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The Johan Cruyff Institute speak with Pierre Maes, a specialist in sports broadcasting rights, who explains how the business has been changing hands and how the ‘Big Four’ technology companies now have the power to change it all again.
The simple act of turning on the television to see what games are on tonight is now a thing of the past. Public channels have gradually lost sports broadcasting rights to pay channels, because they can’t assume the costs they represent. Italians who want to watch Serie A football matches must subscribe to Sky Italia; English fans of the Premier League religiously pay the BT Sport subscription fee; Telefónica offers LaLiga matches in Spain and, in France, Ligue 1 games can only be watched on BeIN Sports France. The broadcasting rights of sporting events are shared today among large telecommunications companies that, in the absence of other competitors in recent years, could charge what they wanted for a piece of the action. Until now.
The so-called ‘telcos’ have got rich with money from subscribers who had no choice. They have been years of fat cows for them, but every bubble bursts in the end. And it seems that times of change are coming. The all-powerful technology companies have been gaining ground. They have changed our way of life, the way we interact, how we communicate. And they have decided that the time has come to also stick their nose in sports broadcasting.
To the telcos’ claim that they offer you the chance to enjoy sport ‘when you want, where you want and how you want’, the technologists have added the final claim: ‘at a better price’. The young people of today, the so-called millennials or Generation Y, live in their internet world. Those born in the 80s and 90s would not recognize a world without mobiles or one-click purchases. You can’t ask them to pay 80 euros to watch football on television. They are children of the ‘pay per view’ generation and they are GAFA users. GAFA is the acronym used for the technology giants Google, Amazon, Facebook and Apple, also known as the Big Four.
In 1979, the British group ‘The Buggles’ released a single called ‘Video killed the radio star’. It was a worldwide hit and, as the first ever video shown on MTV, it marked the beginning of a new age. In the same way that video succeeded the radio star, pay television brought an end to open broadcasts and piracy is challenging subscribed content. GAFA are now working to bring order and change history again.
The Belgian sports media consultant Pierre Maes, with more than 20 years of experience in the field of sports broadcasting rights, recently visited us as a guest speaker of the Master in Football Business offered by the Johan Cruyff Institute in collaboration with FC Barcelona. We had the opportunity to talk to him about the television rights business, and about how it has evolved and where it is headed.
After starting his professional career in Brussels as a jurist, Pierre held various positions at Canal+ from 1989 to 2002. He was a legal adviser at Canal+ Belgium and director of sports programming, later becoming responsible for all sports acquisitions in Belgium, the Netherlands, Scandinavia and Poland for the Canal+ Group. In 2002, he founded his own consulting company, created a worldwide network of consultants for sports broadcasting rights (The Vantage Network) and participated in an agreement with SportBusiness Intelligence, a product integrated in the SportBusiness Group. In 2014, he helped MP & Silva to sign a six-year contract with the Belgian Football League, as their exclusive media adviser. Recently, he has advised Etisalat (UAE telco) on its sports strategy, and the Professional Basketball League of Belgium on the sale of broadcasting rights.
Will we have to continue paying for Premium Sport Content? Will prices continue to rise or have they reached a ceiling? Will we be able to buy matches on Amazon or will we end up watching a derby on Netflix? Pierre Maes warns that companies such as Amazon, Facebook or Google are testing the terrain, acquiring specific content packages, without going, for now, for the whole cake. But it may be just the beginning.
We come from a time when people had no chance to choose what to watch on TV, but it was free. With pay-per-view the offer is huge, but people are still complaining about the price. How did you see the process?
It has been a long process, actually. Pay TV started in Europe in 1984, with Canal+ in France, and the success of Canal+ made it possible for other players to launch the pay TV activities, like Sky in the UK, and pay TV became a big success and then they were able to buy sports and, of course, people had to pay to watch sport from that time.
We agree that content is key. When I accept that I have to pay to watch certain sports on TV, I’m more demanding about the quality of this content. What are broadcasters doing in terms of fan engagement, to make sure people feel it is worth paying for it?
Young people in particular, especially students, don´t pay and if you are a broadcaster and say that the experience of watching a game on my platform is richer, automatically, the fan doesn’t care. What the fan wants to see is the live game, period.
Pay-per-view TV has killed public TV. What is going to kill pay-per-view?
