Friday, 1st June 2007

HEADLINES OF THE DAY

Afro-Asian Cup Rescued but India Matches Still under Threat

Cricket’s Afro-Asian Cup series next month has been rescued from collapse by ESPN Star Sports, which stepped in to take over television coverage of the event after Nimbus Communications pulled out. It is understood that ESPN Star Sports will pay significantly less for the rights for the second Afro-Asian Cup, a three-match series between representative sides from the two continents, than Nimbus had promised.

Nimbus, which paid $12 million for the rights for three editions of the tournament, beginning with the first in 2005, declined to pay the agreed rights fee to the organisers partly because it is disappointed at the absence of top players from the games. Harish Thawani, Nimbus’ chief executive, told PTI: ‘We will not be part of the event in any way. We will not be telecasting the event. Neither will we be producing nor bringing sponsorship for the matches.’

Thawani claimed that continuing with the contract was ‘not viable because there is very little public interest in the absence of big names.’ Top names missing from the Asian team line-up include Sachin Tendulkar, Rahul Dravid, Muttiah Muralitharan, Chaminda Vaas, Kumar Sangakkara, Shoaib Akhtar and Lasith Malinga. The matches are scheduled to be played in Bangalore and Chennai in India between June 6 and 10.

ESS recently acquired the global rights to 18 International Cricket Council competitions, including two World Cups, in the next eight years in a deal worth $1.1 billion, but there is uncertainty over whether the contract has actually been signed.

Meanwhile, the collapse of another Asian cricket broadcasting deal yesterday, involving Zee pulling out of its five-year deal with the Board of Control for Cricket in India to show matches played by the national team at neutral venues, was blamed on Zee’s failure to make money from televising a tri-series involving India, Australia and the West Indies last year. Concerns prevail over the regulatory changes and Asian broadcasters are reassessing the value of cricket rights after television audiences and advertising sales for the 2007 World Cup in the West Indies and India's subsequent tour of Bangladesh failed to match expectations. Source: Sportcal, The Hindu, The Business Standard, The Times of India, 31st May 2007

Nimbus to Telecast Ireland ODIs

Exit Zee, enter Nimbus. Harish Thawani's Nimbus Communications has bagged the telecast rights for the four cricket one-day internationals to be played by India in Ireland in June. The joint announcement made today by the Board of Control for Cricket in India and Nimbus, comes a day after Subhash Chandra's Zee Group pulled out of its five-year contract with the Indian cricket board covering India's matches at neutral venues, accusing it of following a double standards approach.

Nimbus will pay $ 6.05 million per match for the series that is to be played from June 26 to July 1, Cricket Board (BCCI) Vice President Lalit Modi announced. The series involves three ODIs against South Africa and another against Ireland in Belfast. Interestingly, what Nimbus has agreed to pay the board per match for the rights it has just acquired is a huge come down from the average of $ 8.77 million per match that Zee had committed to pay for the same property.

It was in April 2006 that Zee secured the rights for matches played by India at neutral venues (non-ICC member countries). And the winning bid: a whopping $219.15 million for 25 matches spread over five years. ESPN Star Sports (ESS) has bagged the rights on a revenue share arrangement. According to Indiantelevision.com, ACC will take away 80% of the revenue generated while ESS will keep 20%. ESS will also bear the production costs of the live feed. ACC had earlier awarded the three-year contract worth $11 million to Nimbus. Source: The Hindu, India Times Cricket, Economic Times, 31st May 2007

Related Excerpts: Indian Cricket Rights in the Doldrums

Source: The Hindu, 31st May 2007
Contrary to claims made by sports broadcaster Nimbus that it had walked out of the upcoming Afro-Asia Cup cricket series, Asian Cricket Council on Thursday said it scrapped the deal with the channel for "not fulfilling contractual obligations". Consequently, ACC has awarded the telecast rights for this year Afro-Asia cup to be held in India next month to ESPN Star Sports (ESS). "They (Nimbus) did not fulfill their contractual obligations... but it is always painful to terminate contracts," ACC CEO Syed Ashraful Huq told PTI over the phone from Kuala Lumpur.

