Wow, it’s been a huge couple of weeks to be working in the media, especially with Rupert Murdoch landing in Australia two weeks ago.
It all started last Monday when the NRL announced a new $925 million free-to-air television rights deal with Channel Nine.
The NRL announced the deal last week in a bid to get the jump on their rivals from down south, but the deal has now been completely overshadowed by the AFL’s new agreement, which was made swiftly after the NRL’s announcement.
On Tuesday, the AFL, with Rupert Murdoch front and centre, announced a massive six-year, $2.5 billion agreement with Channel Seven, Foxtel and Telstra.
So where does that leave racing on the TV rights food chain, especially as both free-to-air and pay TV are making comments that live sport is growing in importance and value for networks?
This question is especially relevant as the new Channel 78 joint venture between Seven West Media and Racing Victoria officially launches next Saturday at Caulfield for the Memsie Stakes.
As previously reported on The Roar this new racing channel is to be broadcast by Racing.com, with ex-Billabong founder Scott Perrin the first CEO for the channel.
As with everything in racing the media rights are split state by state with the rights 100 per cent owned by the clubs.
The revenue from the television rights for the Melbourne Cup Carnival and the other race days run by the Victorian Racing Club goes to the VRC. The same can be said for the Melbourne Racing Club, who run the Caulfield Cup and the Moonee Valley Racing Club, hosts of the Cox Plate.
The Melbourne Cup stacks up pretty well against Australia’s other premier sporting events, the AFL and NRL grand finals and State Of Origin matches. Last year’s race was watched by over three million viewers and was the seventh highest viewed sporting event of the year.
Yet on examination of the annual reports of the VRC, it doesn’t appear that the broadcast rights are generating much income for the club.
The reports list marketing, sponsorship and broadcast rights on the one line, with the three accounting for $22.9 million of revenue. However, the group also has expenses of $12 million, leaving a net gain of just $10.9 million.
In comparison, in 2005 the VRC reported just sponsorship and broadcast rights together. The two categories contributed a total of $9.9 million towards revenue and just $900,000 towards expenses – resulting in a $9 million benefit.
So in an era of massive increase in media rights – the country’s biggest race meeting has had a net increase of $1.9 million.
This does not even pay for the increase in prizemoney for the Cup over that period.
So what is the media rights value of racing. Is it just the big days and the rest is just fodder for wagering providers such as Tabcorp and Tatts?
This was obviously the question asked by the founding shareholders when they set up TVN.
Unlike the major sports codes, which trumpet ever increasing rights agreements, racing seems to want to keep its media deals commercial in confidence. You have to ask why?
Reports claimed that Tabcorp paid $30 million for exclusive rights to NSW races, however a Racing Victoria director argued that Racing Victoria did not reject a $15 million offer from Tabcorp and that this figure made public was grossly inflated.
The reports surrounding Racing Queensland’s rights agreement were also heavily inflated. As Harold Mitchell led negotiations with TVN it emerged that the agreement could be worth up to $15 million.
However, given the current financial state of Racing Queensland, and the fact that sponsorship and broadcast rights contributed just $7.9 million towards the Brisbane Racing Club in 2014, it is clear that the deal with Racing Queensland is not worth $15 million.
So how would we rate the leading racedays and what value would be attached for media rights? I’ve speculated below, but it comes down to what advertising return the owner of the rights can attract. The Melbourne Cup itself holds huge interest – but what sort of money does Channel Seven make from it?
1. Melbourne Cup, VRC – $10M
2. Derby/Oaks/Stakes (3 days), VRC – $3M
3. Cox Plate, MVRC – $2M
4. Caulfield Cup, MRC – $2M
5. The Championships (2 days), ATC – $2M
6. Golden Slipper, ATC – $1M
7. Magic Millions, GCTC – $1M
8. Australian Cup/Newmarket, VRC – $1M
9. Stradbroke, BRC – $500K
How does the richest raceday in 2016, the Magic Millions on the Gold Coast stack up? Have your say below.
Bob
Guest
It's the corporate bookmakers that are in for the free ride. The race clubs should copyright their race field information and charge the corporates a fee to use the information. Without it, how can they advertise and frame their markets... Use code words or just numbers??
no one in particular
Roar Guru
Lets put the racing numbers into perspective. Last week Sky Racing on Foxtel had 134,000 viewers, while Sky Racing World had 46,000 viewers. Fox Footy had 1,362,000 The Sky Channel numbers put it below MTV Dance and on par with Syfy2 Looking at the week ending 14/3, covering the Newmarket meeting, Sky Racing only jumped to 182,000 and Sky Racing Word was still 46,000 Obviously these numbers do no take into account TAB's, pubs and clubs numbers, nor Seven's carnival coverage, but they are still horrendously low. That puts the TV rights for racing at a low cost
no one in particular
Roar Guru
No, it won't happen in the future. While some liked TVN, they were a vocal minority. TVN lost a bundle and the market rejected it. And people like Richardson, Callender, and the rest are what turned a lot of people off.
Keith brighten
Guest
Thank you for your article. I was once a keen, but now very frustrated racing viewer. I used to love watching TVN. It covered Sydney and Melbourne racing in depth, and that was ideal for me. I loved shows such as Get On and personalities such as Richo, Shark, Gator and big Richie C. It was informative and entertaining, and gave a great background to the horses and personalities. I'd often have a bet on Brisbane or Adelaide as well, and for that I'd simply switch briefly to channel 519( Sky Racing Channel ). Now they are all split up, and quite frankly I've lost a lot of interest in racing. It's sad that the race clubs of Australia, especially from the two biggest States can't get their act together and provide a premium racing channel like TVN. Do you think there's any hope of this happening in the future ?
Geoff Parkes
Expert
Thanks Jason. It does show the benefit for racing to package up parts of racing into identifiable and marketable carnivals, to sell off the rights as special events. The daily treadmill of racing has a tangible value relative to what it provides the gambling industry, but that is fairly constant - the cream obviously comes from getting wider audiences to tune it at certain intervals. The Racing Championships for example is a bit clunky and contrived, but, in concept, is definitely heading down the right path. I think it would be possible to extract more from commercial networks if these carnivals were sold effectively. I hate it if i am forced to watch celebrity b/s and cross-promotion of other shows and network personalities, but people like me are not the target market nor represent the value here. A wider audience is where the value is for the network and perhaps racing holds more of the cards here than what they may have realised in the past and should negotiate a bit harder? It would also help if there was more of a national administration focus flowing into a true national calendar, instead of state/club parochialism and self interest ruling the day. But obviously we're not holding our breath for that to happen.