OTT AND THE CHANGING FACE OF SPORTS CONSUMPTION - THE MAGAZINE OF SPORTS MARKET INTELLIGENCE - Sportcal
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CHRIS ARGYLE-ROBINSON | CHRISTIAN KNAEBEL | MLB IN LONDON
THE MAGAZINE OF SPORTS MARKET INTELLIGENCE ISSUE 15 | AUTUMN 2017
OTT AND THE CHANGING FACE OF SPORTS CONSUMPTION
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www.sportcal.com AUTUMN 2017 Sportcal Insight 3
“‘OTT is killing broadcast’.
That’s a misnomer”
Disruption. That’s a misnomer.
It’s fast become the ‘mot du jour’ in the sports OTT is value adding… at least at this moment in
media industry. its lifecycle. Almost every deal done with a digital
No longer pejorative in meaning, it’s now the platform has been in partnership with a major
go-to description for the change in the broadcast broadcaster – whether it’s streaming network-
market brought about by over-the-top (OTT) televised sport or complementary second-screen
viewing. programming.
It’s been two decades since Clayton Christensen, The PGA of America talked a good game when,
the renowned Harvard Business School professor, having ended a deal in the UK with Sky ahead of the
defined the concept of ‘disruptive innovation’, a 2017 US PGA Championship, it said it was heading Jonathan Rest
principle whereby a dominant product or service to where the youth reside: to Facebook and Twitter. Editor
provider could have its leadership position And it did. But it also signed a live TV deal with Sportcal Insight
disrupted by smaller rivals offering simpler and/or the BBC, that great guardian of tradition.
cheaper solutions. For rights-owners, there are of course additional
It’s a concept that has played out in the transport revenue streams and a new, younger set of eyeballs,
(think Uber) and travel (Airbnb) industries. but ratings remain paramount.
Digitisation has certainly taken its toll on the music But change is coming.
and entertainment sectors. Remember cassette In PwC’s Sports Survey, published in late
tapes - CDs even - and Blockbusters, anyone? September, David Dellea, director, Sports Business
In linear TV, live sports remain one of the last Advisory, PwC Switzerland, writes: “What are sports
bastions, having been relatively unscathed by the industry leaders telling us? The message is loud and
advent of digital. clear: the industry is undergoing more disruption
For how long? than ever. Linear TV is experiencing decreasing
In the fast-moving OTT space, predictions are the ratings and revenues. Global tech giants are slowly
job of the brave. Or stupid. but surely entering the rights market.
So here goes: the mainstream media will buy “These developments leave us with no doubt that
the story in the weeks and months ahead that the big tech firms are gearing up to play in the sports
likes of Amazon, Facebook and Google will mount rights market in earnest, either in direct competition
serious challenges to the incumbents Sky and BT for premium rights or through broader partnerships.
Sport for domestic Premier League rights when they The question then is, when is this tipping point
hit the market. going to be?”
There’s no-one quite like the Premier League Decade-long rights deals in USA have protected
at engineering an auction for its rights. After all, the traditional TV broadcasters, perhaps not from
both BeIN Sport and Discovery Communications actually losing rights to the new digital brigade, but
were used in recent cycles to provide the illusion of certainly from engaging in a bidding warfare that
competition. threatens to put greater pressure on the balance
But let’s be honest, even the dip-pocketed sheets at a time of cord-cutting and shaving.
Amazon will not go from a £10 million ($13.5 Come the early years of the next decade, the
million) a year outlay on ATP tennis rights in the UK picture will look very different if digital players
to the billions of pounds needed to wrest control of continue to build up their portfolios, as they seem
the richest league in soccer. entirely intent on doing.
And I’m not sure the Premier League will jump in When researching this piece, an executive at a
two-footed either. major sports property told me: “OTT is here now.
The Premier League may well carve out a package It’s offering change, yes there are still some pitfalls,
of rights, something Simon Brydon alludes to in his but it’s only going to get more compelling as
excellent analysis on page 31, but there’s no way it technology advances.
will put all its eggs in one basket at this stage. “What of TV? I have no idea as to the future of
As it stands, it appears the big digital media linear TV in the next 10 years. I think I’d be better to
companies do not value live sports rights quite as invest in a lottery ticket before answering that.”
much as traditional media companies do. The revolution is under way.
The very threat of them bidding, however, is Will the revolution be televised? That’s one for the
enough to set off a stream of obituaries: ‘OTT is business professors.
killing broadcast.’
TALK DIRECT
TALK DIRECT jonathan.rest@sportcal.com
475
www.sportcal.com AUTUMN 2017 Sportcal Insight 5
Contents Contributors
Chris Argyle-Robinson
is a strategy director
at RedTorch
Christian Knaebel
owns Global Media Consult
Simon Brydon
is a consultant with
Pitch International LLP
Mike Laflin is Chief
Executive of Sportcal
News analysis Cover Story Jonathan Rest
06 A
change in the organisation of the 26 As over the top viewing disrupts Editor, Sportcal Insight,
Commonwealth Games the way sport is consumed, are writes on events, bidding
08 R
ugby World Cup 2023 bids rights-owners ready to make the and US major leagues
12 C
reative thinking needed in soccer ultimate leap?
14 P
GA Tour’s London aims Callum Murray
World Boxing Super Series Editor, Sportcal Insight,
Opinion 34 Weighing up the commercial prospects specialises in the IOC and
16 C
hris Argyle-Robinson on getting for the $50-million competition international federations
the fundamentals of OTT right
17 C
hristian Knaebel says there’s no Major League Baseball Krzysztof Kropielnicki
time to lose 38 The latest North American league to Head of Sports
grow its London presence Market Intelligence
Murray Barnett
20 T
he Formula 1 sponsorship chief on Sponsorship Martin Ross
the changing face of the series 42 The brands battling for supremacy Online news editor, is a
in elite tennis broadcast rights and sports
agencies expert
Index
48 K
ey information on the events, people Simon Ward
and deals driving the sports business Deputy editor, Sportcal,
specialises in sponsorship
and Asian market
TALK DIRECT mike.laflin@sportcal.com
Insight
6 News Analysis
Autumn2017
End of road
for men from
Del Monte
The recent establishment of CGF
Partnerships, a joint venture of the
Commonwealth Games Federation
and Lagardère Sports, marks a major
step change in the organisation of
the games.
