There are interesting times ahead for sports fans and chattering classes as the $2.5 billion AFL deal and the $925 million-plus NRL deal and their structures are dissected.
It is also interesting to consider what the implications will be for football when the time comes to negotiate the next TV deal.
Fellow amateur writers on The Roar go as far as to state: “For football, this extra money would be immeasurably useful in keeping A-League clubs in the black, improving youth development and growing women’s and grassroots football.”
“During his tenure, Gallop has been widely regarded by most football fans as a huge step up from his predecessors… But after all of this positivity, the game would appear to be losing ground on its rivals – at least in a financial sense.”
It’s understandable in the growth focused world that many will fall into the trap of ‘bigger is better’.
This isn’t necessarily the case, instead for football it is worth recognising the fact that its youthful competitions (the A-League and FFA Cup) are the newest and leanest in the country. They are also the most lacking in bloated complexity, which is a blessing as we look into the future.
Indeed, the fact that actually pushed David Gallop ahead was belatedly introducing the FFA Cup, about five years after it should have been introduced when the FFA was busy focusing its energy on a controversial World Cup hosting bid. It means his legacy is effectively assured.
Firstly, it is worth observing that for all the respectable income derived from ticket sales, sponsorship and other facets of sports business, broadcast rights account for the major share of income.
This is all well and good and will fund projects and subsidy programs for the given sport – not to mention an increase in costs as the players negotiate a sizeable share of revenue flowing into the given sport.
Secondly, this serves to increase the complexity and bloat the structure, with the underlying cost structure of the sport becoming fundamentally higher. This works well as long as income keeps rising and all facets of the game are experiencing inflation and each successive TV deal is larger than the previous one.
However, if this pattern of continuous growth cannot continue this causes problems – existential problems.
From this perspective it is important to consider that the AFL and NRL are streamlined competitions and organisations in mature growth stages, being funded by similarly large industry organisations in mature growth stages.
As such, there is an argument that far from being in an almighty strong position as the size of the recent TV deals suggest they are actually the most susceptible to systemic risk.
Looking back to the impact on the lower tier of England’s Football League at the collapse of broadcaster ITV digital serves as a good case study.
So while astonishingly high TV broadcast deals may pave the way for many useful sounding programs, it needs to be understood they are also a potential source of systemic risk. The higher the share of income TV broadcast revenue represents for a given sport, the higher the systemic risk they also potentially represent.
Great care then needs to be ensured that the high upswing in revenue does not lead to an upswing in costs that would be crippling if the proverbial tap is turned off. This is part of the reason why I recently wrote an article arguing for restraint on adjusting the fundamental structure of the A-League salary cap.
Looking at the structural order of things, the AFL and NRL command the highest broadcast revenue, but both sports are Australian focused and channelled into what is effectively a single competition each focused on one tier (the professional league tier).
Football on the other hand is effectively spread across many niche competitions. It attracts less TV broadcast revenue but it has the most comprehensive spread of market penetration ranging from potent grassroots presence right up to a prominent national team competing effectively in international competition.
Looking ahead it is useful to consider trends in the media industry. That is to say there is a trend of segmentation occurring as technology and consumption trends change based upon mobile devices including laptops, tablets and smartphones.
Add to this the consideration of global economic conditions, which have been uncertain ever since the 2008 financial crisis. Australia weathered this period relatively well thanks to the demand for mineral resources by China but there is the prospect that deflationary pressures on commodities will have a recessionary impact.
This ultimately impacts upon discretionary spending like, for example, subscriptions to cable TV providers and the advertising revenue of free-to-air networks.
As a football fan I’m very much happy that our sport is segmented across many tiers and competitions, as it means that it is better disposed to being in tune with the future nature of the media industry.
Additional to that, risk is not only compartmentalised but each segment can be tuned to reinforce each other.
One reason I have praised the introduction of the FFA Cup is that it turns each aspect of the football fraternity (the grassroots and the professional tier) toward each other in a self-reinforcing dynamic.
This is also why I have stated that strength of interest is more important than the scale of interest in terms of ensuring recession resiliency of a sport.
As a Melbourne Victory fan it was very heartening to see that the team have already surpassed last season’s total of 21,000 season ticket holders with just under two months still to run following their championship season.
A similarly good example can be seen with Western Sydney Wanderers, despite a disastrous season they have managed to effectively retain their season ticket base.
In both cases speed of uptake is the key measure, which is as important as the end size.
Nick Nack
Guest
After reading the facts and figures here on tv deals, particularly AFL. Just imagine how dire it would be for FTA without the AFL and to a lesser extent NRL(because noone watches it outside NSW and QLD). FTA TV will end up being like AM radio.
Perry Bridge
Guest
The 'threat' of Rugby and soccer. Puh-leeze. These networks happily jumped on board the internationals matches this year and broadcast those. The AFL and NRL success has already occurred - that has ensured the 'attentions' they have gained. The current associations that have evolved between broadcaster and 'content provider' (i.e. live sports - therefore AFL and NRL) is very much as a 'partnership'. So - obviously there's a sense of 'investment' in the product. That says enough. Does that mean an attempt to play down the other codes? Well - we've seen in the past some allegedly fine attempts in the print media to play down other codes - ironically the most obvious in recent times was the NewsLtd's Daily Telegraph in Sydney going into bat for the NewsLtd part owned NRL against the evil invaders from Melbourne. Ironically because now young Rupert has been seen around town on the arm of a new girl.
