EBU: Sports rights costs a threat, not a benefit

We all know that TV sports rights have gotten out of hand.

This is especially true in Europe, where, for example, the English Premier League got £3.02 billion ($4.8 billion) for the UK-only rights to coverage for three seasons beginning in 2013-14. This was a 71-percent hike on the £1.76 billion made for the preceding three-season batch, continuing a run of increases that has left inflation gasping in their wake, dating back to the league's inception in the early 1990s. Similar, if slightly less spectacular, gains have been made by football leagues elsewhere in Europe, as well as by some other high-profile sports such as Formula 1 racing.

As the value of rights has increased, the level of access to the events for the public has tended to diminish, pricing many people out altogether. This might have had the effect of increasing attendances at the events themselves, except that, in many cases, admission ticket prices have soared almost as much as the rights. Live coverage on Free To Air services has almost ceased to exist in some cases, except for those events that have been fenced in by governments, such as the Wimbledon tennis championships in the UK. But some sports, such as cricket in the UK, are now almost entirely confined to pay-TV viewers.

Against this background, the EBU has picked up the cudgel and weighed in against sports administrators by arguing that escalating rights prices have become a threat rather than a benefit. If the bubble bursts, as often happens, the fallout could threaten the very sports initially boosted by the rights inflation and bring them crashing down to earth. EBU director-general Ingrid Deltenre has also highlighted a wider societal dimension in that sports that are part of the national heritage are in some cases being denied to the bulk of the population. This is well illustrated by the current tour of India by the English cricket team, to which BSkyB has the rights.

The European debate has also spilled overseas, as in the recent negotiations over U.S. access rights to EPL football. There were fears that if rights fell into the wrong hands, fewer people in the U.S. would be able to watch matches from the world’s most popular league, and that development of soccer in the U.S would suffer as a result.

This point was picked up by the EBU, which warned that whether or not the rights bubble does burst, sports can suffocate as a result of dwindling viewing by a country’s population. This in turn could trigger a loss in interest that could actually bring down the value of future rights. While this is unlikely to be the case for football, it could be for slightly less popular sports, including cricket in the UK.

As it happens, NBC took the U.S. EPL rights away from FOX and ESPN under a $250 million, three-year deal reached in Oct. 2012. The network will show every match and has promised to avoid its much criticized mistake made for the London Olympics of using tape delay to allow for time differences. Premier League games will be shown live.

Deltenre did raise eyebrows, though, by weighing into the debate within English football over the phenomenal turnover rate of club managers, who tend to be replaced as soon as the team hits a poor run. This tendency is sustained by the fact that the appointment of new managers often seems to give a team a temporary lift, even if that is sometimes little more than “regression to the mean” as a run of bad luck ends.

Deltenre suggested that the high rate of managerial sackings in the EPL was an example of the short-termism that has afflicted major sports in general and led to a dangerously spiraling rights bubble.

“Worryingly, these developments show all the characteristics of a typical bubble,” she said. “In my view, this is an extremely precarious scenario that is comparable to the property bubble and the dot com bubble.”

Deltenre suggested that European countries should expand the number of sports and events deemed to be of national interest and put them on Free To Air. This would help strengthen communities and create greater national unity at a time when this is urgently needed in Europe.

This very European and socialistic view may be gaining greater traction in the current global climate, but it still seems unlike the EBU’s campaign can succeed, except around the edges. To a large extent, the genie is out of the bottle regarding sports rights, which have become a huge global business that the sports themselves will fight tooth and nail to protect, even if, as the EBU maintains, this will be against their interests in the long term. In any cases, bubbles are part of the human condition, and past attempts to eradicate them in various realms of activity have proved futile.

What is true, though, is that in the face of a stagnating or shrinking global economy, major sporting rights cannot go on increasing at rates of 20 percent per year in some cases. The question is whether they will gracefully come back to earth, or land with a bang. Experience suggests that the latter is more likely.