By Callum Murray
Time was when the CGF used to
hand over all of its marketing and
broadcasting rights to organising
committees of Commonwealth Games,
along with a list of milestones and
obligations that they were expected to
achieve, from bid to legacy, and then
leave them to get on with it, albeit with
some guidance and support.
“The men and women from Del
Monte would occasionally come in
to inspect the fruit,” is how David
Grevemberg, the CGF’s chief executive,
characterises the process.
Now that’s all changed.
In an exclusive joint interview with
Andrew Georgiou, Lagardère Sports’
chief executive, Grevemberg tells
Sportcal Insight that the appointment “We needed to change the delivery doing two things. Firstly, by responding
of an agency had “been on the books model,” Grevemberg says. “We need to to the market, and the reality that under
for two and a half years,” ever since the make the games far more efficiently and current market conditions hosting
publication of ‘Transformation 2022’, effectively run, to be far more innovative events is a real challenge for all sports
outlining the CGF’s “vision, mission, but also more affordable. We need to and entertainment in general. We need
values and strategic priorities” in 2015. be the controllers of our own destiny, by to be more fit for purpose.
www.sportcal.com AUTUMN 2017 Sportcal Insight 7
“It’s about maximising revenues “Our sponsors are global “We need to make the games
and going to the host city to say brands. We need to be far more efficiently and
we can reduce the overall cost.” where they are” effectively run”
Andrew Georgiou, Lagardère Thierry Pascal, PGA David Grevemberg, CGF
“Secondly, we want to be the industry cities, with increasing costs versus value “We become an active participant.
thought leader. We want to be regarded return. We see that as an issue based on We won’t stop organising committees
as an innovator of the industry because the specific knowledge and expertise in making decisions about how and where
of the complexity and distinctiveness of our organisation, which is almost unique to spend their money, but it gives them
the Commonwealth Games.” in our business.” ammunition based on previous games,
The appointment of Lagardère Lagardère was involved in Rio de so they don’t need to re-invent the
was “not really an appointment,” Janeiro’s successful bid to land the 2016 wheel – benchmarking what it costs, the
Grevemberg adds (both parties have Olympics, and has been moving more ability to really manage costs. Hopefully,
a stake in CGF Partnerships, albeit the into the event and bidding area since the value proposition will start to
CGF is the majority shareholder). “We’ve acquiring Event Knowledge Services, improve to the point where there is a
worked with Lagardère on various games the Switzerland-based company well- reversal of the trend and more and more
over 20 years,” he continues. “It’s not a versed in Olympics bids, in 2015. cities will want to participate and more
typical agency-federation relationship; it’s EKS, run by Craig McLatchey, once of varied cities will be able to afford to.”
truly a joint venture. the International Olympic Committee’s Although a competitive bidding
“We felt that a partnership with an Olympic Games Knowledge Services, is process is currently under way for the
agency like Lagardère would have the now part of Lagardère’s Olympics and 2022 Commonwealth Games with
robustness to go beyond one games. Major Events team and was appointed Birmingham having been chosen
It addresses our needs in terms of an by Budapest to work on its bid to host ahead of Liverpool as the possible
overall asset pool that is available to the 2024 Olympic Games, which was candidate city for England and perhaps
each games. The delivery of the withdrawn in February. Kuala Lumpur in Malaysia and a city
games we firmly believe can be done Lagardère is also well-known within in Australia also in the race- this only
very efficiently.” the Commonwealth Games movement, came after Durban in South Africa was
In the first instance, CGF Partnerships as its Australian subsidiary Sports stripped of hosting rights by the CGF
has been contracted to support Marketing and Management marketed for failing to meet some hosting criteria.
the delivery of the next three major sponsorship rights for Delhi 2010 and Durban had, itself, been awarded
Commonwealth Games cycles up Glasgow 2014 and is doing so for Gold the games unopposed when Edmonton,
to 2030, but with a view to the new Coast 2018. Canada pulled out, and Manchester
partnership delivery model being the Georgiou says: “For me, the bit that (2002) and Melbourne (2006) were
foundation behind all the CGF’s major makes this joint venture almost unique is also unopposed in bidding to stage
sporting events in the future. in relation to the delivery model. There the games.
A key priority for CGF Partnerships are other games where the federation Now, Georgiou says, the CGF is
is to reduce the cost and maximise the controls the marketing and broadcast saying, “we want to have more influence
value of the games for hosts. In a bid to rights. We think we can maximise and control over the commercial rights,
achieve this, dedicated CGF Partnerships revenues by doing that, but it’s not and not just assign them to the host city.
delivery teams will be fully integrated necessarily unique. The really unique part That means we can go to the host cities
with host city teams, providing enhanced is the deployment of internal resources with pre-secured revenues.”
support, knowledge and expertise on the to sit within the organising committees, But is there a concern that the CGF’s
delivery of the games. and transfer knowledge, insight, plans for reorganising the allocation
Georgiou says: “One of the things we technology and software that allows of rights, in order to become the
see as an organisation is almost a crisis them to improve their knowledge faster, ‘controller of its own destiny’, might
in relation to major multi-sports event with less wastage and improved output. actually have the unwanted effect of
8 News Analysis
deterring potential bidders, on the basis becomes the host broadcaster, with
that cities will regard it as an erosion Lagardère providing the resources. World in Union
of the rights they have traditionally Returning to the issue of the
enjoyed? allocation of rights, Grevemberg says: What are France, Ireland and South
“It’s not about the Commonwealth “The ultimate aim is not for the CGF Africa offering in their bids to stage
Games Federation keeping the to sit back and keep 100 per cent of the 2023 Rugby World Cup?