Source: The Business Standard, 1st June 2007
It has been said that there were too many investors chasing too few stocks in the matches controlled by the Board of Control for Cricket in India. Zee, together with Ten Sports and Set Max is understood to have lost interest in cricket after the World Cup. Doordarshan need not bid since a law passed by the government gives it free the feed for all cricket matches involving India, dubbed events of national importance. That leaves only ESS and the new kid on the block, Nimbus, as the serious contenders. Zee’s bid of $530 million for the India rights lost out to Nimbus and is going through intense soul-searching. This is an affirmation of what was said earlier, that the bids were stretched beyond business sense. Many now agree that the third finishing bid, of $402 million by ESPN-Star, was actually the one that offered the true value for the rights. Nimbus and Zee also cite mandatory sharing of feed with Doordarshan as a big spoilsport.

Source: Indian Express, 1st June 2007
BCCI, meanwhile, has offered Nimbus a discount of Rs 257 crore for agreeing to honour their four-year contract of $612m for broadcasting cricket in India and also for making their intentions clear of standing by the Board. However, the upcoming Indian Cricket League (ICL) that Zee has threatened to float by the end of this year has also forced the Board to sit back and think hard. “The ICL is totally a separate issue. This is a tough market and sometimes there can be upsets,” Lalit Modi, the Board’s Vice-President explained.

Source: Indian Express, 1st June 2007
The Afro-Asian Cup has remained an unwanted baby. That became obvious when BCCI and Nimbus ignored the tournament’s importance compared to their off-shore series in Ireland. And the Asian Cricket Council - of which BCCI chief Sharad Pawar is president - had no option but to award the Afro-Asian Cup to ESPN-Star Sports today, with the annulment of its deal with Nimbus. Nimbus had maintained that the starless meet was barely saleable commodity. The rights that ESPN-Star Sports got from the ACC include exclusive global television broadcast rights of the tournament in addition to title and on-ground rights. All other commercial rights are also included, including production.


DID YOU KNOW…?

A total of 270 million people, or 4% of the world’s population, are involved in soccer worldwide, according to a new survey by Fifa, soccer’s world governing body. Big Count 2006, a Fifa survey of its 207 member associations, found that 265 million people, male and female, play the game worldwide, a rise of almost 10% on the figure of 242 million that played the game when the survey was last carried out in 2000. Of the 265 million, 26 million, or about 10 per cent are women.

About 5 million people are involved as referees, coaches and other officials. The number of registered male and female players has grown by about 23 per cent to over 38 million since 2000.

The largest number of players is found in the region covered by the Asian Football Confederation (85 million), followed by Uefa (Europe – 62 million), CAF (Africa – 46 million), CONCACAF (north and central America and the Caribbean – 43 million), CONMEBOL (South America – 27 million) and OFC (Oceania – 500,000). Source: Sportcal, 31st May 2007


SPORTS SHORTS

* IEC in Sport was appointed as international television coordinator for the 2007 FC Barcelona Asia Tour. IEC will distribute international television rights in certain territories for selected matches, production and transmission services for Spanish broadcasters, world feed production and commentary services. FC Barcelona will play matches in Beijing, Tokyo and Hong Kong in August 2007. The match in Beijing will mark the 1one-year countdown to the 2008 Beijing Olympic Games. IEC in Sports also handled television distribution of the 2004 and 2005 Barcelona Asia Tours. Source: Sport Business, Sports e-Media, 31st May 2007

* RTE, Ireland’s public-service broadcaster, is understood to have seen off competition from commercial broadcaster TV3 and Setanta, the international pay-television broadcaster, for the domestic rights for soccer’s Euro 2008 Championships. RTE paid a 'low seven-figure sum' for the rights, according to the Irish Independent newspaper. Although Ireland are struggling to qualify for the tournament, the event is in any case expected to draw high viewing figures, as was the case during last year’s World Cup. Source: Sportcal, 31st May 2007

