When Negotiations Come Down To The Wire, Move The Wire
Michael Hedges November 9, 2020 Follow on Twitter
Sports rights fees have risen into the stratosphere this century, some to the ionosphere. Rights holders across all sports could demand nearly anything leaving broadcasters to wince and pay. Streaming services and telecoms were ready to compete for live broadcast rights to highly-valued games, matches, bouts and anything in between. Then, too, rights brokers entered the fray. Financially, sports rights reached fantasy land. To the horror of all, the coronavirus pandemic threw all of this into turmoil.
 As teams and leagues, many paying fortunes for star players, saw gate and concession receipts disappear with far fewer fans in the stands, advertising and sponsorship revenues also fell. Broadcast rights revenues became an even bigger part of the operating budgets. But broadcast channels and networks also saw ad revenues drop, as listeners and viewers turned to movies and background music for escape. A perfect storm washed over the land.
TV rights broker Mediapro contracted for French Ligue 1 and Ligue 2 TV rights in 2018 from the French Professional Foot Ball League (LPM). There was quite a bidding war. Mediapro agreed to pay €814 million for 80% of the matches, pay-TV channels Canal+ and BeIn Sports taking the rest. Mediapro quickly launched pay-TV sports channel Téléfoot to carry Ligue 1 and Ligue 2 matches as well as UEFA Champions League matches.
This year’s €172 million payment from Mediapro was due and payable this past October. Like other broadcasters, Mediapro took that opportunity to renegotiate with the LPM saying the coronavirus pandemic changed the contract terms. It seems that Téléfoot currently has about 600,000 subscribers at just under €30 per month but needs three and a half million. Hence, money is tight.
Mediapro is a Spanish production house specializing in TV sports across several countries. It is principally owned by Joye Media, known as Imagina Media Audiovisual until Chinese private equity firm Orient Hontai Capital took a majority position in 2018. Joye Media is contractually obligated to cover rights fee costs. The company is facing “difficulty to profitably monetise the French football rights with the current subscriber base” said Moody’s analyst Víctor García Capdevila, quoted by Digital TV Europe (October 27). downgrading Joye Media trades.
Meanwhile, the LFP wants its money. “I expect them to respect their commitment and that, at the very least, show responsibility in resolving the crisis between us,” said LFP president Vincent Labrune, new to the job since September, to Journal du Dimanche (November 8). The parties have entered into arbitration through the LFP. “We will discuss constructively with the arbitrator in order to find a solution acceptable to each of the parties in the shortest possible time. Because time, as it stands, we don't have.”
For its part, M Labrune is “open to a debate” with Ligue 1 and Ligue 2 clubs on a variety of issues impacting financial performance. There are “too many competitions, too many clubs, too many players. We need to redesign the format of our competitions. It’s mandatory, otherwise we’ll die of entertainment boredom and investment exhaustion.”
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That light at the end of the tunnel is still flashing red for the sports media world. Everything is different, they whistle. Sports broadcasters are, strictly speaking, no longer offering coverage of live events. The game must go on, somehow. That means a quite different presentation on television.
These are challenging times for news publishing. That is, obviously, an understatement. While readers have been craving more news and views about the timely events affecting their world, publishers, in many cases, have seen advertising revenue streams melt away and subscription revenues challenged by specialty publications, streaming audio and video as well as Uber Eats. Reallocating resources, business-speak for cuts and layoffs, is the main topic in that Zoom meeting with the finance department or, eventually, the shareholders.
To the delight of many, sports are returning. It’s an ambiguous term, return. Of course, leagues are preparing for something. Sports writers and broadcasters, impatient with rehashing historical bouts, want some action lest their employers find cooking shows for them to work on. Some assume fans are ready to stand in line for seats and beer. Perhaps they will just stay home.
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