SwarmPlanet AB

Broadcasters will go down when Sports take off!

Blog post   •   Sep 24, 2014 06:59 GMT

Today the media rights for sports are souring to new nights and the multi billion dollar question on who’s to give in, content owners, broadcasters or the common fan. This isn’t something that can proceed for ever. Some broadcasters are already today expressing a fear that the souring prices  are driving the fans away from PPV. 

How much money does sports turn around?
In order to understand how much money we are talking about, let’s briefly go trough the numbers.

First, there’s only a few sports that generate most of the income. In this article I’m focusing on the club and leagues income, not the athletes.
Looking at the big European Leagues The Premier League signed a record breaking deal ending 2016 giving the 20 teams £ 1.45 billion, a 60% increase from the year before.

Looking at the clubs inside Premier League, Manchester United’s revenue are in a class of it’s own with £ 363 M in 2013 (The Guardian). Still United is way behind the two power houses of European Football, Barcelona and the undisputed money machine Real Madrid with a turn over of more than 500 M€ annually.

The event that brings most revenues to the clubs in terms of media rights is The Champions League with it’s app 1,34 B€ in income to the 32 participating clubs.  UEFA keeps 25% are reserved for European Football and administration of UEFA. The media rights stands for 75% of the clubs income for Champions League.

Revenues for the top 20 soccer clubs grew 8 % to 5.4 M€ in 2013.

So, how much money is it in total?

Aggregating the sums, it ads up to 143.34 Billion U.S. dollars (according to Statista 2014). 

Why are broadcasters paying this record breaking money?

“If there is anything that could be considered a guaranteed generator in the world of TV content it is live sports broadcasting” - Gary Bourgeault Feb 21 2014,

With amount of dollars, guaranteed revenue for the broadcaster, the existing business model won’t fall until the sports industry finds a way to change their model away from prepaid model. Once they do, the big sport brands will leave the broadcasters in order to increase the revenue without loosing the fans.

Will this happen in the near future? Yes, It will!

I believe that distribution over IP will change the distribution models. This will happen if sports are to evolve. We will see one or two Netflix for Linve Sports who has solved the Authentication as well as the Bandwidth problems that todays CDN technology suffer from.