* The LFP, organiser of French soccer’s top two leagues, does not envisage a drop in the value of Ligue 1 television rights under the next deal, despite an apparent lack of head-to-head competition for the rights. The record value of the present agreement was said to have been inflated by rival bids from pay-television operators Canal Plus and TPS. The two firms merged after Canal Plus agreed to pay €1.8 billion for the rights over three seasons. The next deal is due to begin in 2008-09. Source: Sportcal, 31st May 2007

* Beginning in the middle of June, Apple TV users will be able to stream videos from YouTube directly onto their widescreen television sets. Thousands of videos will be available for streaming on Apple TV at launch, with the entire catalogue set to be available this fall. With Apple TV's interface and Apple Remote, users can navigate through YouTube's video browsing categories or search for specific clips. YouTube members can also login to their YouTube accounts and save their favorite videos. Source: Worldscreen, Indian Television, Advanced Television, 31st May 2007

* Datamonitor has predicted that mobile TV subscribers will grow from 4.4 million today to 155.6 million by end-2012. The report ‘Opportunities in the mobile broadcast TV market, 2006 - 2012’ notes that there are considerable hurdles that need to be overcome before Mobile TV will be “the next big thing”. Asia-Pacific region is expected to have 76.3 million subscribers by 2012. Source: Advanced Television, 31st May 2007


MORE NEWS

Elsewhere/Rights: Soccer Clubs Go Collective over TV Income

The Italian Minister of Sports and Entertainment, Giovanna Melandri, urged football industry to find a solution to the long debated issue of allocating TV revenue fees among large and small clubs, spread through the two Italian leagues, Serie A and Serie B. According to the Minister the new draft law that will rule the football TV rights, currently in discussion at the Italian Parliament, should be finally approved by the end of June.

The new rules will change the system football TV rights are sold, from individual sale to a collective sale that will be managed directly by the national football league Lega Calcio.

The association, composed of all the Serie A and Serie B teams (38 in total), will discuss in the coming weeks how the revenues generated from TV rights should be divided among its associates. The aim of the debate will be to try to find a common and agreed system to allow all clubs to access to a proportionate slice of the 700 million euros cake (expected in 2010) without hurting too severely the legitimate interests of the major clubs (ie. Juventus, Inter, Milan, Roma) which expect to be rewarded for the greater market appeal of their brands.

The clubs that negotiated individually the sale of the TV and media rights will be able to maintain the existing contracts with broadcasters and pay TV operators until the 2010 season. From this date the collective sale of the rights should be already effective. In the 2005/06 season soccer on TV generated a turnover of 470 million euros, 93% generated by Serie A clubs. In the 2006/07 season, the revenues were approximately €500 million, and Serie B clubs had a bigger portion of the income mainly due to the fact that Juventus was playing in the second division. Source: Rapid TV News, 31st May 2007

Elsewhere/Business: Premier League Towers over World Football, Says Deloitte

Deloitte’s latest Annual Review of Football Finance reports that the Premier League, the richest football league in the world, is going to get even richer next year. The review reveals that whilst the changes to the Premier League clubs’ financial results over the past three seasons have been fairly minimal, the combination of increases in revenue and reasonable wage cost control should see operating profits almost double to £260m in the 2007/08 season. The 16th Annual Review of Football Finance also confirmed that the Premier League clubs remain by far the biggest earners in world football, with the top 20 clubs generating around £1.4 billion in turnover.

“We believe the relatively small changes in Premier League clubs’ financial results over the past three seasons represent the calm before the storm,” said Dan Jones, Partner in the Sports Business Group at Deloitte. “The new broadcasting rights deals - providing an additional £300m or so of revenue to the Premier League clubs in 2007/08, and other revenue increases, will drive overall turnover up to almost £1.8 billion.” Player transfer spending this summer, Deloitte predicts, will again likely exceed £300m, while Premier League clubs’ total wages cost will still rise to over £1 billion in 2007/08.