revenues,” Georgiou replies. “It’s about everything. It’s about who’s in the best
maximising them and going to the host position to maximise revenues. We can By Florence Lloyd-Hughes
city to say we can reduce the overall add value to the host city by creating a
cost. There are commercial partners more efficient, affordable model.” On 15 November, World Rugby
who would like to engage on a multi- The CGF has already held talks with officials will meet to elect the host
games basis, and we’re already talking the cities that have expressed interest in country for the 2023 World Cup,
to sponsors. There’s also an opportunity hosting the 2022 games, Grevemberg the tournament the governing body
to give longevity to broadcasters. At says, adding: “Getting the host cities up proudly exclaims to be the third biggest
present, everyone does a one-games to speed on the partnership approach sporting event around.
deal, and there’s a temptation to do is critical to its success. It’s structured to Following the commercial success of
as little as possible to maximise the generate and invest back into the games England 2015 and all indicators pointing
return but they won’t promote the next themselves. We’ve been working hand to another financial windfall from Japan
games because it might not be them in hand with the cities to give clarity and 2019, the pressure is on for France,
[broadcasting the games].” reassurance on this model. It’s very much Ireland and South Africa to prove
Traditionally, the national broadcaster in keep with the direction the entire their value.
in the host country has acted as the host movement wants to go. The detail is
broadcaster of the games, but under evolving and 2022 is an opportunity to
the new structure CGF Partnerships solidify the transformation.”
The CGF insists that, despite the origins of the Commonwealth Games in the
British Empire Games and questions over their role in an increasingly crowded
international sports calendar, the relevance of the games is increasing, not
decreasing.
The CGF says: “Post-Brexit and various other inward-facing regime and policy
changes around the world, there is renewed importance to the economic and
social value of the Commonwealth.” (stats from Commonwealth.org)
HALF OF THE TOP 20 GLOBAL BILATERAL COSTS FOR TRADING
EMERGING CITIES ARE IN THE PARTNERS IN COMMONWEALTH
COMMONWEALTH: NEW DELHI, COUNTRIES ARE ON AVERAGE
19%
MUMBAI, NAIROBI, KUALA LUMPUR, FRANCE
BANGALORE, JOHANNESBURG, With the 2024 Olympic Games now
KOLKATA, CAPE TOWN, CHENNAI secured for Paris, the county’s major
AND DHAKA event hosting drive continues with the
$100
FFR’s bid to stage the 2023 Rugby
World Cup.
LESS
France is aiming to solely stage the
World Cup for a second time after
hosting it in 2007 and staging some
games from the 1991 and 1999 World
Cups, alongside England, Scotland,
TRILLION
GDP, 14% OF THE WORLD’S TOTAL
THAN BETWEEN THOSE IN
NON-MEMBER COUNTRIES
Wales and Ireland.
The FFR, much like Paris’ successful
Olympic Games bid, points to the
country’s existing infrastructure and
52
modernised stadia as a reliable and
MEMBERSHIP STILL GROWING, sustainable option for World Rugby.
THE LAST COUNTRY TO JOIN THE Of the 12 stadiums proposed to stage
COMMONWEALTH WAS RWANDA IN games, all of them already exist and
2009
five were newly built or renovated for
soccer’s Uefa Euro 2016.
MEMBERS COUNTRIES; France invested €1.7 billion ($2
2.4 BILLION POPULATION billion) on soccer stadium renovations
(A THIRD OF THE WORLD’S TOTAL), and construction for the European
OF WHICH MORE THAN 60% ARE Championships, and Uefa estimates that
AGED UNDER 30 hosting the tournament boosted the
French economy by €1.2 billion.
www.sportcal.com AUTUMN 2017 Sportcal Insight 9
on its own, but it staged five games at
the 1991 tournament.
The country is fresh from hosting a
record-breaking Women’s Rugby World
Cup in August which saw sell-out crowds
for all the pool games in Dublin and
impressive attendance for the knockout
matches at Belfast’s Kingspan Stadium.
The Women’s Rugby World Cup has
been a blueprint for the Irish Rugby
Football Union’s plan to stage games in
the 2023 tournament across northern
and southern Ireland.
Of the 12 venues that the IRFU
proposes to host matches in 2023,
three are based in Northern Ireland
and in its bid book, the team points to
the “unifying” role that rugby can play
for Ireland, despite a troubled history
between the north and south.
Eight of the stadiums are home to
Ireland’s Gaelic Athletic Association and
the federation is in line to benefit from
stadium upgrades for all the venues,
which will be paid for by the Irish
governments.
Like France, all of Ireland’s venues
are already constructed but the Irish
bid hasn’t taken its rivals option of a
lucrative hosting fee but instead its
government has agreed to underwrite
just €320 million, which is made up of
the €139 million hosting fee and other
tournament costs.
Ireland 2023 has said it will “deliver
the biggest commercial return in Rugby
World Cup history” through a “record
offer” that will enable “unprecedented
global grassroots investment.”
The bid’s ambitious commercial
programme hints to potential tie-ups
with brands from Dublin’s tech sector,
where eBay, Airbnb and Apple all have
Lille, Lens, Saint-Denis, Paris, Nantes, The second guarantee, from an their European headquarters.
