K&L Gates – We could not let the dust settle on 2015 without recapping the monumental upheaval the sports industry has experienced this year. ]
Not since Rupert Murdoch unearthed sport as a commercial “battering ram” for distribution platforms in his address to the News Corp AGM in 1996 and the English Premier League consummated its first-ever deal with Sky in 1992, have we arguably witnessed such transformational acceleration as in 2015. As we see it, 2015 experienced four major transformational influences neatly dividing into two distinct and colliding themes. The first theme centres around disruptive, positive change in the fast growing global consumption of sport and media proliferation.
The second, somewhat less positive perhaps, focuses on the dramatic, highly public rooting out of corruption and impropriety in sports governance and the increasing menace of media piracy.
Theme 1: Consumption and media –
The global conquest Chapter 1: Internationalisation of sports: An accelerating phenomenon The global market for professional sports is now estimated to be worth a staggering $145 billion per annum according to expert analysts, with a growth rate of 3.7%. It also seems that sports content is becoming ever more ubiquitous.
The public’s appetite for varied sports content is becoming insatiable and truly global. It is transcending the parochial, traditional geographic territories within which certain sports were played. Rights holders seeking to tap into this global phenomenon are looking with increasing guile to take their properties outside their traditional hinterlands. Perhaps the pioneers were the NFL and the NBA, who have been hosting regular-season games in Europe for some years now.
Likewise, English Premier League football clubs have increasingly travelled far and wide around the globe for pre-season tournaments, driven it seems as much by commercial opportunities, as by an opportunity to meet first hand their international fan base.
However, in 2015 it seems this trend has exploded to a whole new level. First, the NFL has signed deals with English stadia owners, Wembley and Tottenham Hotspur at its new stadium, that will see both of these venues host at least two games per year (at Wembley until 2020 and at Tottenham’s new ground from 2018 for 10 years). This would mean that, by 2020, the Jacksonville Jaguars would have played eight years in a row in London. In October next year, Twickenham will also host an NFL game.
There has even been speculation of an NFL franchise relocating to London or one day the Super Bowl being held there. Similarly, the NBA has continued to host pre-season games in cities such as Milan, Madrid, Shenzhen and Rio de Janeiro, with rumours of a future NBA European Conference persisting, driven we suggest in part by the huge popularity of its annual regular season game in London.
Other sports have also been following this trend, particularly in a trans-Atlantic fashion: the All Blacks played their first match at Soldier Field, Chicago to a sell-out 62,000 crowd last year; Premiership Rugby announced its first regular season game to be played outside England at the Red Bull Arena, New York next March; we recently witnessed Irish hurling at Fenway Park, Boston; and cricket’s All-Star Series in New York.
Finally, there is also the continuing pattern of cross-border partnerships and investment – Manchester City and the New York Yankees, Seattle and Saracens, and most recently the announced investment by Chinese consortium, China Media Capital, in City Football Group. 2015 has also been the year when a new disruptive trend to established thinking surfaced into the glare of the sports world’s vision; the spectating of “sport” played out on electronic media, in other words “eSport”. In 2015, according to Newzoo, it is estimated that there were 220 million eSport viewers, over half viewing more than once per month. They also predict that eSports revenues will grow to in excess of an eye watering $3 billion in 2020.
Chapter 2: Media Proliferation: Bonfire of the Technologies
Although sports media rights remain one of the last sacred tenets of “live” broadcasting, consumption of content by sports fans has been changing for a while. However, this has again seemingly been taken into a new paradigm in 2015. The way sports fans engage with their clubs, stars and sport is unrecognisable from not that long ago, due to the proliferation of new technologies, technology convergence and social media.
First, premium sports content today is acquired primarily by conglomerate media businesses, not technological silos often unable to leverage content fully in a multi-platform environment of yesteryear. “Triple” and “quad” play has commonly been the lingua franca of 2015.
Sky and BT’s battle in the UK for supremacy in the sports broadcast market seems to reflect this. For example, BT’s foray into sport, starting initially with its £738 million investment in English Premier League content (two packages and first picks), was to provide a “battering ram” for its own triple play package – BT Sport, BT Telephony and BT Broadband. What one might describe as the traditional broadcasters are fighting back with new strategies.
