Football giant awakens to $160m TV deal

I agree with you 100%. TC

man i hate accountants ..... boring (important, sure, but boring discussion). Happy with deal. nice steady growth please, but more concerned with the football.

Robert this is precisely the point of the discussion. You say the deal has gone from $17 mill per annum to $37 mill per annum, but as Bonita points out, everything has been bundled into the $37 million, so you can't compare to just the $17 mill per annum (the Fox deal), in her words, that would not be comparing apples to apples. The FFA itself has claimed a 100% increase (from $160 mill over 8 years to $160 mill over 4 years). What the FFA describe as $160 mill over 8 years actually translates to $23 mill earned per annum from years 2 to 8 (because as you point out, next to nothing was earned in year 1). Note, that includes the online rights, and presumably the rights to socceroo games. So really, we are talking about an increase from $23 mill to $37 mill - that's using the figures provided by the FFA following the announcement. According to Bonita, the $37 mill is inclusive of the online rights and socceroo matches, and Bonita is also of the view that a further $4 million is owed to WSG as a commission, but we are unclear whether the $37 million has already been netted off, or whether the $4 million commission must come out of that $37 million. TC

The amazing rise: Yr 1: 0.5M (doesnt include Socceroo matches were with SBS) Yr 2-8: 17M Yr 9-12: 37M WSG get nothing out of this deal - they only have the overseas international rights. So everytime Aust play at home they receieve $1M inaddition to the above-- as WSG have the overseas international rights ie they are selling home socceroos matches to other countries. WSG don't get any commission on this deal as they were not part of the process.

Whatever the deal is or was or whatever the net amount is, the A-League is a business run by franchises and they must be profitable whatevere happens, even taking into account how much the cleaners at FFA house get and how much beer Gallop drinks . . . :) Lowy isn't one to throw money away, so if they have increased payments to A-League cl;ubs to 27M per year then they must have more money at their disposal. It sets the foundations for growth and no-one including the FFA and the federal government will let the A-League wither on the vine. If you analyse the other deals probably half the AFL's money has already been wasted on failed expansion teams and marketing exercises like Folau.

Her original article has, by her own admission, a level of educated 'guestimating' in it. This could easily account for any variation she now claims. At the end of the day - she was about right, but how the figure got there may have varied in its formula. Gallopp was faily clear in describing the cash component as exactly that - this, from a coprporate reporting statndards persoective is the give away. Cash can't be 'spun' - butt 'contra' can.

It is a significant amount as a proportion for all codes - but in cash terms, obviously a huge number for the big two who also have much greater 'overheads' at the league level - but which is probably ballanced out somewhat by the 9 national teams football has (three of which cost a lot to run)). Here is that article I was mentioning also - I linked it in the wrong part above: http://sportsbusinessinsider.com.au/blogs-features/the-rights-stuff-how-lowy-tinkler-deal-put-ffa-back-on-course-for-a-league-broadcast-bonanza/

I agree - the $38 mill ends up looking pretty much spot on the money - if we have understood the deal correctly. It's possible that there are aspects of it that are yet to be picked apart. The thing that has caused me to pause and reflect is that Bonita tweeted that she expected the overall amount announced to be greater than $40 million. What did she mean exactly? It's unclear, but one of her tweets stated that a $4 milllion fee to WSG is yet to come out - that might be the reason why she was dissatisfied with the overall $40 million figure. Bonita doesn't write stuff like that just for fun - there must be something in that. TC

I'll be honest, it has never occurred to me whether the figures may or may not contain GST (until Fussball brought it up, and it's a fair enough point). Looking at the NRL/AFL deals, if the the billion dollar deals have been reported as inclusive of GST, it means each is receiving in cash around $84 mill to $105 mill less in cash - significant amounts. It might seem nerdy to raise it, but we are essentially talking about 1/11th of the deals (if that's the case). TC