Piracy. Today, piracy has grown a lot; all these young guys know piracy better than you and me, and they know how to watch their favorite teams and football games for free on internet.
Are there different targets of TV viewers that all the platforms can share? Young people have no money to pay to view; adults are not willing to watch sport via social media channels. Who do you think has the biggest share of the market in sports media rights?
Young people don’t want to pay, but they are big fans. Older peple, people from my generation, are used to paying, but of course the business of pay TV is in danger because it will decline slowly along with the age of its customers. Persuading young people to pay is a big challenge.
Which is the best football league to invest in nowadays?
Definitely, the best football league in the world is the Premier League, but I wouldn’t personally invest in it because it’s too expensive.
Who has control over the content?
Today, if we talk about how the games are filmed, the leagues are taking control over the content. It means that in the past you had the situation where the leagues were selling their rights and telling the broadcasters who wanted the rights, ‘you are in charge of the production’, but that’s no longer the case. Today, the leagues want to produce the images themselves so they have full control over what is shown to the public. If you are a broadcaster and you broadcast one UEFA product, like the Champions League, the Europa League, the Euros or the qualifiers, you will sign a more than 50-page-long contract in which you have very precise obligations as to what you can and cannot show.
Football clubs are never happy, they always want more money. The revenue splits can vary from one league to another, but usually a big part of the TV revenues is shared equally among the clubs and then another part will be shared taking the ranking into consideration, or other factors that are good for the biggest clubs. The biggest clubs always want more money and that’s how it works today.
Is the growth in the value of broadcast rights for football matches from leagues across Europe helping to attract international investments to clubs?
Definitely, because if you invest in a football club and you know that due to a media deal with a pay TV channel you will be guaranteed x revenues for the next three years, of course you can find an investor who wants to do it.
Is there any corruption in the world of football media rights?
Well, you sometimes see in the newapapers that there are some cases, but personally I’ve never seen any corruption.
What are the promoters of the competitions asking on their bidding form? Or is it a blind bidding process for the broadcasters?
The bidding form is one of the documents they send you when they open a tender. The bidding form is a form you are supposed to fill in if you are interested in the rights and need to send it before the deadline. You give your identity and the amount you are willing to pay.There can be some indications that you could give at this time but, on the other hand, these kinds of things are already in the obligations and you will read them in the invitation document.
What is the consumer position in this pyramid of power? Do consumers have any power to keep prices reasonable?
Until recently, consumers had no choice, had no power and could only decide whether to subscribe or not. Today, again with piracy, the consumer can choose to stream and watch football games for free, although it’s illegal. But it’s a choice and a lot of young people do it.
What are GAFA offering to the sports rights industry? Are they a threat for the other competitors?
We see a lot of this kind of ideas in the press, saying that Facebook, Google, Amazon, are going to spend billions on media rights. Today it is not true. These companies are cautious, they are investing in sports rights, but not a lot of money.
What has been the approach of companies like Amazon or Facebook to enter into the world of sports media broadcasting?
They are cautious because they don’t compete for top premium rights, they won’t compete with Sky in the UK for the Premier League rights, they won’t compete against Telefónica in Spain for LaLiga rights. What they are doing is very clever. Amazon is buying some Premier League rights in the UK, but for them it’s a minor investment and they are not the most attractive rights. They seem to be wanting to test the market. Facebook has been buying some rights in India and in America, but again they are not premium or exclusive rights, and they are not paying a lot. They are also testing the market. Maybe one day they will make a bigger investment.
Are we going to be watching football matches on Netflix?
Maybe. Unlike the othe tech giants, Netflix has issued an official statement saying ‘we are not interested in sport, we won’t do sport’. On the other hand, there could be a Netflix of Sport. There is a company called DAZN that calls itself the Netflix of Sport. The Netflix of Sport would be a very good answer to piracy because we saw with movies and series that people are ready to pay for Netflix, so a Netflix of Sport at a decent price definitely could get young viewers to pay.
What will the future bring?
We have had continuous and spectacular growth since the 80s in this market. Astonishing growth. Will it stop? When will it stop? Will it continue growing? Will it even continue to grow faster? A lot of people think that what we are seeing today is that the growth comes from the competition between agencies and it looks like a bubble. And this bubble could burst. We could go back to a certain reallity and the reallity is exactly what the user is ready to pay.
This article was originally published by GlobalSportsJobs partner the Johan Cruyff Institute and can be viewed here.
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