Technology limits sports rights deals for mobile phones

Early deals licensing mobile rights for sports content favor medium-range terms of two to five years, exclusivity and minimum guarantees instead of revenue sharing, according to Kagan Research. The constraint: technology.

In these early days, cellular operators tend to set consumer prices high in part to limit consumer usage so network infrastructures don't get jammed. The research firm presented its insight during an audio conference Jan. 26.

Once mobile technology players perfect ways to limit geographic dispersion of their content, individual sports teams will be better able to engage in local licensing deals. Because cell signals are received from short-range tower antennas, content dispersion can be restricted to only antenna clusters in a desired region, according to Kagan Research.

Currently, sports leagues are disposed to exclusive deals it will spur the cell carrier to aggressively market its sports content. However, the financial gain from any exclusivity premium has to be balanced against reduced promotional punch resulting from narrower penetration of the more than 200 million U.S. cell phone subscribers.

Income from revenue sharing has so far disappointed sports leagues, in part because of a paucity of data. As a result, they are oriented towards contracts setting substantial minimum guarantees, said Christopher Russo, president of consultancy CR Media Ventures. One type of revenue sharing deal gives 25 percent to the sports rights owner, 25 percent to a middleman aggregator and 50 percent to the carrier.

According to Michael Boyd, senior director of programming at Qualcomm's MediaFLO interactive content project, eventually each sports rights holder will parcel out its pool of events into separate packages. Each will be exclusive to a single buyer just as professional football's existing broadcast TV rights are split into two league packages for day games, a Monday night game and a Sunday night package.

Ed Desser, president of Desser Sports Media, pointed out that deal making is somewhat constrained by a rights tangle. It's not always clear what rights teams hold and what is controlled by their league. Given that mobile is a wireless medium, some old, expansively written analog TV broadcast contracts might be construed as including mobile, too, he said.

Mobile sports are expected to be add to consumer consumption, not siphon sports audiences from other media. Today, sports rights holders get more than $8 billion per year for national and local rights, said Kagan Research senior analyst John Mansell.

Until the full extent of consumer appetite for sports content is established, which will take two to four years of experience, nobody will be sure about the long-term value of rights, noted Russo.

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