Napoli owner Aurelio De Laurentiis was not a happy man after the latest Serie A domestic rights renewal with DAZN and Sky Italia was announced in October.
The outspoken owner of current Italian champions Napoli was not pulling any punches once the five-year, €900 million ($974.7 million) deal, which will run through the 2028-29 season, was concluded.
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In comparison, the English Premier League generates over $2.3 billion per annum.
“It’s a loss for Italian football which will die with these offers,” De Laurentiis said. “Sky and DAZN are not competent, they don’t do the good of Italian football.”
Given that media rights are reportedly responsible for half of the revenue in Italian soccer, it is perhaps not wise to bite the hand that feeds, but De Laurentiis is no doubt wondering how Serie A can compete with the likes of the English Premier League moving forward.
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The new deal is a decrease on the current contract, which expires in June 2024 and is worth €930 million. With Italy lagging behind its European neighbors, the plan was to go to market with a five-year deal in the hope of generating at least €1 billion annually, which has obviously not materialized.
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By GlobalDataHowever, it could be worse, as French soccer has found. The Ligue de Football Professionnel (LFP) pulled the auction for the rights to broadcast Ligue 1 after they failed to receive any offers that met the minimum price.
While this now allows the LFP to negotiate directly with broadcasters, the fact of the matter is that no broadcasters were willing to meet the reserve asking price, which must set alarm bells ringing at the LFP.
LFP president Vincent Labrune had set a target of bringing in €1 billion a year in media revenue, the figure that was promised by Spanish broadcaster Mediapro back in 2018 before the Telefoot venture collapsed in 2020 – echoes of the ITV Digital collapse which almost destroyed the English Football League back in 2002 when a challenger broadcaster overpaid, overpromised, and ultimately under-delivered.
Having upset domestic broadcaster Canal Plus with the Mediapro deal, Labrune and the LFP were left with nowhere to turn.
The expectations are always that digital giants like Amazon and Apple will enter the market and compete with traditional broadcasters to drive up the price and ultimately keep increasing revenue, but neither Amazon nor Apple has so far shown any willingness to do so.
Amazon very much picks and chooses what rights it takes, not showing any appetite to become a dominant sports broadcaster focusing instead on a limited number of games such as the NFL’s Thursday Night Football and the EPL’s Christmas fixtures.
Meanwhile, Apple has focused its strategy on the US market, picking up the rights to Major League Soccer and Major League Baseball.
While many in the industry expect the Premier League to have no issue with its rights renewal, there should be caution at the league. Amazon and Apple are unlikely to make a significant play for rights at this stage, despite the likes of The Telegraph suggesting otherwise.
Comcast-owned Sky and Warner Bros. Discovery (WBD) owned TNT Sports are the dominant players in the UK market, and the appetite to try and take on the market leaders may not be there.
Sky Sports has long been the dominant sports broadcaster in the English market, and while WBD has rebranded BT Sport to TNT, the pot of money for sports rights is not infinite.
WBD will likely have one eye on the US NBA rights auction which will start in earnest in 2024. As well as having Champions League rights in the UK, it has global rights to the Olympics and WBD will be looking at launching its Max digital service in the UK in 2026, so Sky will likely have a relatively clear run at retaining most of its rights.
In that case, who is Sky bidding against, and if it is not bidding against anyone, why would it increase the price it is currently paying?
The Premier League will be looking to draw others into the bidding process, but should it fail to do so, it is realistic to expect the price that Sky Sports is paying to drop for the next rights cycle.
As we navigate a cost-of-living crisis, premium subscriptions are seen by many as a luxury, and Sky has never been shy about passing on the increasing cost of media rights to customers.
If that happens this time, it will likely see a greater volume of cancellations, especially with a product that many argue is less entertaining due to VAR-related issues.
Fewer subscribers means smaller audiences for games and advertisers will simply be unwilling to pay a premium to advertise during EPL games, making it significantly harder for the broadcasters to claw back their investment. With greater demands on people’s time, and more options in terms of entertainment, is sport the guarantee for audiences it once was?
The sports media rights market exists in a delicate ego system – sports is the last part of the media ecosystem that is must-see in terms of live content but those habits are changing. More people, especially the younger audiences, are watching a greater variety of sports in shorter chunks, be it highlights or via social media clips.
The NBA has captured this demographic perfectly but continues to evolve its offering to make it attractive to broadcasters. When it goes to market for the next rights deal, it is expecting to generate over $78 billion in its new cycle, but even this may be unrealistic.
While Ligue 1 and Serie A may not be viewed by many as premier pieces of ‘must have’ content when compared to the EPL, the NFL and NBA are still popular leagues in their domestic markets with significant audiences. If neither can secure an increase in their media value, they may just be harbingers of an ill wind that is about to shake the foundations of the sports industry.
With many sports reliant on media rights fees as the main revenue driver, the expectation was that they would always continue to grow, but as has been seen, this growth isn’t guaranteed. Do sports, leagues, and teams have a plan for when that growth doesn’t come? We may be about to find out.
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