Perry Bridge
Guest
Just a couple of ponderances - the FTA ratings 2010 vs 2015. The AFL 2007-2011 deal was the 7,10 and Foxtel combination. At that time though Foxtel did NOT broadcast head to head with Ch.7 on the Friday nights. Since then - we now have Foxtel broadcasting 9 of 9 matches live - without ads during quarters. Ch.7 is directly competing with Foxtel head to head now (2015) where as they weren't in 2010. The benefit the other way is that Ch.7 now broadcasts Friday night live against the gate. Although I'm not sure how beneficial that is in all markets. The other question is whether that Fri night figure is the primary channel only or includes the 7Mate numbers. The article should note too that even though the AFL for example has big revenue - okay, they've invested heavily in what looks logically as the last Australian expansion that has to happen - but, even so, there are clubs generating losses. Club revenue is only so linked to AFL revenue - many of the clubs generate massive revenues (by Australian scales). They aren't so much bloated by the Broadcast rights. Is the AFL bloated by the rights? Yeah - certainly their media department. This then leads to the elephant in the room. Direct broadcast to customers. The NBN doesn't really allow this just yet - but if/when HD unbuffered live sports can get to the majority of customers at a decent price - then the AFL media department will probably see the AFL move away from traditional and new age broadcasters - although perhaps retain a partnership with a Telstra or the like. Of course - the Australian market is limited - these sorts of models work great in the USofA, for sports like the MLB - but Australia is a different kettle of fish and that's even if all of Australia were AFL fans. The US models only hold so much water for the Australian domestic scenario.
The artist formerly known as Punter
Guest
BigAl, we have a totally difference of opinions, but one thing neither can be accused of is a bully.
cm
Guest
90s champions league, ah memories. Some great sides, Ajax, juve, dortmund, live in the memory. And yes the EPL highlights. Was looking for the theme tune without luck and found this, I remember this side really well. Homegrown talent, people with connections to the club going back generations, old stands close to the pitch as possible, people standing, lots of singing, local - or no - sponsorship, attacking football.. The last gasp really. https://youtube.com/watch?v=RnTEjomnzV0 nice ball from lazaridis too if you don't mind.
bart
Guest
FFS seriously LOL.
bart
Guest
Yes, we are pretty sure fuss has a shadow, i think we all know who that dim witted lackey is !!
Mister Football
Roar Guru
I really don't wish to derail this thread, but I had to laugh at this last sentence: “This is great, but geez I hope Ch.10’s share price doesn’t drop.”
NUFCMVFC
Roar Guru
I have a real nostaligc view around the 1993 version of the ABC highlights, from when my old man first got me into it all In the meantime it's nice to look at the UCL progression, not sure how you embedded it, perhaps coding will work [youtube] https://www.youtube.com/watch?v=vnvlw4zP-3w [/youtube] up until early 90's is when it still felt organically natural, after that the big money came in and destroyed the vitality to the point where everything is super clean but sterile Only exception is the Bundesliga with Convertible Terracing
NUFCMVFC
Guest
Great to see the great Sir Bobby Robson on the thumbnail thingy (whatever it's called) Did a great stuff at the Toon in the late 90's early 90's If he was leading us today like then we would have a better chance of actually winning, was very hard to break the stranglehold of Man Utd and Arsenal Chelsea did it with Abramovich's billions As for the 70's, for my part I love the retro shrits, am planning to get an NUFC 1970 one
BigAl
Guest
Punter you really shouldn't have posted right here, as people may think that Fear the Smell is talking about you !
Fussball ist unser leben
Roar Guru
@AR You aren't very bright are you? When you compare business progression - particularly businesses that have undergone major transformation - the intelligent business analyst will compare like with like. You will compare various metrics for Business A in Yr 5, with the same metrics for Business B in Yr 5. You don't compare Business A in Yr 30, with Business B in Yr 10. FACTS 1. In Yr 11 of the AFL competition, the AFL received $17m for TV rights (in today's dollars that's about $28m) 2. In Yr 11 of the HAL competition, the FFA will receive $40m for TV rights (in case you don't understand, $40m in 2015 is worth $40m in 2025)
marcel
Guest
Great postings today folks.....thanks to all
The artist formerly known as Punter
Guest
Fear the Smell, many on the football tab cares little for AR as well, his constant debates with Fuss adds nothing to the football tab!!!
Bondy
Guest
Barry There has been and would suggest a continued intention in Australia to kill off Football professionally here but unfortunately the great casualty to Australian sport is that Rugby has almost been killed off professionally and at amateur ranks as well, though Football continues to rise at both professional and amateur levels ..
Barry
Guest
I am not in Australia but anything I read seems to point to the the fact the the media chiefs over their seem to be doing everything in their powers to make sure AFL and NRL succeed no matter what, it actually looks like they love these codes and on the other side of the coin want to keep Rugby and football's threat under control!! Nzer
Fussball ist unser leben
Roar Guru
And, yet another football groupie who adds nothing to the discussion, but just stalks in order to grab attention.
Fear the Smell
Guest
"How socially inept must he be?" Says the guy who spends all day every day on an internet forum loudly trumpeting the fact he is the most business-y business man ever to busy himself with the business of business. I don't care either way about AR, but a condescending, pompous bully (that's you, by the way) showing off for a small band of dim-witted lackeys (now there are some serious groupies) isn't exactly a picture of social aptitude.
Fussball ist unser leben
Roar Guru
Indeed. He projects as an insecure, pathetic groupie – starved of attention, so he stalks football discussions. The fact that he’s been doing the same thing every day - trolling for attention - for the past 4 years makes him even more pathetic. How socially inept must he be?
Ian
Guest
oh goodness me Rodger, what a sad comment. if you wish to be a troll just come out with it.