21st Century Sport
Not so long ago, sports feared overexposure on television. Now they would go bust without TV deals and they want more, more, more from worldwide internet and mobile-phone rights. It's great news for the armchair viewer, but not for the paying spectator. James Robinson reports.
James RobinsonSunday November 4, 2007
Observer
Twenty years ago, Silvio Berlusconi, the flamboyant new owner of Milan, declared that Italian football clubs should scrap expensive tickets, open their turnstiles and allow fans in free of charge. As a billionaire media mogul and proprietor of one of the world's biggest teams, the future prime minister of Italy was uniquely qualified to suggest radical changes to a game that was about to be transformed by the television age. Italian sides had just had their coffers swollen by a huge cash payment from TV companies, money they would use to buy the world's best players and finance what was then the most successful league in Europe. Berlusconi, like other broadcasters, realised that rows of empty seats look dreadful on TV and that teams roared on by passionate fans in packed stadiums make a more compelling spectacle for television viewers who, a generation ago, were slowly becoming as important as those who paid at the turnstile.The gates of San Siro may never have been flung open, but it is easy to see the logic behind Berlusconi's comments. He was among those with the foresight to see where sport in general, and football in particular, were heading. He could see that there was about to be a dramatic shift in power away from paying fans and towards armchair viewers. The 'real' fans had the passion; the consumers had the money. The amount of money coming into the game from TV was unprecedented 15-20 years ago. It started with the development of satellite television, and coincided with Berlusconi himself building, or rather buying, the original 'dream team' of modern European football, the Milan side - the last to win the European Cup two years running - that featured Ruud Gullit, Frank Rijkaard and Marco van Basten. Although grounds are better, as is the standard of football in many cases, ticket prices have gone up along with the cost of watching games on TV, pricing plenty of supporters out of the market and infuriating many disgruntled fans.
The Italian clubs would now go bust without TV money and English clubs playing in the Premier League, which quickly overtook Serie A as the richest in Europe, are rapidly becoming more dependent on it, too. They will reach a major milestone next year, according to accountancy firm Deloitte, when TV money will generate half of their total income for the first time. As recently as 2005, cash from broadcasters provided just a quarter of turnover and, in the 1991-92 season, the one before the Premier League was formed, when Leeds were crowned champions, Ian Wright was top scorer and gate receipts still generated half of the revenue of clubs in the top flight, TV money provided a mere nine per cent of turnover. Peter Robinson, the former Liverpool chief executive, remembers the start of the 1985-86 season, when football was not televised at all. 'There was no deal in place. It only came back on at New Year and the value of the contract when it was signed was about £600,000, which covered all four divisions.' He remembers that negotiators on both sides of the table had reservations about the value of live televised football. 'The broadcasters would play down the value,' he says. 'They'd say things like, "It's a long time for people to be sitting down," claiming that most TV programmes were no more than 45 minutes.
The idea of selling something lasting an hour and three quarters was diffi cult. They genuinely didn't know how popular it was going to be.' Years earlier, Robinson recalls being asked over to his counterpart at Everton, who wanted to hatch a plan restricting the club's appearances on Match of the Day. 'They wanted to make a deal whereby no club was shown more than once a month because they thought they were being overexposed and they were worried other clubs would see what their tactics were.'
It seems incredible now that anyone could voice such concerns and fear that live televised football would kill off the game. Twenty years on, the latest three-year rights deal with Sky Sports and Setanta is worth £1.7billion and Sky, whose sporting empire now encompasses rugby, cricket and even darts, showed more than 36,000 hours of live sport last year. Other venerable sporting institutions have accepted Sky's cash, with wildly different results. In less than a generation, sport's finances, especially football's, have been turned on their head, with startling implications for supporters.
'How do you define a "fan" these days?' asks Dan Jones, the Deloitte partner who produces the company's annual football finance report. 'Is it one of the 40,000 people who buy a season ticket or is it one of the four million who tune in on TV?' Many supporters, who have been rudely awakened to make a midday kick-off or arrived home after midnight on a Saturday because their team were playing at 5.15pm at the other end of the country, would claim they already know the answer to that question and bemoan the arrival of the fair-weather fan. Recent research carried out by ticket agency Getmein.com claimed that the British are now a nation of armchair or 'fake' fans, who claim they love high-profile teams but have never seen them play, a finding that will resonate with those who attend games.
