Friday, 20th June 2008

INFO BOX

UK Crowned #1 in Sports Sponsorship Market
PricewaterhouseCoopers UK Revenue Report published on Brand Republic, Sportsbusiness.com, The Guardian UK, Worldscreen, 19th June 2008

The UK has been crowned the fastest growing sports market in EMEA over the next five years by a new global entertainment and media study. In one of the most extensive reviews of the global entertainment and media market (2008-2012), management consultant PricewaterhouseCoopers predicts that UK revenues from sports sponsorship -- including merchandising, online, mobile and other revenue streams such as hospitality as well as gate receipts and lucrative TV rights -- will grow from $10.2bn in 2007 to $15.8bn in 2012, representing a 9.1% annual growth.

Comparable growth projections for the same period show that the UK will leave its European neighbours in its wake, with France on 4.9%, Germany on 5.6%, Italy on 6.4% and Spain on 5.8%. On a global basis, sports sponsorship is predicted to increase from $42.7bn in 2007 to just under $60bn by 2012, representing a 7% in growth year on year for the sector. If gate receipts and TV rights are added, the global value of sports marketing swells from $102.6bn in 2007 to a lofty $140.6bn by 2012.

Much of the growth in sports sponsorship is due to a large number of factors, including the experience of brand owners who have invested in sports sponsorship at international and local levels over a long period of time, as well as the deployment of mobile and online channels in reaching youth audiences and customer segments, say the report's authors. A key trend over this period are the peaks in sponsorship activity around major sporting events at regular two-year intervals -- Beijing Olympic Games in 2008, Vancouver Olympic Games in 2010, Fifa World Cup in South Africa in 2010 and the London Olympic Games in 2012.

In the UK, sports sponsorship growth has principally been fuelled by: new rights deals for the FA Premier League, domestically and internationally; by a general increase in sponsorship expenditure as brand owners become more proficient in the activation of sponsorship; and as a direct result of increasing levels of professionalism and commercial acumen amongst leading sports rights holders and governing bodies. Football remains the single most important sport in driving sports sponsorship growth in the UK over the next four years. Premier League clubs are now global brands in their own right, which is likely to fuel fewer but significantly larger sponsorship deals with global brand owners in the future.

Julie Clark, PWC director and one of the report's authors, said: "What's interesting is that these clubs are acknowledging their wider role in the community by partnering with charities, for example, Aston Villa FC recently partnered with Acorns Children's Hospice in a similar shirt sponsorship deal to that of Barcelona and Unicef. "Leaving shirt sponsorship deals aside, there's still debate around the appropriateness of naming rights deals for all new stadia. It's important that sports rights holders get the balance right or risk potentially alienating fans who ultimately form the bedrock of a club's long-term support."

Given the uncertainty around the future of Formula 1, the report's authors feel that sponsors will find other properties to invest in should they decide to leave F1 and it's highly unlikely that there will be any damage to the amount invested in the sports sponsorship sector. As brand owners catch their breath post-2012, the sports sponsorship market in the UK is unlikely to show any signs of slowing down, argues Clark.

She said: "I don't think there will be a decline because you've still got the base growth that's going on in terms of every other sport and in particular the continued investment in football. We've also got another big event coming up with the Commonwealth Games in Glasgow in 2014 which will help to keep the focus on the UK as a place for sports sponsorship well into the future." The full report, Global Entertainment and Media Outlook: 2008-2012 forecasts and economic analyses of 15 industry segments is available from www.pwc.com/outlook


DID YOU KNOW?

Women are playing a key role in UEFA EURO 2008™, contributing at least €140million to commerce around the tournament, according to a comprehensive economic study commissioned by MasterCard, Official Sponsor of the UEFA European Football Championship™ since 1992. Women will be responsible for an economic boost equivalent to more than €4million per game, according to the study. The figure consists of female spending on football related items, such as on merchandise, food and beverages, accommodation, transport and television sets. The study also notes that women are also likely to spend more away from football on retail therapy, holidays and entertainment, while UEFA EURO 2008™ is on. Sportcal, 19th Jun 2008


SPORTS SHORTS

* Telekom Malaysia plans to launch its IPTV commercial services next year, as part of its move to increase the usage of broadband services in Malaysia, its group chief executive officer Datuk Zamzamzairani Mohd Isa said. "We hope to launch it commercially in the second quarter of 2009. AdvancedTelevision.com, IPTVNews.com, 18th June 08

* Sri Lanka Telecom has selected UTStarcom's RollingStream end-to-end IPTV platform for the deployment of IP video services in the country. Sri Lanka Telecom's IPTV deployment is designed to support approximately 100,000 subscribers in the next two years. The telco has a market share of 87% in the country and a wireline subscriber base of over 1.3mn customers. UTStarcom's RollingStream end-to-end IPTV platform currently supports more than 850,000 live IPTV subscribers worldwide, and has recently been deployed by China Netcom and China Telecom in China, Bharti Airtel, MTNL/Aksh and UTL in India, Softbank in Japan, Brasil Telecom in Latin America, and Markwell in Taiwan. IPTVNews.com, 19th June 2008