jmac of course your NPV calcs depend a bit on when you are receiving the $23 mill, etc, but making it as simple as possible (which is the more desired course), then in working out the PV in today's dollars on what was received annually in the preceding years, I'm not sure what you are doing to get from $23 mill to $25 mill in today's dollars? Are you applying the assumed 2.5%pa CPI year on year then averaging that out over the 7 years? Are you then discounting the following 4 years by 2.5% and averaging that 4 years out? I'll be honest, I'm not 100% sure that that is the best way to go, and on top of that, it's unclear whether the CPI is the correct percentage for determining the PV of the next four year's payments, but anyway, let's accept your methodology, the arithmetic looks ok (in round terms), if $33 million is the correct figure, then on your calculations, you are showing a 24% increase. In terms of the increase from year 8 to year 9 (assuming an averaging of the cash income, and no discounting on a month by month basis), you could reduce this to a simple comparision of the number adjusted for CPI as at the 8th year, and take the $33 million in the 9th year on face value, and we end up with an increase from $27 mill to $33 mill (in round terms), or an increase of 22.22% (once again, assuming the $33 million is the correct figure, we've had no confirmation of that yet). Whichever way you look at it, it's a long way short of a 100% increase. Putting aside the figures for one moment, whether the FFA still has to account for WSG's commission or not is a pretty crucial bit of information. Thanks for your input. TC

Here is the article I speak of above - BM was about 'bang on'. http://sportsbusinessinsider.com.au/blogs-features/the-rights-stuff-how-lowy-tinkler-deal-put-ffa-back-on-course-for-a-league-broadcast-bonanza/ "However, the celebratory sparkling wine must also be tempered by the fact that the net number that flows back to the game will be closer to $38 million per year"

I remember BM's original article about this in SBI. The smoke and mirrors begins of the higher $50m figure in her calculations - it is of this estimation that BM ended up at $40m - and would apear to be right on the money - GST aside. What was the GST on the NRL deal - and did that actualy mean they got significantly less than the $1B?

TC, Just out of interest. this CPI marlarky is right up my alley. you shouldn't take the $23m figure and times by 7 years of CPI, because the $ came in one year at a time (I presume) - you didn't get the whole lot back in 2006. eg you would not apply any CPI to this years income, you would apply just one year's CPI to last years etc etc... BASICALLY: $23m each year for the last 7 years equates to roughly $25m pa in Present Value dollars (ie today's equivalent) when you adjust using the actual CPI over this period. THEN: Looking forward 4 years, and assuming 2.5%pa CPI each year: - $33m pa real dollars would equate to roughly $31m pa in Present Value dollars - $37m pa real dollars would equate to roughly $34.8m pa in Present Value dollars SO: The $33m figure, if correct, equates to an increase of 24% on the previous deal ($31/$25). The $37m figure, if correct, equates to an increase of around 39% on the previous deal ($34.8/$25). (I also am happy for any nerds to pick holes in these!)

Reading the tweets of this Fuss on Twitter, I have to admit, it sounds a lot like you. But if you're saying that's not you, then please accept a thousand apologies from me. It's just that Brendo's tweet to Bonita included a reference to this whole discussion, and someone called Fuss was copied into all the tweets and responses. It's not my intention to try and embarass anyone. I'm simply following the money trail. No one else seems to be trying to do it except for Bonita, Brendo, dasilva and myself. TC

Brendo asked her a question, and she responded to him and someone called Fuss - naturally I presumed it was you! If it's not, then I apologise. But let us not change the subject, the key points remained (and you have said nothing to dispute them): 1. the $40 million per annum deal is inclusive of socceroos matches and the online rights ($37 million in cash terms) 2. we do not know whether WSG's commisssion has already been netted off in arriving at $37 million, or whether it is still to come off 3. if it is still to come off, the actual increase in the deal in cash terms is from $23 million per annum to $33 million per annum, approximately. ps that's actually a good point about the GST, are these GST inclusive or exclusive numbers? If they are GST inclusive numbers, the $33 million becomes less than $30 million. Once again, I invite anyone with more knowledge on the subject to correct any of the figures I have put forward, I have no problem with that. We are all after the same thing - a greater understanding of the numbers. TC

Yes, TC ... we believe you. And, to preempt your next argument .... .. when you remove commission, expenses, GST, etc. etc. ... we find the FFA is actually PAYING the broadcasters & receives ZERO revenue? I wish AFL was a 12 month sport, so we'd have less of this nonsense to read from deluded, scared & bored ARFers. PS: Bonita has never Tweeted anything to me - yet another piece of factually INCORRECT information.