Figures extrapolated from a survey of 3,000 people show that an estimated 30 million men and women boast about being 'big fans' of certain clubs, with Manchester United, Chelsea and Liverpool the most popular. But less than half (46 per cent) of those who claim to have a life-long passion have ever seen their teams play in the flesh and another one in 10 will do so only once in a lifetime. Armchair fans are also fickle, the survey found, with just over a quarter maintaining an interest in their team for three years. Furthermore, 2.6m armchair fans will change allegiance five times during their lives.
The biggest sports are becoming global brands, and new technologies are making it easier for them to reach audiences, and new customers, abroad. Television has transformed sports that already boast a truly international audience rather than a domestic one. Early this morning Joe Calzaghe fought Denmark's Mikkel Kessler in Cardiff for the unifi ed supermiddleweight world title. Two Europeans fighting in a European city - but the fight started well after 1am, so the American audience could watch on Saturday evening primetime and the US pay-TV network that put up a huge chunk of the prize money could recoup its investment. The arrangement is not reciprocal. When fights are staged in America, as Ricky Hatton's next contest will be, British fans have to stay awake until the early hours to watch. The American market rules. The organisers of next year's Beijing Olympics have agreed to hold swimming heats and finals early in the morning, delighting NBC, one of America's big four networks, but alarming some athletes, who have complained loudly about the change. Since NBC had paid $2.2bn (£1.1bn) for the 2008 and 2012 Games - providing at least half the International Olympic Committee's television money - the competitors' appeals will fall on deaf ears.
In a year's time, drivers at the Singapore Grand Prix, the latest addition to Formula One's global circus, will race on a floodlit track for the first night-time race, timed to suit the western TV companies that pay millions to screen it. Next year's MotoGP in Qatar, which will be broadcast by the BBC, will also be held at night so it can reach an early evening audience in Europe. American and European audiences are accustomed to TV schedules being built around their own lifestyles and habits, but that could change, along with the sporting calendar.
The famous 2005 Champions League final between Berlusconi's Milan and Liverpool started at 9.45pm and finished well beyond midnight, thanks to the time difference in Turkey. There were complaints from fans in France about 9pm kick-offs at the recent Rugby World Cup, but that was the time the TV companies wanted and that is what they got. In the future, matches may kick off at lunchtime to suit a larger audience in, say, the Far East, for fans who will never visit Old Trafford or Stamford Bridge, and who will be watching over the internet or on their mobile phones. If match-by-match income from Asia ever exceeds that from Europe - and it could happen - the 'consumer' money will do all the talking and the paying fans will have to accept it.
Yesterday's game between Arsenal and Manchester United at the Emirates Stadium kicked off at 12.45. Both clubs requested a Saturday match because they have midweek Champions League fixtures and early starts are now commonplace. A long-standing agreement between the football authorities and the broadcasters prevents the live televising of matches between 2.45pm and 5.15pm on Saturdays, so as not to affect attendances at games with 3pm kick-offs. But lunchtime kick-offs also guarantee a big audience in Asia, where the Premier League is hugely popular and a time difference of five to nine hours means they are screened on prime-time Saturday evening television. In the last three-year TV deal, the Premier League netted £625million for foreign rights and 55 per cent of that came from the Asian market.
Few people know more about the value of live rights than Phil Carling, the influential head of football at sports marketing agency Octagon. Carling, who ran the FA's commercial department from 1996 to 2000, says the emergence of a global sports market could prompt a radical rethink by clubs. 'If Manchester United played in front of 70 million people [on TV or internet] on a global level, and each of them paid £1, that's £70m a game. It transforms the business.' Domestic and Premier League rights are packaged up separately, but both are sold collectively, with the money shared between all 20 clubs. In the next deal, which will run from 2010 to 2013, Carling believes the bigger clubs may try to end this centralised arrangement for rights outside the UK. 'They will seek to do unilateral deals and it will change the model completely. The money will be astronomic.'
