Germany has been soundly thrashed, Albania defeated and, David Beckham having famously found the Greeks' Achilles heel, England are on their way to the World Cup Finals in Japan and South Korea making 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 have been in for a disappointment!
Until the recent success of a joint BBC/ITV bid to televise the competition in the UK, the highly complex world of the marketing of broadcasting rights for major sporting events looked like it had claimed another victim in the World Cup 2002. Britain’s broadcasters had been unable to agree a deal to televise the games from Japan and South Korea. Negotiations with the rights holders had broken down. The European Court and the Office of Fair Trading had been called in to adjudicate.
It seems inconceivable that football fans in the UK were almost unable to follow the fortunes of a resurgent England team but, as ever, money was at the root of the problem. It highlights the fact that the marketing of broadcasting rights for international events is far from straightforward. There is no ‘best policy’ in this area and many of the governing bodies for the world’s largest events favour different solutions.
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.
BBC and ITV jointly offered £50 million to televise the tournament. However, the deal eventually struck sees the two broadcasters winning the rights to both the 2002 finals and the 2006 finals in Germany for a combined price of £160 million. The time-lag between the UK and Japan and South Korea 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. The bidders' bargaining position was also strengthened by the fact that the UK legislation on 'listed events' excluded other competitors from the race. The combined price has been described as daylight robbery by some industry figures.
Although this figure dwarfs the £5.4 million paid to televise France ’98, it is still £10 million less than the current rights holders – Prisma Sport and Media, a subsidiary of the German media company, Kirch Group – were originally asking for the rights to this summer's finals alone.
The impasse the two sides reached in their negotiations 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 came 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 to 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 this 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", i.e. as though "live", or 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.
Robert Stoker is the Head of the Sport, Media and Entertainment Unit at Addleshaw Booth & Co, Official Lawyers to Manchester 2002 Limited , the operating company of the XVII Commonwealth Games.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.