* The Association of Tennis Professionals (ATP) has announced that Barclays will be the title sponsor of the ATP World Tour Finals from 2009. As part of the 2009 restructuring of men's tennis, the Barclays ATP World Tour Finals will replace the Tennis Masters Cup, currently held in Shanghai's Qi Zhong Tennis Centre, as the ATP Tour's season finale. The new event will be held in London's O2 Arena in November 2009 and will feature the world's best eight singles players and eight doubles teams competing to become the number one player of the year. The five-year deal includes the option to extend to eight years and is worth around US$7 million a year. Sports Media, 19th Jun 2008

* Mediapro has agreed a deal for the broadcasting rights for the FC Barcelona’s 2008-09 Champions League third preliminary round clash. Barcelona finished third in last season’s top-tier Spanish Liga and will face a home and away tie against a yet to be determined opponent to qualify for the Champions League. The first leg will take place on August 12 or 13 with the return on August 26 or 27. The agreement also covers Barcelona's pre-season friendly matches against Hibernian and Dundee United in Scotland, Fiorentina in Italy, two matches in the USA, and a home fixture with Boca Juniors of Argentina. In total, Barcelona will play nine matches before the start of the Liga season. As part of the deal, Mediapro will be charged with negotiating the sale of rights to national and international broadcasters. Sportcal, 19th Jun 2008

* Ice hockey’s Champions Hockey League, the new European clubs competition based on Uefa Champions League, has signed a 3-year broadcast rights deal with MTV3, the Finnish private broadcaster, to cover matches of the Finnish clubs Espoo and Karpat. MTV3 has also acquired internet and mobile rights in the Finnish language and will air a weekly highlights programme and monthly magazine programme on the new competition. Ovation is the Swiss agency marketing the media and sponsorship rights for the tournament in partnership with the International Ice Hockey Federation. The competition will be played over five stages, including two group stages, and will offer guaranteed centralised revenue of SFr16.9 million ($14.4 million) for the competing clubs and an additional SFr1 million for the winners. Sportcal, 19th Jun 2008

* Sir Allen Stanford, who is funding the ‘winner-takes-all’ $20-million Twenty20 cricket match between England and a West Indies all-stars later this year is seeking broadcasters for the contest but admits that sale of rights will not cover the cost of the event. Stanford said there will be talks BSkyB and Setanta and looking to secure a US sports broadcaster, possibly ESPN or HBO, as part of plans to promote Twenty20 in the country. However, he is prepared to make a loss on the match, the first of five between England and the Stanford Super Stars over five years, in the quest for long-term gains. Stanford told the UK’s Daily Telegraph newspaper that revenue from television rights will make some sort of a dent in that investment but in due course, I hope that this takes off and it will be enough – money marketing wise, promotional wise, television revenue wise – to pay for this. Sportcal, 19th Jun 2008

* BNP Paribas has announced its involvement as the title sponsor of the 2008 Taste of Tennis event in New York City. The event, produced by AYS Sports Marketing and benefiting The Food Bank for New York City, will be played on August 21 at the W New York Hotel. The sponsorship, which will run until December 31, 2008, will make BNP Paribas the only title sponsor for the star studded event. This year's lineup includes Andy Roddick, Jelena Jankovic, Lleyton Hewitt, Robby Ginepri, along with acclaimed chefs and food personalities such as Alfred Portale and John Delucie. BNP Paribas has been involved with tennis for 35 years having sponsored the French Open in 1973. Sports Media, 19th Jun 2008

* Euroleague Basketball, the top European basketball clubs competition, has launched an official new video game, Euroleague Basketball Manager, which has been developed together with U-Play Studios. Players can participate in fantasy versions of over 25 European competitions, including national leagues and the Euroleague itself. The game enables fans to control over 3,500 players and make decisions, whether in the role of player, coach, general manager or scout. Sportcal, 19th Jun 2008


MORE NEWS

Global/General: Women's Squash Follows Tennis' Grand Slam Series

Women’s squash is to get a new top-tier series as the sport bids to imitate the success of tennis and increase its television coverage and profile. The Global Grand Slam, which is due to launch in 2009, will comprise several new events featuring all-glass courts in different parts of the world and support the existing Women’s World Open, the leading tournament for women.

Andrew Shelley, the chief executive of the Women’s International Squash Players’ Association, told Sportcal.com: ‘What squash lacks is the ‘grand slam’ events that tennis has and that golf has [with its ‘majors’]. We have big events but they are not as enduring.’ He claimed that WISPA will be working with regional bodies, such as the European Squash Federation and the Asian Squash Federation, to create new championship events, which will run alongside traditional tournaments such as the British Open and the Australian Open. Shelley said: ‘There would be a maximum of six, but we are looking to start with four.’

Discussions have already taken place with prospective hosts and promoters will be asked to make a three-year commitment to ensure continuity. The Global Grand Slam will have ‘a major television focus’ with highlights programmes to be distributed to all continents. The series will effectively be a new tier within the WISPA World Tour, filling a perceived gap between the Women’s World Open and the so-called Platinum events, and there are hopes that it will increase television exposure and help squash’s campaign to join the Olympic Games.

