AFC agrees eight-year commercial rights deal with DDMC and Fortis
By Jonathan Rest
The Asian Football Confederation announced today it has accepted an offer from Wuhan DDMC Culture Co., the Chinese sports and entertainment firm, and Fortis Sports, a special purpose vehicle set by former Team Marketing senior executives Patrick Murphy and David Tyler, for its commercial rights over an eight-year period.
The deal runs from 2021 to 2028 and includes rights to the Asian Cup and AFC Champions League, the top national teams and clubs competitions, respectively.
A source close to the deal told Sportcal the widely reported fee of $4 billion is "inaccurate" and indeed "a long way off" (ie too high), particularly as it does not include media rights in the lucrative Middle East and North Africa region, where incumbent BeIN Sports, the pay-TV broadcaster, is prioritising a renewal.
However, the deal does cover sponsorship rights in MENA, Sportcal can confirm.
The offer was accepted in the second round of bidding.
Following an executive committee meeting in Moscow today, AFC president Sheikh Salman bin Ebrahim Al Khalifa said his administration has been "mandated to complete the contract as soon as possible."
At present, Lagardère Sports holds the AFC’s worldwide broadcast and sponsorship rights from 2013 to 2020 in a $1-billion agreement.
The AFC launched its invitation to tender for rights from 2021 to 2028 at the start of February.
Two separate and concurrent invitations to tender were issued: one aimed at agencies seeking to market, sell and service the AFC’s media and sponsorship rights; and one aimed at broadcasters ‘and operators of audiovisual media services’ looking to bid directly for the AFC’s media rights.
There are understood to have been 15 media rights packages and 15 sponsorship rights packages included within the agency ITT document.
Sheikh Salman said: "I am grateful to all the other bidders who showed such keen interest in partnering with the AFC but the executive committee has made their decision and we are excited about the future partnership.
"The new rights agreement will now secure the financial future of our member associations as well as help the AFC further enhance our competitions and development programmes."
The tender was particularly competitive with Lagardère Sports having made no secret of its desire to hold onto one of its prized contracts.
Speaking to analysts and investors in February, Arnaud Lagardère, group general and managing partner, said: “The AFC opened its tender… [and] we receive some conditions. We expect to answer and we expect do so as much as we can to win, knowing that we’ll be very careful about the minimum guarantee, the cash up front and all those things that might happen.
“It’s an important part of the value of the asset. This is something that we want to compete [in] and we want to win it obviously.”
Lagardère is understood to have submitted a bid in partnership with Perform and Dentsu, while other were rival agencies IMG, Infront, Mediapro and MP & Silva, whose president and group chief executive Seamus O’Brien is the former deputy chairman of Lagardère Sports’ executive committee.
The impending loss of the AFC contract, which together with a deal with CAF, the African soccer confederation, represents the leading component of Lagardère’s sports business, would impact on the value of the sports division - the improved financial performance of the unit has led many analysts to debate whether it is time to sell up.
Asked in March following the release of the 2017 financial results if the sports operation was for sale, Arnaud Lagardère replied: “There are priorities in the life of a company and I can’t have 2,000 priorities at once. We’re all together to win this [AFC] invitation to tender and I’m not going to say more about it.”
The AFC announced at the end of November that its forthcoming worldwide rights sales process would exclude the Middle East, and the launch of the tender was put back following the diplomatic crisis in the Gulf region where several countries have cut ties with Qatar. It was originally due to be launched in the third quarter of 2017.
In 2009, World Sport Group, the Singapore-based agency renamed as Lagardère Sports in 2015, renewed a broadcast and sponsorship rights distribution deal with the AFC.
The winners The AFC contract is a significant addition to DDMC's soccer portfolio.
Earlier this year, it landed the media rights in China, Macau and Taiwan to Spain’s top-tier LaLiga until the end of the 2021-22 season after PPTV, the video streaming platform owned by Chinese conglomerate Suning, sold back rights it held for five years to 2019-20.
Spanish reports valued the deal at around €100 million ($118 million) per year.
Last July, DDMC agreed to acquire Super Sports Media, the sports agency that holds the rights to England’s Premier League in China in a deal worth $500 million. Super Sports Media, which is based in the Cayman Islands, landed the rights to the Premier League from 2013-14 to 2018-19 back in 2012 for a fee of just $18 million per year, and has been selling on coverage to Chinese broadcasters at a profit.
However, the cost of sports rights has soared in China in recent years, and the Premier League is passing to PPTV in 2019-20 in a three-year deal expected to bring in as much as $700 million.
Desports, the sports marketing agency owned by DDMC, has acquired exclusive Uefa Champions League and Europa League rights in China from 2018-19 to 2020-21, outbidding PPTV in the process, although that deal has yet to be formally announced.
Desports, which is backed by businessman Jiang Lizhang, has built up a reputation for connecting international sports brands to the Chinese market, with clients including Fifa, prominent soccer clubs, national Olympic committees and events organisers. Indeed it has brokered a number of sponsorship deals with Chinese brands for the upcoming 2018 Fifa World Cup in Russia
In 2017, Desports acquired a 60-per-cent stake in Italian Serie B club Parma, and Jiang is the owner of Spanish LaLiga team Granada. The agency also works with French club Paris Saint-Germain to source new sponsorship and licensing deals for the Ligue 1 giants in China.
Fortis Sports was established as an SPV for the AFC tender.
Murphy and Tyler were two of the main executives behind the sale of Uefa Champions League rights before they left Team in 2012.
Murphy is now president of Catalyst Media Group, the Hong Kong-based company that markets rights to the International Champions Cup, the pre-season exhibition soccer tournament held in various locations around the globe, which is organised by Relevent Sports, headed up by Tyler.
Catalyst remains majority owned by Murphy while RSE Ventures, the New York-based sports and entertainment company that also owns Relevent, retains a minority stake.
In late 2016, Murphy formed Synergy in Luzern, initially armed with sponsorship rights to the Copa Sudamericana, South America's second-tier clubs competition, for the 2017 and 2018 editions.
It also advises the CBF, Brazil’s soccer confederation, on the sale of broadcast rights to Brazil’s national team games until the 2022 World Cup in Qatar.
Synergy recently teamed up with the Infront agency on a bid for broadcast and sponsorship rights to South America's club competitions from 2019 to 2022, but lost out to IMG, the international sports marketing agency, and Perform, the digital sports content and media group, which offered a minimum guarantee of $1.4 billion over four years, or $350 million per annum.