EPL PPV RIP LOL etc
In this week’s Unofficial newsletter:
Amazon’s Italy UCL play
F1’s YouTube experiment
Premier League PPV RIP
Money v Morals. Sport’s Saudi dilemma
The story in three pull quotes - esports
Episode 8 of The Bundle is out
The regular sports media deep dive with everyone’s favourite German millennial rights expert Yannick Ramcke. Click the image to go direct, or search ‘Unofficial Partner’ in your favourite podcast app.
There are five main bits:
Are the FAANGs coming or not?
The Claire Enders (Pod #107) view was that Big Tech remain irritatingly reluctant to bail-out sport with massive cheques. Then Amazon come along with €80million for UEFA Champions League Italy rights. Make up your minds ffs.
Amazon have bought Wednesday night games, adding Italy to their German Tuesday night package. The Italian market has softened quicker than some of the others around the big five leagues in Europe, with Sky Italia and a cash strapped DAZN the only real opposition, which in part helps explain the price differential between the two deals - Amazon paid €100million for Tuesday night UCL in Germany.
Second guessing Amazon’s ultimate sports rights ambition is a cottage industry all its own and it’s a story running in parallel to the various region specific cycles in the rights market.
TEAM started the current cycle of UCL sales in the US, getting increased rights fees from CBS and Univision and taking advantage of the streaming wars going on there ahead of the NFL and other major leagues coming to market over the course of the next year.
What lurks below F1’s YouTube numbers?
Formula One drew 1.7 million views across seven territories for its first ever live race broadcast via YouTube. The Eifel Grand Prix, held on 11th October, was streamed for free on the global motorsport series’ official channel in Germany, Switzerland, the Netherlands, Belgium, Norway, Sweden, and Denmark.
The official press release headlined audience age, and on the face of it there was much to admire, particularly as it allows F1 to talk about young viewers, given they claim an average age of 40 for its global TV audience. Some YouTube race data:
1.7 million views across live content from the Eifel Grand Prix weekend across the seven territories
31 per cent of this audience were under 25, 68 per cent were under 35
Fans watched across devices with 33 per cent watching on mobile phones, and 30 per cent watching via connected televisions
As Yannick points out on the pod, comparing YouTube views with TV is all a bit apples and aeroplanes, as every platform has a different definition of what constitutes a viewer. Twitter has a very low bar in which a view constitutes a few seconds of an impression, whereas YouTube asks for 30 seconds per video to count as a view, both of which lag behind linear TV’s definition, which uses average minutes audiences, which is a higher standard.
A crude summary is that F1’s YouTube experiment was about marketing rather than revenue in markets where the host broadcasters had not paid enough to justify race exclusivity. YouTube fits the gap between the host broadcaster and the race series’ own OTT offer, F1 TV Pro. The argument here is around incremental audience - the new YouTube viewer won’t pay for F1 anyway, so it doesn’t conflict directly with the broadcaster’s ambitions. An interesting move, and one that reveals the strategic complexity that lurks just beneath the simplistic headlines boosted by the D2C utopians.
EPL PPV RIP LOL
Asking season ticket holders to cough fifteen quid for Brighton v Burnley had a distinct ‘last days of Rome’ feel to it. No surprise then when Martyn Ziegler broke the story of a rethink: Premier League clubs agree to ditch pay-per-view fee. But what was the plan in the first place, and what’s Philip Kotler got to do with it?
The problem for Premier League was less to do with making money from the extra games in the short term and more about protecting the longer term price point. A key bit of Premier League rights sales strategy, when compared to other major European leagues, has been the amount of unsold inventory in each rights cycle, ie they don’t sell all the games. This gave them greater flexibility during Covid as it allowed them to give their broadcasters some extra matches in compensation for lost revenue. But, it also created a problem in relation to what Kotler calls ‘the expected product’, which is that once the broadcasters have those extra games, they might assume they will be part of business as usual next time the rights come to market. By pricing them high, the Premier League were attempting to protect the value in the product. But marketing theory has a habit of falling apart when it enters real life, and the league was confronted with the comms nightmare of justifying 15 quid a game to fans who already feel they’re paying through the nose for football.
Pirates turned gamekeepers
Having created BeOutQ to undermine Qatar’s BeIn Sport, a huge source of revenue for virtually every tier one rights holder, Saudi’s sport strategy has shifted toward claiming the moral high ground: they want credit for closing down BeOutQ, and have set up its own official version to service the MENA region.
Sports rights holders are now faced with an ethical dilemma, which vast amounts of oil money will solve in most cases, explained here: ‘Big Sport has a Saudi problem, despite a ‘softer’ tone on rights ambitions.