Other key findings in the report highlighted English football’s financial strength compared to its European counterparts. English football, says Deloitte, contributed around one quarter of the total revenue of the European football market of £8.7 billion in 2006. Premier League revenue of £1.4bn in 2005/06 beat second placed Serie A (£1bn). The other ‘big five’ leagues are in Germany (£0.8bn), Spain (£0.8bn) and France (£0.6bn).

Meanwhile, English football’s second-tier Championship clubs saw turnover grow four per cent to £318m (average of £13m per club) in 2005/06. Below the top two divisions, “ the financial position remains very challenging," says Deloitte, “ but it has improved and stabilised over the past three to four years.

Appraising the future outlook for football finance, Alan Switzer, director in the Sports Business Group at Deloitte, concluded: “English clubs will continue to lead the world financially. Whilst the players will be the main financial beneficiaries from the new TV deals, English clubs will continue to invest in their stadia and youth facilities, which is a vital element of a successful business strategy. “Over 15 per cent of revenue generated by Premier League clubs since 1992/93 - over £1.7 billion - has been invested in facilities; the ‘shop window’ for the game. The contrast to facilities in countries like Italy is now stark.” Source: Sport Business, Sportcal, International Herald Tribune, 31st May 2007

Elsewhere/Business: Champions Stuttgart Top Bundesliga Broadcast Revenue Table

VfB Stuttgart have been boosted by news that topping Germany’s top-tier Bundesliga this season will nearly double its television income. Stuttgart received €26.18 million ($35.2 million) in television money after winning the league this season for the first time in 15 years, close to double the €14.47 million received in broadcast revenue in 2005-06 when they finished in ninth position, according to a study by Ernst and Young, the accountancy firm.

The jump is also attributable to increased overall receipts from the new three-year media rights contracts that started at the beginning of the 2006-07 campaign, netting the league €420 million a year, including €240 million a year from Arena, the pay-television broadcaster that won the live rights. All 18 top-tier Bundesliga clubs enjoyed an increase in television revenue thanks to the improved deal.

The previous broadcast contract for the 2004-05 and 2005-06 seasons was valued at between €330 million and €350 million a season, with Premiere, the cable and satellite giants, paying the lion’s share for live rights Schalke 04, which finished in second place in this season’s Bundesliga, earned €25.85 million, while third-placed Werder Bremen received €25.52 million. Deposed league champions Bayern Munich, who finished in fourth-place in the Bundesliga, netted €25.19 million. Source: Sportcal, 31st May 2007

Elsewhere/Business: Premier League Revenue Distribution Set for Change

A new revenue distribution system for the television rights for English soccer’s Premier League is close to being agreed, beginning with next season, which would guarantee each club a minimum number of television appearances. The new agreement would guarantee a minimum 10 ‘facility fees’ for appearing on television, representing about £5 million ($9.9 million) per club per season, according to the Guardian newspaper.

Under the present arrangement, 50% of revenue is split equally between the league’s 20 clubs, with 25 per cent distributed according to league position at the end of the season and 25 per cent according to the number of television appearances that each club makes. Certain clubs, which had been led by the now-relegated Charlton Athletic, called for an adjustment to the established revenue distribution.

The clubs had called for 70 per cent of the revenues to be redistributed equally, with 20 per cent depending on league position and 10 per cent on television appearances, but this was rejected. A new television rights deal worth £2.7 billion ($5.3 billion) over three years kicks in at the beginning of next season.

It is feared that under the deal, which will result in 60% more television revenue for the clubs from next season, the gap between the richer and poorer cubs is set to grow still wider, with rights holders British Sky Broadcasting and Setanta competing to show the best games and leaving the smaller, less popular clubs out in the cold. The winners of last year’s title were forecast to earn £50 million in television revenues, compared with £30 million for the bottom club. The differential between top and bottom club at the end of the 2005-06 season was £13.6 million. Source: Sportcal, 31st May 2007