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The sale of sports rights: a shot in the foot by the promoters?

It is a fact that television audiences, as a general trend, are falling in the world of sports. Are we simply in a transition period from analog to digital models, or the “mandamases” of the various competitions, guided by the short-term money from the sale of rights to payment platforms, are creating damage from irreparable consequences?

At this time, there are usually annual awards ceremonies for many sports competitions and federations and the typical run-run of the conversations, they often revolve around the same theme: There are no sponsors. And unless there is going to be like this, keep it up! -it is added quickly as a postscript -. ¿ Why not get sponsors? Because there is not enough audience.

This type of conversation lately results in the most usual sports forums and is a consequence of the alarm lights that are jumping in the marketing departments of the companies, thinking with much less joy than in the past the investment in sports sponsorship. However, if you continue to believe in sports sponsorship as an ideal tool for the promotion and communication of your company, the return on investment before television audiences and digital environments well below the usual / expected expectations begins to be questioned.

The case of Repsol is relevant, sponsor for two decades of the Honda team in MotoGP, which gave a warning at the beginning of the season about the unsustainability of maintaining a sponsorship in a sport that just four years ago gathered 5 million people in front of a television and at present, it rarely congregates more than 300,000 from its passage from open television to pay platforms. That this happens in Spain, in an absolutely sweet moment with Marc Márquez’s dominance in the category and the spectacular nature of his careers, only deepens that concern and questions the approach.

The situation in the field of four wheels is not much more encouraging, where despite the spectacular season of Carlos Sáinz Jr. in the McLaren team, there do not seem to be many Spanish companies willing to support the young Madrid driver, except in the case of Estrella Galicia beer, which has compensated with excellent sponsorship activation, very low audience figures (compared to when it was open TV) by Movistar TV.

The problem is that worldwide the situation is similar, suffice it to say that in little more than five years, Formula 1 has lost about 125 million TV viewers in the more than 625 million that had in 2012. As in Any business when customers begin to lose massively, are looking for reasons of the most varied, so as to avoid getting to the bottom of the problem, which in my opinion in this case is that a lot of arrogance in general has been sinned by both of the promoters of competitions as of the managers of the payment platforms. To think that where you could see something for free before, now the pay- per- view followers would come in droves because ‘the quality was greatly improved’, has shown the time that they were forecasts far removed from reality.

As I said, this is not an exclusive Spanish case, because in the European continent we can see the difficulties that the untouchable (until now) and almighty football have, to match the audience figures that not long ago enjoyed, because having its disaggregated vision on various platforms depending on whether they are League, Copa del Rey, Champions, or Europa League (or even selections), the total numbers of the sport may not go far from their best times depending on cases, but category by category the descent has been inevitable.

Let’s go to the data, such as those offered by the ‘Global sport fan survey ‘ of the company CSM Sport & Entertainment. The 2018 study tells us that there is in Spain and the United Kingdom about 20% of the adult population very interested in following both ‘La Liga’ and the ‘Premier’ respectively. Without a doubt they are very high data, but nevertheless, if in the same sample you are wondering about what is your favorite sport, in “soccer” butt countries such as Spain or Italy, it is surprising that only approximately 50% opt for football as a favorite sport and if you look at countries like France and the United Kingdom, this figure drops to just 35% of sports fans.

If we continue to deepen the sport-to-sport data later, we see that among sports fans other than football, such as motorcycling, tennis or cycling, there are about an important 25% who claim to be simply sports fans in general, that is they are delighted that the sport they put on TV, but come on, they are not ‘fanatics’ enough to follow it on a paid platform.

If we continue to search through the data, they will confirm more and more what we already suspected and that is that in the end the payment platforms, they are only able to attract the very fans of their sport and leave the fans to others sports that as we see are many. Fans, that although it is not their favorite sport, if they made it easy (in general TV on the open to understand us) if they would follow. In the end, the very sport-to-sport fans together can add up many, but the numbers are quite disaggregated.

Payment platforms

When promoters are asked about the negative effect that the step to pay per vision has for sport monitoring, the answer is usually ‘that it is very cheap’ and that payment should therefore not be the reason. To some extent they may be right, but the fact that a football fan, who at the same time likes to follow motorcycles, tennis, golf, etc., is not going to be paid at the same time to Movistar TV, to DAZN, to Canal Golf et cetera and so on with all the necessary platforms to follow your favorite sports. In the end, you would need more or less to make an excel sheet of receipts and places of emission to clarify where everything is, where before it was (and free) only the zapping of general television.