One of the more remarkable and groundbreaking deals in 2015 was Discovery’s full acquisition of Eurosport shortly after Europsport’s acquisition of the all platform Europe wide Olympic content rights from the IOC to the 2018-2024 Summer and Winter Games cycle. Internet businesses are also deepening their presence as viable alternatives to traditional platform distribution methods. The Wembley game in England this October between the Buffalo Bills and Jacksonville Jaguars was livestreamed internationally for free by Yahoo. Yahoo reported that it had 33.6 million total views and 33% of views were outside of the US.
The NFL is reportedly interested in providing such a package on a regular basis for its Thursday night games. The pace of change is frenetic. In 2010, smart phones apparently accounted for just 19% of all mobiles sales. Just three years later, we are told a staggering 1 billion units were sold. There are reports that smart phone sales increased worldwide by 13.5% in the second quarter of 2015. We have also read that there were 35.6 million tweets during last year’s FIFA World Cup semi-final between Brazil and Germany, which Twitter tweeted was the most-discussed single sports game ever on Twitter.
Second, new technologies are revolutionising both the quality and bandwidth available to fans across the globe. According to research, 60% to 70% of new television sets are 4K or Ultra HD and 80% to 90% of viewing sport still occurs on that platform. BT, for example, is running an Ultra HD service for its BT Sport Europe channel. Cloud technology has introduced itself into the fray. It seemingly offers the potential to cut production cost and enable faster delivery to more channels, with a corresponding increased monetisation of content.
Third, as mentioned above, fans’ engagement with sport through media and technology has been revolutionised. Social media is providing an intriguing, disruptive backdrop. Sports rights owners are grappling with how to engage with it and, therefore, their fans, whilst not undermining the value of rights they own. This year saw the acquisition of Periscope by Twitter, the now well known live streaming video app, which allows users to choose to broadcast a live stream publicly or to certain users only. A similar technology is Meerkat. For both of these, viewers can comment, see how many are viewing and can indicate their approval by “likes” or “hearts”.
Vine is yet another social media technology platform owned by Twitter, which is used for sharing sports related content. So whilst social media platforms expand the traction, brand and reach of sport as fans engage with friends, other fans, teams and individual athletes, by enabling the uploading of content they can also risk devaluing the rights sports owners own and exploit. This leads to a complex balancing act for rights holders with some difficult questions to answer. What should be encouraged or allowed? What is unlawful?
When is it right to take action and against whom? To respond to the challenge, most rights holders have strict ticketing and enforcement policies restricting reporters and fans from creating live broadcasting footage of matches, players or backstage action.
For example, the NBA’s and NFL’s ticketing conditions and press passes contain strict policies restricting these kinds of activities. Manchester United recently prohibited fans from bringing iPads into its stadium. On the other hand, we are witnessing rights holders trying to take control of the social media conversation. The All England Lawn Tennis and Croquet Club reportedly used Periscope during Wimbledon 2015, whilst banning spectators from doing so. MLB has also received positive press coverage by attempting to get in front of the curve by setting up MLB Advance Media to exploit the MLB’s online opportunities. It created MLB TV and the “AtBat” mobile app, which enable live stream viewing on computers and mobiles.
This has, apparently, been very successful with significant subscriber numbers and corresponding revenue generation. MLB is not alone in providing successful fan engaging content for the digitally savvy social media generation. “NBA League Pass” and the “NFL Now” app are two more illustrations. In November, Verizon was publicly announced as the Official Wireless Service Provider of the NBA, WNBA, NBA Development League and USA Basketball which includes go90 (accessible by mobile) providing highlights (which fans can share via various platforms), original and exclusive content and NBA League Pass access to out-of-market live games.
It is also interesting to note the trend of Wi-Fi build out in new stadia. For example, it is reported that the Levi Stadium (the San Francisco 49ers new home) not only provides four times greater bandwidth than the NFL requirement for 2015, but the upload speeds have been prioritised over the download speeds. If correct, that seems to suggest there is a focus on helping the social sharing of the live experience in the stadium.
Theme 2: Waving Goodbye to Corruption and Piracy?
Chapter 1: The corruption and piracy terminators The first lightning bolt in this theme was, of course, one of the world’s highest profile prosecuting agencies, the US Department of Justice, initially serving indictments on 14 FIFA officials, after a three-year FBI enquiry (16 additional FIFA officials were indicted on 3 December). FIFA has suspended both Sepp Blatter and Michel Platini and the Swiss authorities have accused Sepp Blatter of criminal mismanagement or misappropriation. This widened to allegations of corruption in relation to the award of the 2006 FIFA World Cup in Germany. Soon after, the German Football Association’s headquarters were raided by the German tax authorities.