See also:
The same moral questions apply at the level of individual athlete, particularly those who are using their fame to promote social causes. For example, the just announced Saudi Grand Prix for 2021 is a problem for Lewis Hamilton, who now has to pick a side.
“The bitter irony over a Saudi Grand Prix is that the very people who fought for the rights of Saudi women to be able to drive are now themselves languishing in jail. Brave people like Loujain al-Hathloul and Nassima al-Sada. In the lead-up to the race, we’re saying to F1 drivers, owners and teams they should brief themselves on the dire human rights situation in the country and be prepared to speak out about the plight of Loujain, Nassima and others.”
When asked last week about the prospect of a GP in Saudi Arabia, Lewis Hamilton, who has been strident in his campaign for diversity and equality in F1, said he would need to find out more abut the regime before making a judgment. At the Emilia Romagna GP the world champion wore a Black Lives Matter T-shirt that included the phrase “Women’s rights are human rights”.
Then, of course, we have to lay Covid across the issue.
F1 has lost huge amounts of income this season with races cancelled and meetings held behind closed doors. The reported $50m (£38.7m) fee for Saudi Arabia would be a major boost.
A creative solution for Hamilton: refuse to race in Saudi next year, and then win the Championship anyway. This would do two things: 1) it adds some excitement to the annual procession that is the F1 season and 2) gives some substance to Hamilton’s brand purpose signalling.
Infront’s private equity moan
Wanda owned sports agency Infront have warned of the consequences of private equity’s involvement in sport, specifically Serie A.
There’s a turkeys for Christmas element to these claims: Infront has a decade long relationship with the Italian league as its rights sales house, a role which would likely be eliminated were P/E to take control (CVC is in negotiation around a stake for media rights deal and presumably would cut Infront out if that’s successful). Worth noting also that Infront were initially bidding for a slice of the league themselves.
So Infront might be the wrong people to be making the argument, but they are pushing a fear button that hangs over sport’s relationship with private money. It’s a variation on Ted Forstmann’s Barbarians at the Gate battle cry from the early days of leveraged buy outs, when KKR bought RJ Reynolds, which became the plot of a good book and a crap film.
The title of the book comes from a statement by Forstmann, in which he called Kravis' money "phoney junk bond crap" and declares him and his cousin as "real people with real money," also stating that to stop raiders like Kravis: "We need to push the barbarians back from the city gates."
Funny how things come around.
Esports in three pull quotes
TL;DR Beckham’s entry in to esports via the Guild IPO has upped the noise, there’s obvious value there somewhere, but investors and traditional sports rights holders are split as to how to make money from it, yet.
From Samuel Agini’s FT Long Read on esports.
Quote 1: It’s a generational thing
John Clarke, Gfinity: “If you are a sports rights holder, you have a choice. Embrace the gaming culture and find a way to play in it authentically, or watch your audience get older and older.”
According to F1, the average age of its fans is 40. Only 14 per cent are under the age of 25, with another 30 per cent coming from the 25-34 bracket. “The very core of why we're doing this [expanding into esports] is really about reaching out to a younger audience,” says Julian Tan, head of esports at F1. “The reality is that the younger generation are spending more time gaming.”
Quote 2: There’s a brand loyalty problem
However, some investors are wary about the rush to invest in esports teams, questioning their ability to build loyalty. Damir Becirovic of Index Ventures, the venture capital firm, says the real prize would be finding the next top game publisher and developer. In esports, unlike the real world, it is possible to own the game itself. “We want to back companies that have technology at the core [and] when we think about a team it’s really humans at the core,” he says. “Humans are fickle sometimes.”
Established sports have built their intense followings over decades, proving the investment case in teams and leagues. By contrast, Fortnite, for example, was released just over three years ago.
“Will fans permanently transfer their allegiance and their dollars to the virtual teams [or the players who compete in these tournaments]?” asked Nick Train, co-founder of UK fund manager Lindsell Train, a major shareholder in Manchester United and Juventus, in a note to investors in August. “No.”
Quote 3: Never forget sport and esport are different things
Industry experts believe there is only limited potential in promoting esport versions of traditional sports…“Fifa is a good game, many people play the game but no hardcore esports fan will tell you, ‘I’ve been watching Fifa for years’,” says Carlos Rodriguez, a former League of Legends gamer and founder of the G2 Esports team, which counts McLaren F1 racing chief Zak Brown as a shareholder. “[Established sports teams] are used to buying LeBron James or Cristiano Ronaldo and automatically selling millions of jerseys,” he says. “They’re not used to having to relate to the people.”
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