Sports Rights, Pay TV

  Sky, BT

Ballon d'More: How much longer can sports rights values continue to inflate?

Over the past decade sports broadcasting rights values have soared. Many of the major domestic sports leagues in Europe and the US continue to shatter previous records each time a new deal is negotiated. This trend of rapidly rising sports rights valuations has again been highlighted, as UK telco BT secured exclusive UEFA Champions League and Europa League for a record £1.2bn over three years, up 30% from the previous deal. Ampere has analysed some of the major domestic leagues from the US and Europe to highlight this rapid inflation.

In terms of the overall value of the rights, the US domestic leagues lead the way. The NFL and NBA have annual costs of $5bn and $3.2bn respectively. However, in terms of inflation, the NFL is much lower than the other leagues. The UK has seen rapid rise in value of domestic rights for the Premier League and the Champions League, as has the Bundesliga in Germany. Even smaller pay TV markets such as Turkey have seen rapid inflation of the costs of the domestic soccer league.

However, the question must be asked, how sustainable is such rapid and sustained growth? At a certain point the costs of the rights will become unjustifiable for pay TV providers and multichannel operators. The rights cost will start to reach a level which cannot be maintained through growth in revenues and begin to impact margins, negating their value. The consequences of this are an inevitable slowdown in the increase of the value of sports rights. Evidence of this can already be seen in the USA as the inflation of NFL rights has slowed significantly. Turkey still has a way to go in terms of saturation, however as a more developed pay TV market, the UK could be closer. Sports rights have historically been a key driver of subscribers and revenue in the UK, however in recent years this growth has slowed which puts pressure on mounting rights costs.