Article by Robert Stoker and James Whittaker
Germany has been soundly thrashed, Albania defeated and a win over Greece should take England to the World Cup Finals in Japan and South Korea and make Sven Goran Eriksson a candidate for honorary British citizenship.
Already millions of armchair fans are anticipating settling in front of their television sets for a summer of football. But they may be in for a disappointment!
The World Cup 2002 is presently a victim of the highly complex world of the marketing of broadcasting rights for major sporting events. There is no ‘best policy’ in this area and many of the governing bodies for the world’s largest events favour different solutions.
And so far, Britain’s broadcasters have been unable to agree a deal to televise the games from Japan and South Korea. Negotiations with the rights holders have broken down. The European Court and the Office of Fair Trading have been called in to adjudicate.
It seems inconceivable that football fans in the UK won’t be able to follow the fortunes of a resurgent England team but, as ever, money is at the root of the problem. It highlights the fact that the marketing of broadcasting rights for international events is far from straightforward.
All 64 matches of the World Cup are ‘ listed events’ and covered by Government legislation designed to prevent them being bought up exclusively by a pay-tv broadcaster.
ITV and BBC are jointly bidding to televise the tournament and have offered £50 million. The figure might have been higher but the time-lag means that live matches will be played at a time when most Britons are at work and so they have a lower value in the UK.
Although this figure is almost 10 times the £5.4 million they paid to televise France ’98, it is still only a third of what the current rights holders – Prisma Sport and Media, a subsidiary of the German media company, Kirch Group – are asking for.
The two sides are still at loggerheads.
The current stand-off highlights the fact that there is no commonly acceptable way to market the broadcasting rights for such major sporting events.
There are three potential routes:-
- The governing body for the event sells the rights to a sports rights organisation for a fee. The body knows from the outset the sum it will receive and it is up to the organisation to recoup its outlay by selling the rights on to individual broadcasters and countries and make a profit. This is the model preferred by FIFA, although it became unstuck when its previous partner, ISL, collapsed.
- In another model, the rights holder sells to a broadcaster or production company for use in their own territory. In the past, some broadcasting organisations have effectively bought up whole sports.
- The third model is the one adopted by the organisers of the Commonwealth Games to be held in Manchester in 2002. In this case it is up to the host city to arrange broadcasting, sponsorship, merchandising and other rights with the revenues generated helping to offset the costs of staging the event. In the case of Manchester 2002, host broadcaster rights have been awarded to the BBC – who are allowed screen the event in their own territory - with the organising body selling rights to other territories to use the feed produced by the BBC.
This means agreements need to be concluded with individual broadcasters or consortiums for the overseas countries of the Commonwealth and covering Australia, New Zealand and the Pacific islands, Asia, Canada and Africa. In the UK, the BBC has committed to 100 hours of coverage on BBC1 and BBC 2.
The Commonwealth Games will be the largest multi-sport event ever staged in the UK with over 5,000 athletes and officials from 72 Commonwealth countries competing in 17 different sporting disciplines for two weeks beginning on July 25 next year. Organisers are predicting a cumulative worldwide television audience of one billion!
Despite the different approaches, there are some common factors in concluding agreements which should be remembered by organising bodies.
- Rights holders should expect the chosen broadcaster to commit to promote its coverage of the event, building awareness and viewing figures. Lower profile sports need to consider if the large amount of money usually offered by subscription is offset by the lower viewing figures when compared to public service television. The sport may, ultimately, be better served by more viewers than more money.
- There are limits on exclusivity. The internet is an increasingly popular platform but by its very nature territorial limitation cannot be imposed. As a result, online sports broadcasting rights tend to be granted to each member of the television broadcaster family on a non-exclusive basis. The main challenge to exclusivity is news access and increasingly innovative ways of producing commentary, either by radio reporters commentating on tv coverage "off-tube" ie as though "live" and mobile phone updates from the stadium into website or text message services.
- Broadcast deals should add value to sponsorship agreements negotiated by the event holder. Event sponsors must be given first call on broadcast sponsorship or advertising break opportunities to prevent ambush marketing by rivals
- Modern technology also facilitates virtual advertising, where logos or advertisements are electronically added to the feed, including the possible replacing of venue advertising. This is a key area where control must be exercised to protect the sponsor’s interests.
- In the UK virtual advertising is regulated by the ITC which deals with it in its Code of Programme Sponsorship. Many governing bodes also have their own regulations; FIFA introduced regulations in December 1999. The safest course as an event holder is to prohibit virtual advertising without specific consent by means of a contractual restriction in the rights agreement.
It must be remembered that a broadcasting deal is just one facet of building and maintaining a successful sport or event. It must tie in and support other programmes such as sponsorship, merchandising and ticketing. A carefully selected broadcaster can increase the fan base, generate interest and raise profile. Broadcasting agreements must be considered in this context as well as dealing with the technical requirements and financial details.
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