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    In this first of a two part series Nic Couchman, Chairman of GlobalSportsJobs’ legal partner Couchmans LLP, discusses the latest sports law and intellectual property rights trends influencing the international sports industry in 2017.

    Working as we do with many organisations, businesses and athletes across 30 or so sports, we at Couchmans LLP have the privilege of seeing at first hand what is happening ‘at the coal face’ of the sports industry, and what are the main challenges which are confronting, or are about to confront, our clients. It is a particularly fascinating time in sports at the moment, as the effect of rapidly evolving media rights, a crisis in sports governance, disruptive technologies, and new market entrants and revenue streams interact in the market place.


    1. Social Media Rights

    The social media giants have started to bid in earnest for live sports rights, for example Twitter’s purchase of PGA Tour rights for 2017, following on from their NFL Thursday Night streaming deal in 2016. Facebook, with 650 million sports fans on its platform, now aims to be a ‘video first’ company, and hosts over 8 billion video views per day. In 2016 it launched Facebook Sports Stadium for NFL with football, basketball and other sports to follow. Although perhaps not strictly a social platform, Amazon Prime Video is actively working on building a package of live streaming sports rights, and Sina Weibo in China has announced its own NFL streaming deal.

    The question for rights owners is how can they find the optimum blend between traditional media and social media deals, and the right balance between distribution/exposure and revenues. The problem for the social platforms is not necessarily the cost of the rights, but availability. Many major rights are tied up for several years with major broadcasters or other licensees. Many sports are also experimenting with their own OTT (‘over the top’) streaming services. Meanwhile, specialist sports-focused social media platforms are sprouting up, aggregating content, sometimes with, often without content licences.

    The upshot is increasing complexity in media rights strategies, deals and contracts, as more buyers with very different agendas and business models compete for sports content. Rights owners will need to examine their current and new agreements very carefully in this era of major change for sports content rights.


    2. Live content versus sports ‘snacking’

    Viewership of much traditional long form live sports is falling, and ‘snacking’ on sports content is increasing, as millennials and centennials, in particular, switch to mobile digital content and video on demand. ESPN has lost an estimated 9 million subscribers in the last 3 years, and Sky Sports reportedly suffered a 19% reduction in Premier League football viewing figures, possibly an early season blip but too early to tell. Many consumers are now consuming their sports content in short bursts via multiple channels such as blogs, vlogs, news sites, illegal and legal streaming, social media platforms etc. The number one method of consuming sport in China is on mobile devices, not TV.

    Live, ‘long form’ sport is still one of the few ‘appointment to view’ opportunities, but the trend is towards a more diverse, consumer centric, on-demand engagement. The challenge for sports here is not just financial, i.e. the risk of reductions in media rights fees as broadcasters consequently invest less heavily in live sports rights, but in terms of control over the underlying IP value in sports content. How do they exert legal ownership over their video and data content when it is being pirated in a million ways a day around the globe? It is fast becoming a game of ‘whack a mole’ with millions of moles. The music industry faced similar fundamental challenges 15 years ago and haemorrhaged value - can sport avoid the same fate? Meanwhile the likes of Facebook and YouTube are generating billions of dollars in advertising revenue (to the detriment of other traditional channels for advertising) around shared sports content, great promotional value for sport, but revenues in which the rights owners are not themselves participating.

    Sports ultimately depend on monetising their IP value to survive, and innovative IP protection policies are needed to deal with the realities of digital technology.


    3. Data and live betting

    The in-play betting revolution has generated a surprise windfall for some sports rights owners. The sports betting market, globally valued at over $50 billion, is driving the value of live sports data ever higher, but still only a tiny fraction of betting revenues is actually being paid to the organisers of the events which are being bet on. Even the notoriously gambling-phobic US sports franchises are now actively exploiting their data for betting purposes outside of the US. 2016 was a record year for ‘official data partnerships’ and the trend will continue apace as more rights owners realise they can’t ignore the opportunity and indeed need to embrace it in order to compete, and data buyers continue their land grab of available data sets.

    In much the same way as rights owners consciously took the decision two decades ago to proactively protect the value of their exclusive sponsorship rights by establishing protective structures and commercial rules, and by stamping on ambush marketing, they need to execute sophisticated strategies to protect and exploit their data.


    4. Governance and regulation

    To what extent should the ‘governments’ of sports – the international and national governing bodies - also own them and control their commercial rights? This is arguably one of the biggest questions in sport today, with franchises such as the NFL, Premier League, Formula 1, UFC, and the World Surf League effectively in the private sector and the FIFA World Cup, UEFA Champions League and Olympic Games owned by their constituent sports associations.

    One of the problems faced by the traditionalists who don’t believe sport should be controlled by private interests is that the major governing bodies themselves have come under intense scrutiny and criticism for devastating failures in governance causing immense damage to their reputations both with the public and major brand sponsors, and a decimation of trust in the sports establishment. The rapidly changing and globalised environment for sports risks is making some governing bodies look increasingly archaic and ‘unfit for purpose’. The inherent risks of conflicts of interest between a governing body’s governing, regulatory and developmental roles on the one hand, and their desire to optimise commercial revenues on the other, has to be addressed in order to restore confidence. Is this a legal issue? Yes, in so far as the effective governance of a sport depends on the construction of sustainable and defensible internal structures and rules, protecting a sport from abuse and corruption, achieving transparency and ultimately the reinstatement of trust and credibility necessary for effective leadership.


    5. Esports

    Whether sport or entertainment, esports have come of age with several major deals announced in 2016 including BAM Tech’s purchase of the streaming rights to League of Legends for $300m and the E League being broadcast on TV by Turner Sports. Many football clubs now have esports teams and the space is set to generate over $1bn by 2018. The sector provides almost limitless opportunities for new IP creation, potentially on a territorially unlimited, global basis, where investors can not only own the format, but also set the ground rules and control the commercial rights. As the stakes get higher, and sponsorship and betting start to play an increasing role in the revenue model of esports, the regulation of the sector will increase, as will the commercial value of the top talent, some of whom are reportedly earning over $1 million a year – from playing video games.

    Further reading:

    Stay tuned for part two of the series, in which we look at more Sports Law and IP trends for the year ahead, including challenges to rights deals and processes, niche sports and new formats, and the influence of China.

    Couchmans LLP is the UK's premier specialist sports law firm. For more information visit: www.couchmansllp.com

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