Bordeaux, Lyon, Saint-Etienne, unnamed “large private French bank”, is Ireland is also hopeful of enticing World
Toulouse, Montpellier, Nice, and for €236 million to “cover commitments Rugby with the engagement of its global
Marseille are all slated to host matches, in terms of the organising costs of the diaspora, which it estimates is made up of
with 10 of those cities having staged tournament.” 70 million people across the world.
games a decade ago. The FFR’s ambitious commercial Ireland 2023 claims it will “unlock
Alongside promises of a participation claims for the tournament include significant new audiences for the
legacy, sustainability and economic projected revenues of €477 million, game” in “new and developing rugby
growth, the FFR’s most enticing offer of which €373 million will come from markets”, specifically, North America,
and standout bid promise to World ticketing. which is home to around 37.5 million
Rugby is a financial guarantee above By comparison, organisers of England people that identity as Irish, and where
and beyond what is expected. 2015 generated over £250 million World Rugby believes a World Cup in
The FFR has submitted two in ticketing monies, delivering an the near future will be held.
guarantees to World Rugby, totalling £80-million surplus to World Rugby The IRFU believes its planned legacy
€407 million, of which the first and a £15-million surplus to the Rugby programme will engage an untapped
guarantee from the French Federal Football Union to be invested into the audience in North America, using the
government, is for €171 million, development of rugby. competition as “a platform to grow
exceeding the £120 million ($158 IRELAND rugby” and signifying a “key moment
million) hosting fee stipulated by World Unlike France and South Africa, for the sport’s growth in an important
Rugby and the FFR’s rival bidders. Ireland has never hosted the World Cup strategic market.”
10 News Analysis
SOUTH AFRICA
South Africa is hoping it will be fourth
time lucky in its attempt to host the
World Cup again after failed bids in
2011, 2015 and 2019.
The SARU is confident that the 2023
tournament could reignite some of the
historic memories from its hosting of
the 1995 Rugby World Cup, which was
the first major sporting event the county
hosted after the end of apartheid.
However, its journey to bid submission
has been a tricky one, after the
government had temporarily banned
sporting federations from bidding to
host events because they had failed to
meet targets on transformation in the
post-apartheid era.
When the ban was eventually lifted
in May, the country’s cabinet approved
the request for guarantees totalling R2.7
billion ($202 million). The SARU boldly
claims that “unlike other mega-sporting
events” it would “profit” from hosting
as it promises a “low-cost, high-return”
tournament. According to Jurie Roux,
SARU chief executive, hosting the
tournament would be “a marvellous,
inspirational nation-building moment
to recapture some of the excitement of
1995, but it would also have enormous
practical benefits for our country.
“Hosting the Rugby World Cup in
2023 would have a R27-billion direct,
indirect and induced economic impact
on South Africa; R5.7 billion would
flow to low income households; 38,600
temporary or permanent jobs would be
sustained and there’d be an estimated
R1.4 billion tax benefit to government.”
Grant Thornton, the professional
services network that carried out
a feasibility report for the SARU,
estimated that Durban alone, which
would host games in the Moses
Mabhida Stadium and Kings Park
Stadium, could benefit from R4.5 billion
economic benefits.
The SARU plans to use eight existing
stadia in seven cities, with the final taking
place at Soccer City in Johannesburg -
the showpiece venue from the 2010 Fifa
World Cup.
South Africa spent R40 billion on
building six new stadiums and upgrading
airports and transport links for the 2010
World Cup but the country’s international
team and domestic clubs have so far
failed to build on the legacy of the event.
However, the country has fond memories
of the 1995 Rugby World Cup and is less
sceptical about the potential economic
benefits of hosting again in 2023.12 News Analysis
knowledge or effort to identify, League, AB InBev, a Fifa World Cup
Teams must think propagate and develop what that brand sponsor, and Mars, a partner of England’s
actually is.” Football Association.
as brands He adds: “The commercial analysis Carling claims that the sums involved
a rights-owner has to do and how it mean it is increasingly important for
Octagon believes soccer clubs need positions itself to the marketplace sponsors to justify their outlay on teams
to be more creative to stand out from actually has to start with an and competitions, and that rights-holders
the crowd understanding and articulation of what can play a key role in helping them
their proprietary difference is. achieve that.
By Simon Ward “You could see presentations from, He says: “There is recognition on behalf
for example, Barcelona, Real Madrid of the clubs now. They have to give the
Leading soccer clubs are being and Bayern Munich, and, if you took clients the opportunity to make a return
encouraged to make greater efforts the branding off, you wouldn’t be able on their investments because you take
to develop their own brands in order to distinguish between those three something like a Champions League
to differentiate themselves and make propositions because they’re all selling sponsorship and we’re talking €50 million
them more attractive to audiences and the same thing effectively – the signage, to €60 million a year just in rights.
sponsors, with agencies able to play a the exposure, the tickets, association “It does give you a certain amount
key role in the process. with a great club, association with a of media value, but that’s not so valued
Octagon, the international sports great sport. these days and the activation that goes
and entertainment marketing agency “It’s all very good, but there’s nothing behind it is way more important. More
that is a significant player in soccer, has that differentiates those propositions often than not that activation sits within
evolved in recent years from a company from each other. Our contention is that non-linear media and that’s going to be a
that predominantly works with brands the primary piece of thinking needs to big challenge for the elite rights-owners,
on contract negotiations and activation be ‘what is it that makes Bayern Munich particularly those products that are
to one which also offers consultancy different, special and unique compared most predicated on media value for the
services and analytics to rights-holders, to any other football club in the world?” justification of the fees.”
including Uefa, England’s Premier Carling claims that, from the extra Carling anticipates that Octagon’s
League and elite teams, on how best to income generated from media rights, “proprietary position” in soccer
exploit their assets. teams in the Premier League and beyond
It is also now making a return to should be investing in creative concepts
the media rights market, with the alongside “brand doctors”, and that Real Madrid’s Sergio Ramos celebrates
establishment of a new consulting Octagon is already working with several scoring his team’s third goal during the
practice based in USA. Uefa Champions League group match
partners in this area.