The prospect of the bigger clubs keeping their own broadband money, for example, is a frightening one for all the other clubs. Senior sources in the Premier League and throughout the game in England insist collective bargaining is here to stay, but there have been discussions about the value of rights sold overseas before, and Andy Melvin, deputy managing director of Sky Sports, concedes, 'Some clubs believe the international rights are undervalued because the Premier League is so sexy at the moment.'
There is no doubting the potential worldwide audience for games is enormous. When Everton and Manchester City both fielded Chinese players (City's Sun Jihai and Everton's Li Tie) in a game in January 2003, it was shown live on state television in China, billed as 'a Chinese Derby', and watched by an estimated audience of 350 million, despite a late-night finish. The average audience for a Premier League game screened on Sky Sports in Britain is 1.1m (excluding pub audiences), although subscribers pay about £40 a month to watch. Games are screened in more than 200 countries worldwide. China's 1.1billion population earns an average annual wage of £500, but in 10 years' time that figure could be 10 times higher. India already has an affluent middle class of 200 million and it is expected to grow to 500 million by 2015. These are markets no sport can afford to ignore. Uefa already 'simulcasts' Champions League games over the internet in more than 200 countries, including China, and claims football is the number-one sport in the country, which is expected to overtake Germany as the world's third-largest economy within weeks. By 2009 China will be the biggest online market in the world.
New technology is becoming more important in a TV industry that is going through a period of tumultuous change, with an explosion of channels in the UK and abroad. Twenty years ago there were four channels in Britain; now there are several hundred. Four out of every five British households have multichannel TV and the big channels are seeing their viewing figures tumble as competition increases. In 1995 more than 200 TV shows had audiences of over 15 million. Today there are barely any. All of which makes big sporting events that can guarantee huge audiences all the more appealing to broadcasters - one reason ITV paid a huge sum to screen last month's Rugby World Cup.
A new wave of innovation in broadcasting will make games such as England v Sweden in last year's World Cup, which bagged an average audience of 18.8m for ITV, all the more valuable. Personal video recorders, such as Sky+, allow viewers to record shows, pause or fast forward, skip ads, or simply watch at a later date. TV schedules are becoming a thing of the past, creating a huge problem for advertisers who will no longer reach a captive audience of millions in front of the box. The implications for sport, because viewers want to watch it live, are very significant. Greg Dyke, the former director general of the BBC, says: 'The price broadcasters pay [for sports rights] will continue to go up. In a world where you can download anything, you can't download what's live.' Roger Mosey, the BBC's head of sport, says. 'Drama, comedy or music can be time-shifted, but people want to watch news and sport live, so there's a big premium attached to them.' The same applies to the value of rights on other platforms, including the internet and next-generation mobile phones. Mosey says that these new media are shaping the BBC's coverage of the Beijing Olympics. 'People will want it on mobile devices and broadband. Many of the events in next year's Olympics will be at 7pm, but in Britain it will be lunchtime. You may be at work or you may be on the beach.'
NBC plans to screen an extra 2,200 hours of Olympic coverage next year on-line and the BBC will show 2,400 hours of extra live sport on its interactive TV service, which allows viewers to choose which event to watch via their remote control, or online via a PC. 'At Beijing, when you wake up in the morning some events will have happened overnight and you'll want highlights before you go to work. So you do both,' says Mosey. 'But by London 2012 the amount of coverage will be exponentially larger. The idea is to make more live coverage available than before - so you can see all the fencing live, for example. BBC1 will become the ultimate premium channel, giving you the gold-medal presentation in the javelin followed by the 100 metres, followed by cycling, but the aspiration is to show every event live.'
The Premier League already receives more than £74m from the sale of mobile and internet clips, and a significant proportion comes from abroad. Malaysia is the largest overseas contributor, paying about £5m. 'People who went to the World Cup in Japan and Korea saw fans travelling between games and using their phones to watch highlights,' says Deloitte's Dan Jones. 'That will happen more and more with better resolution and bigger screens.'
