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Karl
Senior Member
USA
914 Posts |
 Posted - Sep 15 2003 : 2:01:05 PM
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Values Of Various Rights Packages
The money that entered world soccer in the 1990's was a direct result of television. From FIFA to clubs, all greatly expanded their ability to make money by selling the rights to tournaments and leagues. For FIFA and the Confederations, that meant selling the rights to tournaments and national team games. For clubs it meant selling the rights to league games.
Televising professional sports for profit was an American invention, starting with the New York Yankees’ local TV package in 1946. Seven years later, all but one Major League Baseball team had a local television deal.
European soccer was a bit slower in adopting baseball’s model, relying on betting revenue to grow the sport.
When English soccer was facing a very real financial crisis in the 1950’s, Football League secretary Alan Hardaker grew concerned that there was a business making millions off of English soccer without paying the clubs a dime. The business was the pools, at the time one of the biggest employers in England.
Basically, the pools were a very popular system of betting on the scores of soccer games. Popular throughout Europe, all it really required was the fixture list. Hardaker sued, claiming the fixture list was property of the Football League, and on May 13th, 1959, a judge agreed.
That verdict changed the economics of English soccer, paying 0.5% of the pool revenue annually, an amount that was worth millions. But an equally valuable revenue stream was left untouched.
The North American Soccer League did a much better job of realizing the value of televised soccer decades before England and the rest of Europe saw the potential profits.
To this day, the type of live coverage associated with American professional sports is unavailable in England. For decades, aside from a few experiments, no live league soccer was screened on English television. That prohibition made the BBC’s Math Of The Day highlights show one of the most popular programs in the country, the only way to see all the action from a cross the league.
The basis for that decision was the continued dependence on gate receipts, logically concluding that if fans could stay home and watch for free, a lot of them would. Until the advent of the Premiership in the early 1990’s, the all-for-one mentality of the Football League also considered the problems small clubs would face if the big clubs could show their games on TV, directly competing for a limited fan base.
Broadcasting live games in England has changed considerably since the Premier League signed their first television contract. The EPL was created for television, and it is that revenue that has driven English, and for that matter global, soccer through the boom of the 1990’s.
Expectedly, soccer forgot the example of the pools, once one of England’s largest industries and their cash cow, slowly dying over decades and unable to provide the kind of revenue the clubs expected.
By the beginning of the new millennium, the money from television reached what many believe to be its conclusion. The problems facing FIFA and England’s Football League demonstrated how reliant soccer at all levels had become on a single revenue stream.
For the elite clubs, the obvious answer is new markets, selling their product in all its forms to Asia and North America.
Just as America started the business of televised sports, it is also the place where overvaluing sports packages has pushed the economics to the point of collapse. Recently, the Washington Post reported that Fox Sports lost $909 million on sports coverage in 2001. A Deloitte & Touche report places potential sports losses for the four major networks at $4 billion by 2006.
The result has been a rethink of sports rights by the major networks. NBC lost millions on a made-for-television football league, refusing to spend hundreds of millions to keep the National Basketball Association contract and joining with the Arena Football League in a revenue sharing scheme with no base rights fee. In other words, the AFL won’t see a dime from the network until the product shows a profit.
This idea of shared risk gets little play among the elite teams in Europe, simply because they are still in a position to dictate a cost. But just like in the United States, the climate is changing.
Professional sports in general finds itself in a contracting broadcast rights market, and world soccer is already experiencing the problems of over reliance on outside revenue.
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Karl |
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Soccer Television Business History