Do not forget also that in difficult times economically speaking, the first thing that is cut is this type of expenses, even more considering the amount of entertainment available today through the Internet completely free. The result is that you cancel all your subscriptions or at most you stay only with what you consider essential for your hobby.

Independent of this phenomenon, a result of the proliferation of payment platforms and the consequent increase in supply entertainment at all levels with Netflix, Amazon Video and other, more beyond the sporting arena, is also known for some years, by part of the promoters aging their fan base.

It is a fact that the younger public decants today by tracking other very different sport traditional options such as video games or channels YouTube or Instagram. It is logical that they are worried about it and that they take measures to approach them and seduce them with offers more adapted to their tastes, but in my opinion, they have generally launched into a career quite suicidal to attract the young public, neglecting completely and not spoiling to that bulk of followers between 45-65 years who are considered ‘old’. They forget, that if you do not make it very complicated for those ‘old men’, they would continue to watch their favorite sports on average general TV for at least an average of 20 years. Two decades!!

It is perhaps spoken therefore, with too much disdain of general television forgetting that on weekends, when you are away from home, on vacation or simply at any time of the day in your own homes many people do not want to go crazy with different platforms and They want to simply see ‘what goes on TV’. Much disdain with these people, but beware, that home to home, bar to bar, were those who ended up giving those millions of followers that once were so attractive to companies, when investing in sports sponsorship. Not everyone is as ‘tecchie’ and digitally active speaking as managers often assume from their offices. Here we have a clamorous example of the famous trap in which one can fall for the lack of correlation of market studies with the harsh reality.

Sports promoters, in my opinion, have not considered either, that in addition the model of payment platforms offering such exorbitant amounts for the very low rights and subscription fees are not sustainable in the long term. It is logical that platforms do in order to gain market share affiliate as more quickly as possible, but probably guided by a short – sighted view of the huge sums that have put them on the table, promoters and why not say it with the support of its participants have opted for the most crude mode of ‘bread for today and hunger for tomorrow’ have gone unchallenged one after the other towards this pay-per-view model.

It reminds me that no less than twenty years ago I had the opportunity to participate in sports broadcasts of what was then called Digital Satellite Channel and I did not hear anything around me that «this is the future»«conventional television is dead” and similar comments. Well, be very careful with these dinosaurs, because sometimes they resist «dying» much better than expected.

In this sense, it is very illustrative that in the United States, a paradigm in all this type of audiovisual and sports issues, the great traditional sports such as football, basketball, baseball, ice hockey and Nascar motorsports, are also suffering a lot with the audience drops.

Entertainment oversupply

The FOX, ABC or NBC sports platforms have a cost per affiliate much less profitable than expected, as a result of disintegration and especially entertainment oversupply. The one that is leading it best is ESPN, the Disney sports channel, which opts for a different syndication model with a presence on many Comcast or DirectTV- type platforms and consequently ends up having much more arrival and better tracking and economic numbers. 

It is also very significant that the biggest sporting event in America, such as the American Football Super Bowl (NFL), hit the audience ceiling in 2015 and is the first time since there are records that chained three consecutive years of falling audience. This year it picked up a bit (it is said as a consequence of the legalization of sports betting in many states), but it is admitted since it will be very difficult to return to the great figures of yesteryear and, as a consequence, the sponsorship rates and the Number of companies interested in sponsoring will certainly go down.

In short, in an environment such as the current one of an enormous offer of audiovisual and digital entertainment, I think it is not a good idea to put barriers to your traditional followers with payment platforms and difficulties when it comes to the general monitoring of sports. I have always believed that the ideal model for sponsorship money to reach the sport is to make both models coexist. Create enough difference in quality so that the ‘fanatic’ subscribes to the payment platform and the ‘occasional’ can continue watching it through the general TV.

In the background, it comes to business as usual. No magic recipes, but compromise solutions.

 


 

Pablo de Villota
Director of Sports & Entertainment at Proa Comunicación

 

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