Only elite sport will survive financial crash caused by coronavirus, warning
Football’s EFL Championship and the FA Cup are broadcast packages that are considered vulnerable to a sharp decline in revenues which could have a catastrophic impact on member clubs and associations.
The general consensus is that existing premium packages like the Premier League, La Liga, Serie A, Formula 1, international cricket and Six Nations rugby union will continue to drive enough interest among broadcasters to withstand the anticipated economic downturn.
But the uncertainty of when crowds will be allowed back into stadiums and how damaged the economy will be once life returns to normal, means the future looks bleak for anything below that.
Chris Buckley, a partner at Sport Acuity in York, a specialist sports rights and media consultancy, is confident the Premier League – and within that its biggest clubs – will ensure that competition is immune from any long-term downturn.
“Premium sport will always drive premium value,” he told The Yorkshire Post. “What you tend to find with broadcast rights is they are only really valuable in the elite sports.
“In football, that means Champions League, Premier League, La Liga, Bundesliga and Serie A. Anything below that and the values really start to fall.
“And even within that, if you look at the viewing figures for a Manchester United game versus a Brighton game, worldwide it’s an enormous gap.
“If the bottom half of the Premier League broke away, their value would be negligible. International broadcasters are buying it for the big six.”
Buckley believes elite competitions like the Premier League will prosper because of the huge interest in advertising.
Using virtual technology, the perimeter boards and the carpets at the side of goals can be changed depending on the territory the game is being shown in. This drives huge additional broadcast value. Formula 1 has similar virtual advertising versatility, depending on the country its product is being shown in.
“Broadcast rights and sponsorship are inextricably linked,” continued Buckley. “Big international sponsors want to be seen by a lot of people in a lot of countries.
“The super-rich, the top four or five leagues, and football, will continue to do extremely well. The pinch will almost certainly be felt lower down, grassroots sport.”
David Murray, an economist and a veteran of 25 years working on sports broadcast rights negotiations, is not as confident in the Premier League’s immunity but agrees sports below the elite will struggle.
“Even before Covid, there was a trend of more and more of the money going into fewer and fewer of the sports – football, international cricket, Formula 1, Six Nations, the Rugby World Cup.
“For sports below those premium rights, and you might put the Championship into that category, I think they are going to struggle for money, as they were before this pandemic, and Covid will only accelerate that.
“You look at the Championship – is their model actually viable without crowds? Certainly when you get below that into League One and League Two, it’s not viable.
“Are crowds going to come back next year. If they don’t come back next year then there’s going to be a lot of sports in trouble, TV money or not.
“They will have to take a serious look at their models, and I’d put rugby union into that category as well.”
For Murray, the timing of the Premier League’s next round of negotiations later this year means that that competition cannot take its current income levels for granted.
“The Premier League would normally come to market at the end of this year at a time when subscribership for Sky and BT is going to be down significantly,” continued Murray.
“A lot of games that have just been announced are going to be on free television. Where does that leave Sky and BT subscriber levels? Once the novelty of behind-closed-doors live sport wears off, how many will continue to pay monthly sports subs?”
But, ultimately, the worldwide popularity of their product makes the Premier League more immune than those sports that command a lesser audience.
“It’s very difficult to see the second-tier sports’ values holding up at all,” added Murray, citing the reported pressures racing is facing in renewing ITV’s deal at £7.5m, which is worth around half of one Premier League match.
“Those are the ones that are most vulnerable, whereas the smaller sports have got used to not having much TV money so they’re a little more robust.”
Financial uncertainty has led to FIFA president Gianni Infantino calling for the prospect of salary and transfer fee caps to be discussed at all levels of the game next month.
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