against APOEL Nikosia
However, amid competition from While acknowledging that live
rival sports agencies and potential matches remain the most compelling
challengers moving into the sphere, product, he stresses that soccer is now
Octagon, which is owned by advertising much more than the 90 minutes, but
giant Interpublic Group (IPG), is already “365 days and 24/7 on a global basis”
eyeing other opportunities, and can and that brands and rights-owners
see a major one in using its knowledge need to fully exploit platforms outside
and resources to empower clubs to the collective deals, notably online, to
project themselves to the worldwide engage with their audience.
commercial marketplace. He continues: “I think that over the
On the back of huge rights deals such next five years this is a very exciting
as the English Premier League’s three- area for agencies to move into. You still
year domestic live TV contracts worth need the data, the knowledge and the
over £5 billion and the global popularity analytics to underpin and to build the
of soccer, European clubs have been packages that justify the commercial
getter richer and built up their profiles case, but if you can add to that a unique
and international following. creative territory and articulation of what
However, there is a sense that this your club or property stands for as a
has not been accompanied by growth brand, that’s powerful.
in creative thinking on how they can “We know with the brands we work
stand out from the crowd off the field with that what they like more than
and offer a more attractive platform for anything is finding a property that
commercial partners. provides them with a rich, creative
Phil Carling, head of football at territory in which to tell their own brand
Octagon Worldwide, tells Sportcal story, and if you can bring those two
Insight: “Most football clubs and things together then that’s really strong.”
rights-owners within the football Established clients of Octagon in
space are brands, but they’re brands soccer, among other sports, include
almost in spite of themselves. They’ve global brands such as MasterCard, one
become brands without any conscious of the main sponsors of the Championswww.sportcal.com AUTUMN 2017 Sportcal Insight 13 marketing consultancy, backed up by its Octagon Media Rights Consulting, growing integration with the sponsorship experience in the field and acquisitions which launched in New York in August, sector, and the increasing reliance on such as Futures Sport & Entertainment, is headed up by Daniel Cohen, data and analytics. the data, technology and analytics formerly managing partner, senior Cohen says: “Rights-holders and company, will be challenged by the vice-president for the Americas at MP content creators are not just looking for a major professional services firms. & Silva, and has a mandate to provide consultant to bridge a gap or get a deal He continues: “The difference is that strategic consultation to domestic done, but to wrap themselves around we come from the sports marketing and international rights-holders, software and bring in an outside party arena and therefore we have unique broadcasters, digital platforms and that can support them.” insights which McKinsey and Deloitte do sports investors. The initial focus is on USA and the rest not have. When we talk about the value The move was motivated by demand of the Americas, but the media rights of a Champions League or World Cup from existing clients seeking evaluations arm is intended to be a global offering, deal, the chances are we’ve done a deal of media rights, plus the growth of with the support of Octagon’s 50 for or on behalf of a client in the last six new distribution channels for content, international offices and audience data months and therefore our knowledge including digital and OTT platforms. from Futures Sport. is much more current and it gives us a Simon Wardle, Octagon’s chief strategy Potential clients include leagues, competitive advantage. officer, explains: “It’s a non-traditional governing bodies, teams, traditional “But it won’t last forever. I think business for us because we’ve been broadcasters, digital platforms, content potentially the McKinseys and Deloittes focused on non-broadcasting consulting. creators, telecoms companies, OTT will buy sports marketing agencies to But the same things are happening in providers and media buyers, plus private integrate into their packages.” the world of media. Our sister business equity firms, venture capitalists and This explains the need to find new Futures Sport, which I run, showed the technology companies. revenue streams, notably in the shape need for this business is acute.” of soccer clubs, and Octagon is also While the launch does not represent a ONLINE: Sign up for daily branching out with a consultancy return to the buying and selling of media news alerts on technology practice advising clients on how to rights, a market that Octagon exited innovation at maximise media rights assets across when it sold CSI to rival IMG Media www.sportcalcom/news various platforms. in 2006-07, it does demonstrate the
14 News Analysis
sales but also on servicing existing opportunities. London is a media hub.
London Calling clients in that space. It’s time we were Being on the ground, having lunch with
on the ground,” Pascal says. an agency, or a broadcaster, or even
Analysing the motives behind the “We have a growing number of another league, because it’s all about
PGA Tour’s central London hub. international media partners and building the knowledge base – we’re
sponsors. It is imperative to build and competitors for eyeballs, but we are all
By Jonathan Rest foster those relationships with partners in the same business – is vital. It is hard
locally, and not from several time for us to do that from America.
A 9-iron it may be from MI6 zones away. “Sure I can pick up the phone to
headquarters but US golf’s PGA Tour “While we have managed to do Barney [Francis, managing director of
insists this is no secret mission, as quiet that for many years successfully from Sky Sports] but ideally you want be
as it has been since setting up base in Florida, there comes a tipping point deep in the weeds.”
London. when you need to be on the ground, Sponsorship business from London
The PGA Tour’s Vauxhall Bridge office and there’s only so much travel you can is being headed up by EMEA vice-
has been operational since May, but do. We have as many media partners in president Phil Kennard, most recently
only in mid-July did it really speak out, Europe as any other big sporting entity, commercial manager at Land Rover BAR
inviting the great and the good of the so we want to be talking to them and during the Ben Ainslie sailing team’s
sports industry to a lavish reception at supporting them, while helping them to Americas’ Cup exploits.
the National Gallery. build their audience.” The implication is that the PGA Tour
Publicly, the Tour insists its In the UK, the PGA Tour has a long is seeking to court sponsors who might
permanent presence on the ground and established broadcast relationship otherwise be attracted to European
in London should not be seen as an with pay-TV operator Sky. That deal Tour events.
aggressive move on the European Tour, runs to 2021 and Sky recently moved to Given the global nature of the
headquartered at Wentworth Golf Club, strengthen its golf offering by scrapping sponsorship market, Pascal insists (again)
located on the south western fringes of its numbered channels and rebranding that a London presence is “sensible.”
the capital. them as sport-specific destinations, “Our sponsors, whether it’s a title
Thierry Pascal, senior vice-president, in this case Sky Sports Golf, which sponsor or commercial partner, are
international media at the PGA Tour, customers can individually subscribe to. global brands, the likes of Rolex,
insists it is purely a “good business “We have a terrific relationship with HSBC and BMW. We need to be
sense” decision. Sky, and now we can work more closely where they are.”
