AFL Rights Deal Bonanza

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[Archived from: The Sports Economist, 29 April 2011]

The Australian Football League yesterday announced the details of their 2012-2016 media rights deal.  The total aggregate package of A$1.253 billion (US$1.37 billion), with 95% of this sum in cash, is well above expectations, and is over 60% up on the value of the 2007-2011 rights.

The result is the biggest ever sports rights deal in the Antipodes, and is being hailed a win for all stakeholder groups, especially against the backdrop of downbeat local and global economic conditions relative to half-a-decade ago.  Even the Chief Executive of the rival NRL is claiming the result is also good for them.

Fans that prefer watching on the box have a better deal on the balance, with more local games going live-to-air, without the current 60+ minute delay.  However, there persists the problem of fans (without a pay TV subscription) of smaller-market Melbourne teams complaining that their teams are televised systematically less often than their wealthier contemporaries on free-to-air.  See also: http://theconversation.edu.au/articles/busting-the-afl-blockbuster-cartel-1132

While the players are also happy, they have already been preparing their case for their ‘fair share of the pie’ in advance of the next round of Collective Bargaining Agreement negotiations, and this announcement will result in them intensifying their demands.

The (non-profit) clubs will also benefit, and allow a few of the strugglers to reduce or eradicate their debt.  Nevertheless, it might do little to address the gulf in revenues between richer and smaller clubs, although the economic theory tells us that it should induce a minor improvement in this regard.

Coughing up the dough is a partnership between the free-to-air Seven Network, pay TV operator Foxtel/Austar, and communications giant Telstra, who offer streaming and other internet services.  Their respective representatives each spoke glowingly in turn at the press conference about how pleased they are with the deal and their partnership with the League.  However, it should be remembered that they are all assuming a huge amount of risk of ending up with a Winner’s Curse.

It is indeed a staggering amount for an indigenous sport confined to such a small market, and once again demonstrates the unabated rise and rise of sports media rights.  One wonders if/when this source of revenue will plateau, and whether networks and viewers will lose a bit of apatite for sportscasting in favour of other programme types.

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