Peter Wilson
Roar Guru
Speaking of TV rights. The EPL got 3.2 billion pounds or about $5 billion over 3 years for its TV rights and look at the financial scorecard of the EPL teams. http://image.guardian.co.uk/sys-files/Guardian/documents/2011/05/18/sportscribddoc.pdf No club made a profit - Chelsea lost 734 million pounds and ManU lost 590 million pounds. Sydney FC is doing very well to lose only a couple of million, given what the FFA give them.
Fussball ist unser leben
Roar Guru
Enough, Fuss. Roar Mods.
The Cattery
Roar Guru
Something is only ever worth what someone else is willing to pay, no more and no less.
Redb
Roar Guru
"The Australian football TV market will never reflect the true value of the game, in the same way that the AFL TV market will never truly reflect what AFL TV rights are actually worth, especially in comparison to the other sports in this country." You have no grounds to back that up. Just simple bitterness.
Dugald Massey
Roar Guru
You might be right, I'm no expert in media rights -- best I can do is see what the experts are saying and there's a consistency there in what they're saying ... the relationship between big sport and FTA is in trouble. I can understand why they'd say that but whether they're right or not, who knows? Time well tell, as will our changing viewing habits and the returns advertisers and sponsors think they're getting. Unfortunately you've misconstrued the piece, thinking the 2006 figures were the point -- the point was that the 2006 appear -- appear -- to represent the peak of the FTA model because sponsors aren't getting the ROI they were. They're finding it harder to make their 'voice' heard and 'own' an event in a crowded marketplace so perhaps the sports-sponsorship thing isn't providing the value it once was ... which obviously has implications for media-rights values. FIFA, the FA's and FFA's media-rights dilemmas obviously aren't exactly the same but they're all facing a similar tough call -- there is more money on offer in the short-term to go to cable. As the article says, the FA is torn over the issue but the way its going pay-TV will have exclusivity over WCs and Euros in the UK in the future. How is that different from FFA's dilemma with HAL? If there's no money on offer from FTA but FTA is better for promotion of both HAL and the Socceroos' and their sponsors, what are all the downsides of going to cable? Obviously that does impact on FIFA revenues because its 'global partners' are counting on FTA -- pay TV is worth less to them so it's a serious issue when football working both sides of the street with FIFA spruiking to prospective sponsors an audience of 7 billion people and then the national federations onsell it to cable and put the event behind a firewall that cuts out half or more of that audience the sponsors paid for. That's been the marketing post-script to the Asia Cup -- some mightily annoyed sponsors who'd signed on on the strength of a FTA audience and then it got flogged off to pay-TV. That's the big uncertainty at the moment -- how much will going behind the pay-TV firewall will cost the game in other revenues? What it picks up in media rights from cable could be lost on the "global partner", jersey sponsorships and ground signage revenues. The FA have done all sorts of number crunching on it and come up with question marks so your guess is as good as anyone's about what happens next.
ItsCalledFootball
Roar Guru
Yes and he contradicts himself throughout. He talks about FIFA's FTA model "hitting the wall" but then quotes the amazing jump in sales because of the WC exposure. If it hepls sell ads and products, then it will always grow. In fact, the FTA model for FIFA has been an outstanding success and while it is difficult to measure accurately the world wide TV audience has also skyrocketed amazingly in the last 24 years. FIFA adopted the absolute right startegy in keeping the WC free to air to give it the enormous exposure it gets. Especially for poorer people and poorer countries who would never get Pay TV to watch a WC - you just try and make the WC Pay TV only and see what happens to you. The FFA's situation bears no relevance to the FIFA FTA WC model whatsoever. The Australian football landscape is unique, the market much smaller and has an attitude to the game that goes back to the White Australia policy and all its prejudices. The Australian football TV market will never reflect the true value of the game, in the same way that the AFL TV market will never truly reflect what AFL TV rights are actually worth, especially in comparison to the other sports in this country.
4orb
Guest
Unfortunately this article overlooks one rather vital stat - despite the 'corrosive' effect of new media, 'dud marketing outcomes' and FTA rights 'hitting the wall' - FIFA's revenues continue to increase, making the whole spray above an exercise in wishful thinking. All the viral videos in the world won't change the underlying commercial benefit of live sport on FTA TV - the broadcasters need it to deliver the big audiences advertisers pay for, and no medium is as effective at doing so - now and for quite a few years to come. And another thing: Nike has outspent adidas on its campaign around the last 2 World Cups, so who exactly got the dud marketing outcome there?
Rob Gremio
Roar Pro
MF, that's the thing - it's a big IF. Cricket hardly seems to be making inroads anywhere beyond the former British colonies. Basketball is a different story, as it has a fairly big footprint in Europe, as well as China. It's fairy popular in Sth America too. You could even say, hypothetically, that Volleyball could become the world's most dominant sport - it's popular in Japan and China, South America and Europe. I am not disputing your point that the Indian/Chinese middle class will be larger and dwarf the spending power of Europe and the US, but I don't see the cultural shift to a slow sport like cricket occurring in places like China, billions of dollars or no.
Rob Gremio
Roar Pro
I agree that it is an enormous part of Asia, but my point was that the rest of Asia couldn't give a fig about cricket - and that is an *enormous* segment of Asia too. Hardly a platform from which to launch world domination
Nathan
Guest
I have to say, if 50 years down the track in the India+China dominated world, Cricket and the Indian Premier League have become the dominant world sport and league, it will be the funniest thing ever. As it stands, the amount of coin running through the IPL *is* immense and growing, even if Australia doesn't pay as much attention lately.
Midfielder
Guest
Rob HHHHHHHHHHHMmmmmmmmmmmmmmm ...... India has a bigger population than Europe ... China bigger the North & South America ... Between them they have close if not 3 billion people... The sports these two nations go with will be the dominate sports in the future.... Football is already a big game in India ... and in China Football is the top or second top depending on how you rate basketball... However if cricket takes off in China and India is spending heaps to promote it .... then the spending power of the India & Chinese middle class will dwarf the spending power of Europe & the US...
Nathan
Guest
They have footholds, there are decent leagues running in Germany, for instance. Obviously internationally somewhat bellow Rugby Union in terms of take up. Also their international exhibition games never have much trouble selling out. I just think they're temperamentally unsuited to pushing internationally. And "Asian sub-continent aside"? Thats an *enormous* segment of Asia to just push "aside".
Aka
Guest
Yes and the NFL can't get a foothold anywhere despite the US having been an economic superpower.
Rob Gremio
Roar Pro
I disagree. On what basis would cricket, played in only a handful of countries, and almost none in Europe outside the UK, become the world's major sport? The Asian Sub-continent aside, cricket hardly registers in Asia, and its influence in Africa is limited to the southern part of that continent. Which other sports? Football is very popular in China, and it has a growing profile in India.
Midfielder
Guest
Great read... Also not being confronted by the new media players is that in the not too distance future both China & India will have a middle class bigger than Europe & the USA.... meaning cricket and other sports could maybe challenge FIFA as the worlds major sport...
RedOrDead
Roar Guru
Agreed. Good response whiskey. Peter, you are not!