Study: Media rights reach peak and sport must adapt to maintain revenue
By Tariq Saleh
Media rights have reached a “high-water mark” and sport will have to fight hard to retain its broadcast revenues and adapt from an over-reliance on broadcast fees to become a fully-rounded digital media business, according to a new study.
The ‘3rd Age of Sport’ report by Mailman, the Shanghai-based sports consultancy firm, and its Seven League subsidiary, released today, found that 83 per cent of sports executives surveyed believe that media rights has reached its peak which could force the industry to address how it is structured and where it derives its revenues.
As part of the study, Seven League spoke to representatives of tier-1 global sports properties that have direct experience in rights negotiations and represent both the rights holder and broadcaster sides.
According to the research, sport must become a fully-rounded digital media business by incorporating ecommerce, streaming, ticketing, sponsorship, membership, loyalty and wagering.
Mailman and Seven League said “how each of these business models operate is fundamentally changing, something we call the 3rd Age of Sport.”
Through the report, Mailman and Seven League emphasise how the Covid-19 pandemic has accelerated the sports industry’s transition into a third age, “where digital disruption is having a fundamental impact on every area of the sport business landscape, across content, sponsorship, data, streaming and overall competition for audience attention.”
The study outlined: “In the first age of sport, industrialisation increased leisure time to enjoy and participate in amateur sport creating a period of recreation and community. In the second age of sport, we built businesses. We charged money for access, we developed sponsorship and advertising offerings, we packaged and sold the rights to view sports, allowing athletes to become professionals and sports to grow.
“As we enter the third age, digital disruption is restructuring sports consumption and how it is discovered and monetised. New competitive forces and new distribution media are altering the industry and reshaping the business model for sport, while creating new opportunities elsewhere.”
Andrew Collins, group chief executive, Mailman Group, said: “While we may have reached Everest with many media and sports properties, international audiences are proving to show sports are increasingly becoming more global and with that presenting new broadcast and digital rights opportunities. Global platforms such as Facebook, YouTube and Twitter have accelerated the need for an international ‘multi-platform, multi-product’ strategy - rights holders who are able to adapt quickly should realise gains.”
Richard Ayers, chairman, Seven League, added: “Digital transformation has given sports the opportunity to go direct to consumer, but the same power has been given to everyone else. Amazon and the other big tech companies are the gatekeepers… Sponsors can be more certain of their return on investment by going direct… And those who have the data have the power. Meanwhile, people have become fixated on “owning the audience” when the audience does not want to be owned. Trust is the currency of the future. Sports must master the value exchange, and through that build trust.”
According to Mailman and Seven League, the third age is arguably the most important era for the sports industry following Covid-19’s impact globally, and predict that “new playbooks, new audiences and new media will determine how sports is monetised, consumed and enjoyed by all.”