Is the sports media rights bubble about to burst?

Plus: Golf-F1 mashups, and the most marketable athlete in the world...

October 23, 2023

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HOT TOPICS

📈 Ominous signs for the media rights market…

Disney this week released dedicated financial results for their ailing cash cow ESPN. The division earned $2.9 billion in profits, but both cable and streaming subscribers are falling.

Meanwhile, European football leagues have been having a tough time selling their rights. The Ligue 1 rights auction was cancelled after no-one made a satisfactory bid.

Check out the big read below for the full breakdown 👀.

📺 Streaming companies dip into live sports

Netflix announced its first foray into live sports. The ‘Netflix Cup’ – a golf tournament between professional golfers and F1 drivers – will air on November 14.

Meanwhile, Youtube’s live sports experiment has showed promising results – the NFL Sunday Ticket has reportedly drawn 1.3 million paying subscribers – more than the 1.2 million DirecTV’s satellite offering drew in previous years.

👟 Brands spend big in the lucrative sneaker industry

The shoe company is making a push to be seen as a serious player in the lucrative sneaker industry, having recently signed NBA star Julius Randle and footballer Harry Kane. Their stock has risen 36% this year.

And in other news…

THE BIG READ

The historic rise of broadcasting revenues

Fuelled by competition amongst broadcasters (and, more recently, big tech), the value of sports media rights has, for the most part, increased steadily over the last couple of decades.

Many teams have invested heavily in players and infrastructure on the assumption that the rights will keep on going up. 

Macro-economic headwinds

But there are several trends that threaten to derail this growth:

  • Unbundling means that sports broadcasters are losing revenues they were previously allocated for households that bought pay TV packages but didn’t even watch sports

  • The rise of streaming and ‘cord cutting’ means many consumers are unsubscribing from traditional pay TV

  • ‘Gen Z’ are watching less live sport, and consuming more sport (free) via social media

In short – consumers are moving away from traditional broadcasters, in favour of alternatives such as social media and streaming platforms.

As a result, the big broadcast players don’t have much much appetite for paying increasingly bigger rights fees.

Leagues are struggling to maintain rights deals

This is starting to play out across different leagues:

  • The English Premier League looks likely to see a small increase in its total rights revenue for the 2025-2029 cycle, but mainly because it is adding 70 games and tweaking its packages in favour of bigger deals. In fact, the per-game revenue is likely to fall.

  • Ligue 1 this week scrapped its rights auction for 2024-2029 after no satisfactory bids were received. LaLiga, Serie A, and the Bundesliga are also struggling just to keep their revenues flat, with less-than-hoped for demand from broadcasters.

  • The cost of the IPL media rights has risen to seemingly unsustainable proportions, with their costs far outstripping any potential advertising or subscriber revenue. I went into more detail on this here.

  • In the US, the Regional Sports Network system that has historically proved lucrative for the NBA, MLB, and NHL, is disintegrating.

Streaming is struggling to make up for lost revenues

If users are simply moving from TV to streaming, can’t leagues simply replace the TV revenue with bigger streaming deals?

Well, not exactly.

So far, streaming hasn’t been able to monetise in the same way TV could:

  • ESPN+ still has only 25 million subscribers in the US (compared to 100 million TV subscribers a few years ago), and actually lost users last quarter

  • Many sports streaming platforms are still loss making (DAZN lost over $1Bn in its most recent financial report) and don’t have the ability to bid for the more expensive deals

  • Others, such as Apple and Amazon, have so far avoided bidding for the major rights packages

  • Amazon’s NFL coverage last season only ended up averaging 9.6 million viewers per game, around 25% lower than original estimates

  • Direct-to-consumer platforms such as NFL+ and NBA League Pass are growing, but still have a huge way to make up for what major broadcast deals bring in.

  • The ease of switching, reduced appetite for advertisements, and wider variety of sports options also make retaining and monetising online users particularly challenging.

What happens next?

We are firmly in the midst of a widespread consumer move away from traditional linear TV broadcasting, and towards a world where sports are distributed to different consumers at different times via different formats and platforms.

The problem is that no-one has really worked out how to monetise this at scale.

Whilst the market for the big North American leagues (the NFL and NBA in particular) looks buoyant, there will be tough rights cycles for others, such as European football leagues such as Ligue 1 or Serie A. Meanwhile, many middle-of-the-road OTT platforms will struggle amidst the fierce competition.

🍿 Expect consolidation on both sides in the years to come – the European Super League may come back into the conversation in some form or another, whilst media platforms may look to ‘rebundle’ – I expect we will end up with dominant sports providers, they just might have different names (all hail Apple Sports?).

WHO’S THE RICHEST OF THEM ALL?

🤑 SportsPro Media this week released their list of the world’s Most Marketable Athletes. Can you guess who’s #1?

COMPANY IN THE NEWS

💰 Infinite Athlete have £40M spare change to sponsor Chelsea FC, but no-one seems to be able to explain what they do.

In simple terms, the company (which was formed by a merger of two other companies TempusEx and BioCore) collects data from different third-party sources – including stadium cameras and on-player sensors – and allows other applications to tap into this. Previously they would have needed to connect to each data source individually.

🧠 This (in theory) gives rise to many use cases, including tactical analysis, performance coaching, live stats overlays, and injury prevention.

🎯 JOB VACANCIES
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