The Winners & The Losers In The NRL’s New Mega Rights Deal

The Winners & The Losers In The NRL’s New Mega Rights Deal

When Channel Nine announced its $925 million NRL rights deal on Monday it was great news for some (namely the fans who got more live games free) and bad news for others (namely Channel Ten). Here B&T talks to sports marketing specialist, Jack Watts, the managing director of Bastion EBA, on who’ll profit and who’ll lose from Australia’s biggest sports rights deal…

John Bastick
Posted by John Bastick

Who would have loved Monday’s announcement and who would’ve hated it? 
Whenever you see these big broadcast deals there’s always winners and losers. You’d have to say the clubs that rate the highest, that have the biggest attendances, the best grounds; what this deal will do will bring them a lot more money. They can charge more for sponsorships, they get more members, they get great more commercial revenues, they sell more merchandise and the rich clubs will get richer and the poorer clubs will get poorer.

Jack Watts

Can you see teams that don’t rate well on TV having to merge, move or fold?
I don’t think that will happen initially. Even the struggling clubs are going to get a lot of money out of this deal from the broadcast rights. Is it dished out equally? No. Well, that’s certainly what happens in the AFL but the NRL needs to make sure even the struggling clubs are looked after; that everyone’s a winner.

If you look at the Knights, the Raiders, the smaller teams in the over-crowded Sydney market they may be at some sort of risk. The reality is in the scheduling… which the NRL controls as part of this deal… but despite that they will be beholden to deliver the ratings that Nine expects and the problem here is what’s good for the game is not necessarily good for the broadcaster.

The NRL and Nine wants all the teams to be strong. Nine certainly don’t want teams to fold. Eight games a week is a significantly stronger proposition than seven games a week; that would put a major dampener on the value of the broadcast rights. Nine doesn’t just want the occasional blockbuster, it needs all the games to rate well.

Could Nine try and change the format of the game to accommodate more ads? Longer breaks or 20 minutes halves to flog more ad space?
It’s a very good question. You only need look at the Origin coverage and that’s just flooded with brands and I think that takes away from the viewer experience. Again, it’s about Nine putting on the best broadcast not just the most profitable broadcast. Unless Nine continue to spit out a good product then the viewers will tune out.

Clubs are going to want more for sponsorships etc. Could some brands be forced out due to the costs?
For sure. I have no doubt that the clubs will see this deal and its live TV rights and want more money from sponsors. Increased reach means increase in value and increase in investment. But I think the NRL views that as a good thing. Putting a more premium value on the product and the cost of being involved with a club.

I think a problem for the NRL is… take the apparel sponsors (on jerseys and shorts) they’re everywhere and what the teams have done is have lots of brands and sold them for less rather than have one premium brand. And the NRL want the national, the international brands behind the clubs not just the local car dealership. These big brands want to associate with likeminded brands but when there’s a local brand there’s limited residual value in national brands coming on-board.

It’s no coincidence that you are seeing the bigger clubs with the bigger brands charging more. The international brands just aren’t going to come onboard with smaller, lesser known brands.

You’ve worked with a lot of players and on a lot of club sponsorships. Your advice to a young player coming into the game following this deal?
My advice is (A) play well and (B) don’t do anything stupid. Which is harder than it looks a lot of the time. But I don’t think the broadcast deal is that relevant to the players. Nine will now be out hitting up advertisers big time; at the same time the clubs will be asking for more money, the players will be looking for individual endoresmeent deals. So with so many stakeholders in the game there’s going to be a bit of cannibilisation of the total pool that can be generated. Will Nine be taking money from advertisers that may have gone to the clubs and vice versa? Everybody will be trying to convince brands not only of the value of the game but their position in it. Some brands will take the position of supporting the clubs while other brands will want to target the entire code. Everybody is still going to have to fight for their piece of the pie.

Is there a loser in this? Clubs, brands, networks?
In these huge broadcast deals I don’t think there’s too many losers; maybe the networks that bid and didn’t get it wouldn’t say that. The fans are better off, clubs get more money, the game increases in value, the broadcaster – if they can get increase on their investment – comes out a winner. The thing to watch would be an unfair distribution of the TV monies and that can often mean poorer clubs missing out. But I am sure the NRL will put systems in place to ensure that doesn’t happen.

Should the AFL be worried?
Yes and no. The AFL would be worried that the NRL will have increased reach…

Will the two codes be fighting for the bigger brands? As an example, there’s only so much money the likes of Emirates, Toyota or NRMA can splash about…
On the other hand it also sets a benchmark for the AFL’s upcoming broadcast rights deal. The big thing here is that the NRL has gone first to market and they know their plans. Nine can get to market before the AFL. But as you say there’s only so much money to go around from brands and Nine and the NRL and the clubs can go to market immediately with security around what the broadcast rights now look like.