Pascal is based in the Tour’s Ponte with them,” Pascal notes. “We are
Vedra Beach, Florida-headquarters, but always looking to strengthen business
has spent much of the past three months
crossing the Atlantic to establish the
London presence and build-up the team.
London has been a hot topic at the
Tour for a number of years, but why
make the move now?
He tells Sportcal Insight: “There is a
growing recognition of how important
international is. Are we a global
company or product that just happens
to be based in the US? Or are we a US
business with international operations?
We should be the former but we have
been the latter. We are recognising the
need to change that.
“We are becoming increasingly
international. We now have events in
Canada and Mexico, and we’re in Asia
with tournaments in Malaysia and the
WGC-HSBC Champions in China, and
this year we’ll be adding an event in
South Korea, so we’ll have a real
Asian swing.”
It is the Tour’s third base outside of
USA, with offices in Beijing and Tokyo
(described as its Asian HQ), and while
London is a small sales operation at
present with three permanent staff,
growth is anticipated.
“There’s a new business element, a
focus on rights sales, on sponsorshipHOSTING
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GOLD PARTNER 201816 Columnist Opinion
‘Why would
someone pay to
watch your sport?’
Global OTT TV and video revenues will hit $65 2. Understand your audience: competition
billion in 2021, more than double the 2015 intensifies when other genres are introduced Chris Argyle-
figure. But how much of this eye-watering figure into the OTT mix. Robinson is strategy
will go to sports rights-holders? 3. Price competitively: do your research. director at RedTorch,
The OTT world is set to become increasingly A recent summer Olympic sport’s World the independent
competitive as sports battle for audiences. Championships were available on the data-driven digital
To succeed, rights-holders need to rethink the federation’s native OTT platform, but were at communications
fundamentals of marketing and revisit ‘The 6 Ps least 60 per cent cheaper on Eurosport Player. Is agency specialising
of marketing’ to answer one simple question: this effective pricing? in sport.
It’s understandable to want to generate TV-
Why would someone pay level revenues, but OTT is a different market and
to watch your sport? requires different expectations.
PEOPLE PLACE
1. How much disposal income do they have? With people increasingly choosing to watch
This has a huge impact on willingness to content on mobile, 3G/4G quality will have a huge
purchase, especially as fans are still reluctant impact on audience acquisition and retention.
to replace traditional TV bundles with OTT Put simply, broadband speed will go a long way
offerings that are often disjointed and towards determining if your OTT offering is a
cost-heavy. roaring success… or a catastrophic failure.
2. How much time do they spend watching TV?
Time spent watching TV is the single biggest PROMOTION
prize for competing live sports. For example, The biggest challenge (by far) with emerging
US adults watch TV an average 3.3 hours per OTT platforms is simply that most of them are
day. An average sports broadcast for this not set up for e-commerce. Whether it’s lack of a
market lasts over 2 hours, so, to reiterate: Why holistic CRM system, or an in-house team with no
would someone pay to watch your sport? OTT-specific experience, the basic structures are
not in place.
PRODUCT There seems to be a focus on integrating new
How fans experience your sport in the digital technology without understanding how most
space goes a long way to determining success. effectively to use it to acquire audiences. Why?
The key is to deliver digital-first, platform- and Because audience acquisition is expensive.
audience-specific narratives that engage people Expectations must be managed: the amount
emotionally. While this process takes time, it is you spend on audience acquisition will
essential as the quality of narrative will determine determine the size of audience you acquire.
how many people watch – and continue to watch
– your competition. PERFORMANCE
OTT platform success is measured by high
PRICE average view time, low churn rate, and the ability
Enormous TV revenues are distracting, and to attract and keep new customers.
rights-holders would do well to ignore them It’s not clear which sports will benefit from the
when pricing for OTT. OTT boom, or the exact size of the revenue-
My three top tips: generating opportunity, but if ‘the 6 Ps’ are at the
1. Perform a cross-genre price comparison: not heart of everything you do, your sport will stand
just with sport. more chance of grabbing a piece of the OTT pie.www.sportcal.com AUTUMN 2017 Sportcal Insight 17
“Do not fall for the
snake oil salesman
promising cheap entry
into the OTT TV sphere”
Why should you enter the OTT jungle now? OTT TV platform. All you need to provide is
your content and you can start. And most of all, Christian Knaebel
I’m often approached by people not typically technology is affordable. owns Global Media
entrenched in the TV industry, but who have Budgets should not be a limiting factor either, Consult, a leading
access to great content. Especially in the sports especially when you consider the huge upside of international consulting
business, there are hundreds of such players, generating various revenues out of your OTT TV boutique for TV,
large and small, yet they always ask me the service. But, in any case, you would be wise to Media and Creative
same question: ‘should I launch my own OTT TV have a generous budget and invest in a state- Businesses. He consults
service?’ I always give the same response, a big of-the art solution. Do not fall for the snake oil clients of all sizes on
YES. salesmen promising a cheap entry into the OTT launching TV and video
Now is the right time to launch an OTT TV TV sphere with their platform - you will pay dearly services, distributing
service. The opportunity has never been bigger later on, if things fail. or aggregating TV
and shinier, especially for sports content. This is Make sure the project has top priority among content, developing TV
even truer if you are offering niche sports content. your team and leadership - and make all platforms and entering
The big players such as Disney/ESPN, Discovery/ necessary resources available. Most new OTT new markets. Clients
Eurosport, BeIN Media and Sky are all taking the TV services fail for one of two reasons (or both): include Al Jazeera,
lead in this arena. It is about occupying shelf- lack of sufficient funding and lack of operational Bloomberg, Liberty
space and customer-relationship. support. Budget enough money to sustain a Global, NBC Universal,
It is another step towards a business long enough start-up phase and do not expect SABC and Vodafone.