Some newer innovations are mind-boggling. Uefa already use hi-tech gadgets to track every player in a Champions League game so they can produce statistics on how many yards they cover or tackles they make. Now Sony want to use that information to create a 'virtual' version of the live game that will run alongside it, allowing viewers at home to pause matches and use their games consoles to become part of the action. 'If Wayne Rooney misses a shot you will be able to stop the game, take it yourself and see if you can do better,' says Uefa's Daniel Marion.
A survey carried out by Mindshare Performance, part of advertising giant WPP, recently found that, although Britons prefer to watch sport on TV at home or in the pub, most Chinese watch it on their computers and the majority of Indians prefer to use their mobile phones. That helps to explain why Nimbus Communications paid more than £300m for the four-year rights to Indian domestic cricket last year, a deal Daniel Taylor, a partner at OC&C Consultants describes as: 'The first big-money sports rights deal outside Europe or North America. It was a massive increase on the last deal and way more than anyone expected.'
Next year's inaugural Singapore Grand Prix provides further evidence of a shift to new markets. Formula One has always been a trade-off between getting huge track fees in the Far East, where governments will pay up to £15m for the right to stage a grand prix, or racing in the West where fees are not usually paid but TV companies pay many millions to screen races. 'The dynamics are changing,' says Taylor. 'You used to go east for track fees or west for TV money: soon you will be able to go east and get both.' Which could mean more floodlit races in future.
Established Western sports are engaged in a global scramble to tap emerging markets and, not surprisingly, the Americans, who boast four of the six most affluent leagues (American football's NFL, Major League Baseball, ice hockey's NHL, and basketball's NBA) have led the way. Last week's game between the Miami Dolphins and the New York Giants at Wembley was the first step towards establishing a global foothold, and the league's commissioner, Roger Goodell, has talked about basing a NFL team on another continent within 10 years, with at least four games a year being played outside the US before then. The NFL and other US leagues have already squeezed as much money as they can from their domestic market, and are being forced overseas to fund future growth, but they will face huge competition from other Western sports.
According to Deloitte's Jones: 'India is cricket's market to lose, Japan loves baseball and Korea seems to have taken football to its heart. But China is much more interesting - it's up for grabs. Football's sort of getting there, basketball's big but only because China has got a few players in the NBA. They haven't found their sport yet in China, and every sport is looking at it.'
The demands of television have already fundamentally changed some sports. Hawkeye technology was introduced to tennis for viewers at home, but giving the players the right to challenge line calls has added drama and tension to the game. Athletics' governing body, the IAAF, are considering changing the way they present the World Championships, perhaps in time for the 2011 event in South Korea. According to Emanuele Perotti Nigra, the IAAF's head of technology: 'Athletics is not easy to follow as a fan. There are so many events going on at the same time, so we need to focus attention on what you should be watching at any one time. We have to work with TV to do that. But it's quite sensitive.'
Despite the influx of TV money, football has remained essentially unchanged, which may help to explain its appeal. But the prospect of game times being changed, or even moving European matches to another continent, as raised in these pages last week, is sure to enrage fans, no matter how remote that prospect currently seems. The fan forums and internet sites in Florida have been awash with angry Dolphins fans complaining about last week's London showdown. 'People with common sense understand that we are consumers who have the right to get what we pay for,' said one post, on a site calling for NFL commissioner Goodell to be removed from his job. 'Taxpayers have paid a premium to build most of these new stadiums and they expect the teams to play all their home games in the communities that support them.'
'The NFL will be looking at the feedback very carefully,' says Deloitte's Jones. 'It's a difficult balance because no sport wants to disenfranchise its fans.'
Just as the influx of TV money a generation ago was seized on by clubs, the opportunity of fresh riches abroad may prove too tempting to resist, according to Octagon's Carling, particularly at a time when many clubs feel their international rights are being sold too cheaply by the Premier League. He claims that if the big clubs retained those rights and sold them individually, 'the media rights would generate over 90 per cent of total income'. Which would mean, he adds, 'They could afford to let fans in free, or reduce ticket prices significantly as it is important to have a full house to create the pictures.' Berlusconi may be proved right for reasons even he would never have predicted.