I notice that Bonita has tweeted Fusssball and Brendo to confirm that the FFA's $6 million per annum for Socceroo matches is actually included in the $40 million per annum deal. As Bonita had previously tweeted, there's a bit of smoke and mirrors going on and an apples to apples comparison is difficult because everything has now been bundled up. Personally, I think the online rights (formerly $4 million per annum) is also included in the $40 mill per annum deal. Now the key point of the FFA presser was that the value of the TV rights had doubled, and they illustrated this by saying they had gone from $160 million over 8 years to $160 million over 4 years, but as I said in an earlier post, it's quite difficult to work out what the $160 million over 8 years is referring to. Noting that the FFA got less than $1 million for the first year of the rights, we are actually talking about the deal in the next 7 years being worth approximately $23 million per annum (incl $4 million per annum for the online rights). In other words, on an annualised basis, we are talking about having gone from $23 million per annum (over past 7 years) to now $37 million per annum for the next 4 years (cash). So the 100% increase is starting to get watered down a bit – that's precisely what Bonita is alluding to when she talks of smoke and mirrors. But it might be worse, Bonita had previously mentioned that the FFA will need to pay $4 million per annum to WSG for their commission on doing the deal. What we don't know is whether that $4 million is coming out of the $37 million, or whether it has already been netted off in calculating the $37 million. If it needs to come off the $37 million, then in reality we are talking about the cash component being worth $33 million. If that's the case we are talking about going from $23 million per annum, over the past 7 years, to now $33 million per annum, which in all honestly, would be marginally higher than the CPI over such a long period. But I’m very happy for anyone's input and clarification on these numbers, there are a few grey areas that need some explanation – from someone. TC

Absolutely, I'll take Bonita's opinion very seriously. So, how did this play out? How did FFA get hold of the AUS NT rights? Did the FFA buy them from WSG? How much did FFA pay for the rights? Did WSG sell it for just $1m/game? Did WSG sell the rights to the FFA for less/more? What about the 2015 Asian Cup? Did the FFA also buy those rights from WSG? And, is this included in the $40m/yr? What about the Asian Champions League matches involving A-League teams? Did the FFA also purchase these rights from WSG? Lots of unanswered questions, IF we accept Bonita's opinion. If we use logic & legal reasoning regarding property ownership & transfer of property rights, it's a much simpler analysis.

Ok, Bonita has responded to me. Her opinion is that the $40 is inclusive of the AFC $6M Now I accept this is only her opinion but she is in a much better than us to know

dasilva has summed up pretty much everything that has been on my mind, even before brendo put up his first post, but it's a pretty good question, afterall, it's only a couple of weeks ago that we were referring to that Bonita article as the most detailed analysis of the likely broadcast deal we have ever read, so it's odd that people would now disown it. We know that after the commissions were taken out of the picture, Bonita says straight out that the FFA will end up with $38 mill in the pocket, the split being $34 mill for TV rights and $4 mill for the online rights (this deal is $37 million in cash terms, pretty close). But as she tweeted, from what she has read, everything has been bundled up together, and it's no longer an apples to apples comparison. Re the online rights, Gallop said they have retained some of it, but both Fox and SBS said they have rights to the games they are showing, so presumably, that's wrapped up into the $37 million per annum (cash component). So when Fussball says there's another $4 million per annum coming from online rights, I think he is mistaken. Now here's one more point to consider, and this is the bit that gets me thinking that Bonita is spot on when she says it's no longer an apples to apples comparison. In the presser, they made a point of highlighting that the FFA is going from $160 million earned from broadcast deals over the first 8 years of the comp to earning $160 million over 4 years, i.e. exactly double. Ok, fair enough. But hands up those who know what the $160 million over the first 8 years refers to? I'll have a shot, but I'm struggling a bit: 1. $120 milllion for the 7 year deal with Fox 2. I think the initial deal for the inaugural year was around $1 million? (happy for someone to correct) 3. I think there has been $4 million per year in online rights for at least the last 7 years, so that's $28 million, not sure what happened the first year, happy for someone to correct. Ok, so that brings us to $149 million. What's the other $11 million? I suspect it will be a mixture of in-kind and payments for socceroo matches? I don't know. Anyway, as Bonita says, it has all been bundled up and it's difficult to make an apples to apples comparison, but the FFA is doing precisely that by comparing $160 million over 8 years with $160 million over 4 years. And the question still remains: is anything more to come out of the $37 mill per annum as a commission to WSG, or is that the final sum? Fussball is trying to convince us that there's an additional $10 million per annum to add to that $37 million, for the socceroo matches and onlline rights. Hands up if you truly believe that? TC