environment where more and more content large ROI too early. Have a good service team
creators get into a direct relationship with content that supports your project: targeted marketing,
consumers, thus shortcutting the distribution excellent customer service and experience, and
and aggregation platforms. Most notably it will knowledgeable content curation are the three key
undermine the TV content resale business of cable areas to focus on.
operators and telcos. It’s all about distribution. Think about the user often. Your own OTT
The future of TV and video is with apps. The TV service gives you the unique opportunity
future TV universe is going to be a world of to engage directly with the consumer. There is
various apps. Consumers can choose freely on nothing between your content and the audience
which service they’d like to spend their dollar - no any longer; no cable operator, other TV channel
cable operator, telco or channel bouquet as a or editorial gatekeeper to deal with. You are in full
bottleneck. You can now distribute directly to the control of the relationship with your fans and the
audience, and you can use all types of content. entire brand experience. So make an impact.
Finally, you can make use of your archive, too, and Your own OTT TV service gives you much
be able to distribute it, moreover, monetise it. more muscle in the ever-so-hard sports rights
When you think about launching your OTT TV negotiations. You can negotiate better with rights
service, there are a few issues to consider though. buyers because you now have your own outlet
Too often I see companies fail by not thinking to broadcast and distribute content. It will also
the project through and not applying the proper give you leverage to acquire content, because
expertise. While it seems to be an easy endevour there are content owners who would rather work
to launch an OTT TV service these days, there are directly with a niche service than deal with a
numerous pitfalls to be wary off. behemoth like Sky or Discovery.
On the one side, technology is not a limiting The jungle is just starting to grow. It is up to you
factor anymore. There are various technology whether you want to be a tiger or cricket in it.
vendors and service providers that offer a one-
stop-solution or managed services for your
LEADING INDUSTRY VOICES FEATURE DAILY AT wwwsportcal.com/newsVisit us at our
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DATABASE20 Interview Murray Barnett: Driving Change
DRIVING
CHANGE
Murray Barnett talks to Jonathan Rest about
his plans for the commercial evolution of
Formula 1 under the series’ new owners
I
t’s the world’s fastest sport that for too His remit, quite simply, is to build on
long was accused of standing still under existing partnerships and attract new
Mr Formula 1, Bernie Ecclestone. sponsors, something the series has
But since the changing of the struggled with over recent years.
guard brought about by Liberty Media’s His appointment coincided with
completion of its $8-billion takeover of CAA Sports, the division of USA-based
Delta Topco, Formula 1’s parent company, entertainment and sports agency Creative
in January, the pace has been relentless. Artists Agency, being brought in by the
An influx of hires to bolster the senior Formula 1 management team to exclusively
management and a new headquarters in represent its sponsorship rights worldwide.
the heart of London’s fashionable West End That was intended as a short-term deal to
have changed the face of the organisation, “use an American term, get some points on
with plans now being formulated to attract the board quickly,” while Barnett built his
new fans, and sponsors, after a decline in team, which is now six-strong and expected
audiences in recent years. to double in size within a year.
“We call it the 60-year old start-up,” “There is much to do in the space,”
Barnett, Formula 1’s first-ever head of admits Barnett, who reports into another
sponsorship and commercial partnerships, of the new guard, managing director of
tells Sportcal Insight. commercial operations Sean Bratches,
“In many ways it feels that way and if you formerly a senior executive at sports
talk to any of the people that have been broadcaster ESPN.
here a long time they’ll tell you it’s like “Although Mr Ecclestone did an
working in a brand new organisation.” amazing job of building Formula 1 to what
Barnett is one of the newcomers, having it was, he had two main focuses: high
joined in late April from World Rugby race fees and strong TV revenue. So the
where he was first head of broadcast, commercialisation of the events and the
commercial and marketing, and then series itself was very much an afterthought.
chief commercial officer.www.sportcal.com AUTUMN 2017 Sportcal Insight 21
22 Interview Murray Barnett: Driving Change
“The combination of there not being
much precedent and having new
ownership who have a very broad view
of how it should be approached and no
pre-conceptions, meant I was starting
with a blank slate to really look at the
development of the sport.”
At time of writing, Formula 1 has six
global partners and two suppliers.
Barnett knows three of those global
partners inside out, having worked
closely with Emirates, DHL and Heineken
during the 2011 and 2015 Rugby World
Cups when they were worldwide partners
(they are all also signed up for the 2019
edition).
World Rugby has traditionally had six
worldwide partners, and Barnett says he
sees value in limiting top-tier availability.
“We have six global partners right
now. At the top level, we will probably
grow by three or four at the most,”
he notes, with financial services and
technology two categories thought to be
under consideration.
“But the next level down is a little
more infinite. The only thing which we
are limited by is the [amount of] trackside
signage. Above and beyond that we
are growing exponentially our digital CATEGORY EXPIRATION DATE
properties and what we can do with fans.” GLOBAL PARTNERS
Barnett concedes that sponsorship
was “somewhat forgotten about” in the Heineken Beer 2023
pre-Liberty era, but that provides the
DHL Logistics 2017
opportunity to build flexibility into the
new commercial model. Rolex Timekeeper 2024
He explains: “When you look at the
[Uefa] Champions League or World Emirates Airline 2017
Rugby, it is quite a fixed package. So if Pirelli Tyres 2019
we had a sponsor drop out it was about
approaching a brand in that category Carbon Champagne 2018
and saying ‘here’s what a package looks
OFFICIAL SUPPLIERS
like, how much are you willing to pay
for it?’ Johnnie Walker Whisky 2019
“What we are doing at Formula 1 is
trying to tailor-make something that Tata Connectivity 2019
meets a sponsor’s objectives. There are
some brands who are not interested critically important to us. My vision as it Does a stated preference for pay-
at all in track-side signage. They want relates to media rights is a hybrid of free- TV, therefore, make Barnett and his
more access to our database or ability to-air and pay. Our plan is to balance the department’s job more difficult?
