By Paul Nicholson
October 30 – Amid the figures presented by Martin Wagner, delegate to the Board of TEAM Marketing, at the International Football Arena (IFA) conference earlier this week, was an explanation from the coal face of sports marketing of why, if football rights are handled correctly, their value will continue to increase.
Wagner said that the “UEFA Champions League Final delivered with a global TV audience of over 170 million, the highest global audience for a sports event so far in 2013.” TEAM, that markets the Champions League and Europa League for UEFA and does so as its exclusive business, currently generates $1.85 billion annually for UEFA and Wagner said that will grow and the “clubs will be happy”.
Behind the leap in the growth of TV rights fees in recent years has been the entrance of advertiser funded channels as serious bidders for rights, generating competition, and pay TV providing a home for sport with dedicated channels. Mid-week, prime-time football featuring the best clubs in Europe guarantees solid and valuable TV audiences for broadcasters. Allied to the growth of pay-TV and the rush to build subscriber bases, there has been a perfect storm of rights growth.
“We have seen the affect of this in the UEFA Champions League. In 1995 to 97, over 95% of the revenues came from commercial or Public Service Broadcasters; in the current cycle, over 50% of reenues now come from pay TV partners. Digital TV research estimates that, by 2018, the number of pay TV subscribers will exceed 1 billion, a 23% increase compared to today,” said Wagner.
Everyone in the audience at IFA knew the power of football – it has always been the same but Wagner’s central point, which may have been lost on some, was that it is not this on its own that is driving the value of premium football rights up for products and services in the connected networks. “If businesses do not proactively design the experience the customers shall have, the businesses cannot influence the experience that’s shared about their brand,” said Wagner.
What Wagner was explaining was that selling football rights is not just about putting them side-by-side on the sports supermarket shelf and letting the rights-buying customer choose and negotiate a price. It is actually becoming more complicated than ever before and requires a more integrated approach.
For Wagner there are three separate trends that are changing the business – he called them “disruptive”, and in the sense that they have and are changing the way the smart sports marketers are selling their rights, then we are seeing a business in the midst of life-altering change.
The first trend is in the sponsorship market. Wagner quoted the PWC valuation of the global sports market at $130 billion, of which $40 billion is sponsorship, up from $27 billion in 2006. This will continue to rise with the real growth opportunity coming in the area of virtual advertising – the insertion of digitally generated graphics into the broadcast feed replacing logos on perimeter boards, for example, at the stadium.
This isn’t new technology, much of it was actually developed out of Israeli defence technology, but the pioneers of the late 90s who have managed to hang on in this business will be relieved that their time has now come.
The second key trend Wagner highlighted was the growth in new bidders for premium sports rights – and he was not talking about phone companies, they are older news now. Wagner pointed to Microsoft’s 5-year $400 million sponsorship deal with the NeffL which uses the new X-Box One console to link fantasy gaming to live coverage, and the English FA’s content deal for Facebook.
Clearly in a more connected world, rights holders will need their agencies to be more ‘connected’ if they are to get best value.
The third trend that Wagner pointed out was the move towards ‘hybrid’ models, “with brands creating their own properties or their own TV channels. For example, Red Bull makes more money on its media activity than it does from selling drinks…Football clubs are also looking to take greater control over their rights using new media platforms.”
All of this points to a change in terminology and marketing speak in the deal-making rooms of sports rights.
“In sponsorship there has been a shift in focus from ‘return on investment’ to ‘return on objectives’. Sponsors now ask how the sponsorship has performed against goals such as brand exposure, awareness and likeability, trust, purchase intent and customer advocacy,” said Wagner. And there is a new phrase entering marketing speak – ‘return on investment’ is being replaced by ‘return on involvement’.
It is a brave new world with big new revenue potential for the savvy and the ‘connected’. “Governing bodies will need support from marketing agencies who understand this complexity, who can leverage these new opportunities and mitigate the threats to the existing commercial concepts and the existing rights packages,” said Wagner.
Contact the writer of this story at moc.1734899515llabt1734899515oofdl1734899515rowed1734899515isni@1734899515noslo1734899515hcin.1734899515luap1734899515Martin Wagner is chairman of Insideworldfootball AG