In the men’s game, its equivalent is the Super Series, a group of 11 tournaments organised by the Professional Squash Association. Shelley said: ‘It’s similar in that it’s a grouping the events under a banner for television. As a sport, we’re not getting the press coverage we should.’ Each of the Global Grand Slam tournaments will have a prize fund of $150,000, which Shelley said is ‘the same kind of level’ as the top men’s tournaments.

While the new series is a WISPA venture, Shelley said his organisation was prepared to work with the PSA on simultaneous men’s and women’s tournaments, saying: ‘We already have many joint events and some of these [in the Global Grand Slam] will be.’ It is envisaged that Asia, Europe, North America, South America, Africa, Oceania and the Gulf would all be capable of hosting new top-level women’s tournaments and places would be reserved for players from the host region and country in the main and qualification draws of 32 players each. Sportcal, 19th Jun 2008

India/Broadcaster: Zeel's Film Subsidiary to Raises Cash, plans AIM listing

Zee Entertainment Enterprises Ltd (Zeel) is in the process of floating a film subsidiary company, Zee Entertainment Studios (ZES), and plans to raise $200 million by diluting 10-20 through an initial public offering at the Alternative Investment Market (AIM) of the London Stock Exchange (LSE). Zeel will make an initial financing of Rs 1 billion and plans to shift its entire library of about 3,300 movie titles to ZES. The company will then dilute a minority stake in ZES to raise financing for the next 2-3 years of operations. The details of this are being worked out.

"The financing for the venture will be done using a mix of internal accruals and equity dilution in ZES. We are looking at a 10-20 per cent dilution to raise around $200 million. We are planning to list at the AIM of the LSE," says a source in Zeel. UTV, Eros and the Raghav Bahl-initiated Indian Film Company have already listed on the Alternative Investment Market to fund their movie business.

ZES aims to execute 180 film projects in six languages over the next three years. The languages include Hindi, Tamil, Telugu, Marathi, Bengali and Gujarati. Zeel has already established six internal teams to lead in-house film production as well as signed output deals with about 8-10 directors. The film production business will synergise with the other group companies - exhibition through E-City, broadcasting, and distribution (Wire & Wireless India Ltd and Dish TV) - to monetise the developed film content.

The international distribution of film content will be handled through the overseas television distribution arm of Zeel. The IPR rights of all film content produced and acquired will be globally managed and monetized by ZES, though some rights will be sold to third-parties initially to large scale of operations. Zee will set up two production studios — Zee Motion Pictures for mainstream films and Zee Limelight for niche films — to kick-start its in-house production. The company, however, also plans to aggressively delve into co-productions, output deals and complete film acquisitions to achieve its targets. "We are targeting revenues of Rs 14 billion and EBITDA (earnings before interest, taxes, depreciation and amortisation) margin of 34 per cent from the business in FY 2011," the source adds.

Zeel is demerging its flanking Hindi general entertainment channel Zee Next. The details of the demerger are being worked out, but the idea is to get Zeel out of the losses from the channel which is in investment mode. The losses are capped at Rs 500 million in the first quarter of this fiscal. Zee Next will try to rope in an investor, the source adds. Indiantelevision.com, 19th June 2008.

India/Broadcaster: Zee Next Spin Off Could Improve Earnings

Zee Entertainment Enterprises Ltd (ZEEL)’s plans to hive off its recently-launched youth channel Zee Next and to re-enter film production has the potential to improve its earnings prospects. The spin off (expected in the second quarter of the current fiscal) could remove the burden of the new channel launch on ZEEL’s earnings. ZEEL had earmarked Rs 300 crore as expenditure for programming and marketing of Zee Next for FY-09.

Zee Next is the latest channel from the Zee bouquet that had been launched to take on competition from new entrants in the general entertainment category (GEC). Launched in December 2007, the channel is, however, yet to make a significant mark. Losses from the channel launch amounted to Rs 32 crore in 2007-08. The details of the planned hive off have not yet been disclosed to the stock exchanges. The development was apparently announced at an analyst meet held by the company recently. While concerns on the competition front remain, ZEEL would be able to focus better on consolidating its No 2 position in the GEC category, once the spin off is complete.

Film production :
Recent disclosures from the company indicate that ZEEL has also firmed up plans to foray into the film production through an existing Mauritius subsidiary, which would hold an 80 per cent stake in Zee Entertainment Studios. The company plans to divest a 20 per cent stake in the company to investors. The subsidiary would be an offshore one, along the lines of UMP (UTV’s motion picture division) and The Indian Film Company (Studio 18). ZEEL claims to have movies already in the pipeline for release in 2008-09 in multiple regional languages.

The foray into film production would add another dimension to the media conglomerate and the movies business will offer some synergies with its broadcasting business. While the business does have the potential for expansion, it is more risky and moves in this space will have to be closely monitored. TheHinduBusinessLine.com, 19th June 2008