to reach our consumers off the track, so two but have a prominent, over the year, After all, the promise of fewer eyeballs is
we are then able to construct a package free-to-air voice. not exactly a selling point to prospective
that suits them much more. Not every “That is important from a fans, brands.
sponsor has to have the same inventory.” sponsors and relevance standpoint. “It’s difficult to give a generic answer
In late June, the new owners of There is the cauldron full of cash on the because it’s different in every market,”
Formula 1 announced they would be pay side and on the other side of the he notes. “For example we will be
seeking a 30:70 ratio in terms of free-to- scale you have brand and reach. going exclusively pay in the UK at the
air and pay-television coverage of the “My view is a 30:70 model of free-to- expiration of the Channel 4 deal, so
sport in future rights deals, albeit it will air to pay, where you have a number of that’s going to be difficult situation there.
honour an exclusive six-year, £1 billion grands prix to be on free to air and then But when it comes back to engagement
contract with Sky in the UK from 2019. we can play and toil with the pay side to versus exposure, you could argue that
Bratches told the FIA Sport generate revenue that we can reinvest the audience, albeit lower that you’ll
Conference in Geneva: “Free-to-air is back into the sport.” get on Sky compared to Channel 4, iswww.sportcal.com AUTUMN 2017 Sportcal Insight 23 a much more highly-engaged audience “We had Little Mix, Kaiser Chiefs the teams have done in that area and and, from a sponsorship perspective and Bastille playing. If you take away we actively encourage the drivers to talk they’re the people that are actively the car part of it, that probably gives about what they are doing at the track involved.” you a flavour of how we would see a for people to understand it a bit better.” On his first day in office at the turn of city centre activation happening in the Barnett believes loosening the reins will the year, new Formula 1 chairman and future, where during the day it can be reap commercial benefits for all involved. chief executive Chase Carey, a long-time used for educational purposes, or more “The new positioning of F1 is that it understudy of media tycoon Rupert experiential things, like taking part in a should be at the nexus of entertainment, Murdoch, outlined ambitious plans for tyre challenge, and then in the evenings sport and cutting edge technology. To the sport, envisioning 21 grands prix you might have bands playing or a reinforce that we have to have the most with the “excitement and buzz” of NFL fashion show.” advanced digital media platforms, they American football’s Super Bowl. In the same week, Formula 1 unveiled have to be the most engaging platforms, “They should be week-long a partnership with Snapchat, the photo but they still need to have the sport at extravaganzas with entertainment and and video messaging app, marking its the core. music, events that capture a whole city,” first commercial collaboration with a “So it’s very much about how do he told international media at the time. major digital and mobile-first platform. we achieve those objectives through That is music to Barnett’s ears. Throughout the remainder of the engaging with new consumers through He says: “The concept is that season, exclusive content has been digital media, through making interesting Formula 1 is the fulcrum for this huge pushed through Snapchat’s ‘Our Stories’. and engaging content and through entertainment platform that will cover It is a collaboration few would have trying to bring the teams and the drivers fashion, music, food, eSports and envisaged when Ecclestone was in power. along with us in terms of understanding education. So F1 comes into town on While the 86-year old promoter was that mission. a Tuesday or Wednesday prior to the widely credited for turning the sport into “This is such an untapped asset. There race weekend and there will be a whole a multi-billion-dollar business, he was is so much opportunity for the sport to bunch of activities throughout that part increasingly regarded as out of touch, at evolve and grow.” of the week. In fact you may not interact a time when Formula 1 has to compete What then, can Formula 1 aspire to? with the race itself at all, but you will for attention with other sports and “If you want to look at reference points interact with many other parts of the entertainment products. for Formula 1, certainly what the NFL F1-related activity. So it gives me a great Ironically, in April 2016 Ecclestone and NBA have done internationally, and opportunity to sell MasterCard as our banned prominent British driver Lewis what the NFL does when they are in a music partner, Martini as our fashion Hamilton from filming footage for his Super Bowl city. The top US leagues do partner or whatever it might be. That’s Snapchat videos inside the F1 paddock. sports marketing much better than most not to say some brands won’t sit across “That was F1 then with Bernie. And other leagues. multiple strands of that. this is F1 now after Bernie,” reflects “The Super Bowl not only has a whole “Let’s fast forward a year from now. Barnett on the sport’s new digital-friendly bunch of activities in the week leading There should be no excuse for a brand to approach. up to it, but it is actually ambushed by say to me ‘because you are motorsport “One of the first things that Sean non-sponsor partners looking to feed off I’m not interested in you’. I should be Bratches and Chase Carey did when they that crowd. able to say ‘oh, you’re interested in joined was to tell the teams ‘so long as “I think that is a measure of success fashion, well we’ve got this’ or ‘you’re it’s not during practice, qualifying or the for us if, all of a sudden, we find our interested in music, we’ve got that’.” race, you can do whatever you like at Grand Prix weekends significantly In the week leading up to the British the track with your social media’. That ambushed by brands.” Grand Prix in July, Formula 1 offered fans has seen a massive explosion in what a snapshot of what race weekends could come to look like with the staging of London Live, a show in the heart of the city, featuring teams, drivers and cars, alongside a host of stars and headline music acts. For Barnett, it was “the first tangible example” of the ‘new era’ that Liberty and the senior management had talked so much about. “We put our hands in our pockets to put on an event and didn’t ask the teams to pay up [it cost them through the logistics of supplying their cars], we didn’t ask the city of London to put money in and we didn’t ask our sponsors to pay extra. That event itself did more to show people that we are thinking about things in a very different way than anything else.
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