Recently, the Belgian Pro League released the tender for the tv rights of the professional football competition. The Pro League hopes to earn about €100 million (as it stands, they are assured of €80 million - a continuation of the current contract). Way too much according to some, far too little according to others. When making a business decision, it’s better to follow the numbers than to follow the heart. So, let’s try to answer some key questions before we make a decision.
Bird’s eye view
How absurd the number seems at first sight, a comparison with other leagues will put things into perspective. In emerging markets like China the tv rights of the top football league have been sold for €370 million for 2 years (2016-2018). Established markets like the Bundesliga or the Primera Division sold their rights for 4,64 billion euros and 2,65 billion euros respectively. The absolute champion is the Premier League who sold the broadcasting rights for a whopping €5,8 billion (domestically)! All these leagues have an internal market that is multiple times larger than the Belgian market. We also have to take into account the difference in competition strength - which makes their value ample times bigger.
Nonetheless, recent worldwide trends have shown the sports market to be in decline. Viewing figures are down, from the Champions League to the NFL. In the NFL’s case, viewership was down 12% in the beginning of the season, while the Super Bowl was only 0,2% off last year’s mark. It’s logical that the ratings get better once the final of the competition looms, but with -19% and -40% the ratings from the Premier League and the Champions League (respectively) definitely took a big blow. So while the demand for €100 million isn’t at all absurd, it is in a market where the interest on the traditional medium is in decline.
What’s on the telly?
Ratings may be in decline, but television is still the primary medium, so broadcasting rights are still focused on this particular medium. Currently, the Italian company MP & Silva owns the non-exclusive rights and “rents” it to providers both nationally and internationally. This means that Belgian providers Proximus, Telenet and VOO can all show the games live and thus have package deals for their viewers on Pro League games. The current holder has made it clear that it will re-up their current bid. But, taking into account today’s global sports market, is it possible to extrapolate these declining figures for Belgium? There are two things we need to take into account. First off, what’s the market for football in Belgium? Secondly, how many people want to pay to see it on tv?
In our Soccer Report from 2016, we’ve established that a total of 56,8% of the Belgians are interested in football. There clearly is a market. Only 19,1% of our respondents say they watch the Belgian competition on Telenet, Proximus or VOO, while 43% say they follow football on television through summaries of the matches in sportshows. This means that Telenet, Proximus and VOO still have room to grow on the tv segment of the market and their maximal potential seems to be more than double of the current clients. With 29,5% of the people following Belgian football online or on a mobile device, it would seem that the lot for mobile devices could become a contested one, because surely this number is only expected to rise in the coming years. It is the same trend Facebook and Twitter seem to bet on with their expanding streaming service - even for football (Facebook currently streams one friday night game from the Primera Division).
In the current tender, there are 6 different lots available. The first is every broadcast of every game on every platform (tv, smartphone, tablet,...). The second lot is live broadcasts on the web or mobile devices. There is a lot on the Super Cup, summaries on tv, a weekly magazine, and short “near live” clips on the web.
The three main providers (Telenet, Proximus and VOO) seem to be happy with a status quo of sharing the rights. However, with Eleven Sports there seems to be a new kid on the block. Eleven Sports has made it clear that it wants to shake up the status quo by going for the exclusive rights for five years. The option for exclusivity is forbidden for the providers. Eleven Sports, at the moment has a focus on the mobile device - since they aren’t digital tv providers - which may be the way for them to get at least a piece of the pie in this tender. The short notice to the start of the 2017/18 season might be a disadvantage for a newcomer like Eleven Sports.
A (flawed) calculation
There aren’t a lot of numbers available, and in-depth research would be necessary - but we have tried to provide some figures with the worth of the broadcasting contract. From our Soccer Report we’ve learned that 56,8% is at least “interested” in football, 28,3% say to be “very interested” and 13,4% call themselves “extremely interested” in Belgian football.
The market penetration for digital tv is 84%. So, there are 3,9 million connections for digital tv in Belgium (necessary to receive Telenet Play Sports, Proximus 11 or VOO Sports on tv) and the average cost for a subscription is €16,11/month. If we calculate the base number, taking into account only those who are “extremely interested”, we come to a sum of €100,3 million. The maximum amount would be about €379,5 million.
This is, of course, a gross estimation and due to the lack of available figures a flawed calculation, but it does give a sense that the broadcasting contract is worth around the dreamed figure of €100 million. We are always open to perform the necessary research for any of the parties should they be interested and willing to give more data...
Source for the future
In no uncertain terms, the income from tv money is a lifeline for the growth of a league. A decent distribution code is immensely important. If we take the Premier League as an example, we see in our table that the top earner from the 2015-16 season, Arsenal, has made 6,2% of the total pay-outs, while the bottom one (Aston Villa) has made 4,1% of the total. This is in part what makes the Premier League such a strong competition. There are no “walk over” teams.
In Belgian Pro League, this kind of equal spread isn’t the case. This due to the market difference of the teams in the first division. However, this income from the broadcasting rights can still be used to grow the overall strength of Belgian football. By investing in the grassroots level, and the elite performance schools, you help clubs (and the national team) solidify their future.
Should the Pro League put forward a plan for the future, competitors for the broadcasting rights might feel more comfortable knowing that they are investing for the future of their product.