A report by Deloitte, commissioned by BSkyB in the UK, found that broadcasting rights contributed up to 58% of total funding for certain sports bodies indicating this revenue source is increasingly becoming a major factor in ensuring governing bodies’ viable existence.
The recently released, The impact of broadcasting of sports in the UK report, outlined the impact of broadcasting on sport, and in particular on the funding of sports governing bodies to fulfill their remit.
It drew on case studies ranging from football to rugby league, cricket and netball to highlight the range of impacts that broadcasting can have on sport or sports organisations. It also examined the various factors, which sometimes work in conflict, that sports consider when determining their broadcast strategy.
Damien Tampling, national leader of Deloitte’s Technology, Media and Telecommunications (TMT) industry group, said the report is particularly interesting for Australia, given a number of local sports governing bodies are about to embark on rights negotiations.
“They’re highly relevant in the Australian marketplace and especially regarding the debate that rages here about anti-siphoning laws,” Mr Tampling said.
“The importance of broadcast rights on the basic functioning and success of sport means that, what is and is not on our local anti-siphoning list, can have a serious impact on how a sport’s rights negotiations might be structured and the value they may obtain.
“Not least, as we head towards the high speed NBN network, it should not be understated how important it is that the Government move quickly to release a forward looking set of standards for IP based rights.
“Without such guidance it might not be a poor TV deal that undermines most sports rights deals in the coming years, but a poorly articulated digital media deal in a highly uncertain environment.”
The impact of broadcasting of sports in the UK report found that:
broadcast rights revenues represent a substantial portion of the total funding for sports such as cricket, football, rugby union and rugby league, which typically attract considerable viewer interest. Of the sports profiled, this contribution ranged from 22% to 58% in their year ended 2008
there is relatively little cost to sports associated with broadcast revenues compared to other revenue sources, such as match day and other commercial revenues. As such, broadcast revenues are almost wholly available to an organisation to fund its activities
broadcast revenues are often critical in determining the level of funds available for a sports organisation to invest in the development of the game
the nature of broadcast contracts, particularly those extending over several years, provides a platform for sports organisations to plan ahead and invest in the development of their respective sports. Often, a lack of grass roots funding will follow in the absence of a broadcast deal
any broadcast deal is generally about balancing the pros and cons of both PAY TV and Free To Air (FTA)
this challenge extends to digital rights. For example, most existing digital deals usually means a “wall gardened” approach to content distribution, while a large percentage of the online and mobile market, but still not to 100% of those that might want access to it
when it comes to digitising content too, something that is on the forefront of many sport’s minds as we move towards a more prolific IP TV ready environment, is the challenge of short term cost for long term return. Digitising the many back catalogues of content is not necessarily a cheap or quick procedure, so many sports have elected to partner with broadcasters and telecommunication companies to embark on this process. This sometimes means giving up some control of the usage rights relating to content in return for not having to pay for the process of digitising and tagging it
solid broadcast revenues are often directed at grass roots funding, but the links between grass roots funding and participation are still a little grey
sports organisations typically take an approach of bundling less attractive rights with more attractive ones in order to secure the best possible coverage, while still getting a solid financial return. In Australia, this might include bundles of AFL Premiership Season, Finals or Brownlow night rights into different packages, just as in Europe the same is done with major cycling events such as Le Tour de France, La Volta and Giro d'Italia
it was also found that a number of examples are evident where broadcasters have partnered with sports to invest in the development of competitions, and production quality and innovation.
Please note, Deloitte’s Technology, Media and Telecommunications (TMT) industry group in Australia comprises a team of practitioners who specialise in advising clients not just across the TMT sector but also in the sports and entertainment space.
Deloitte TMT group has released a number of publications, including prediction reports on technology, media and telecommunications. For copies, go to this page.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.