Did Gallop sell us short?

[El Diablo]

yer

 

[Razor]

The dealwith the aflis for all gamesisnt it.. with nine being able to on sell the rest to other stations or pay tv...
so where does this leave the afl with pay tv...and how do the nrl compare when youn combine the revenue from news ltd and nine?

NRL is $500mil over 6 years Fox Sports and Channel 9 combined
AFL is $780mil over 5 years Channel 9. Channel 9 can on-sell upto 4 games per week to another station.

 

[greeneyed]

Channel 9 and the Packers have been paying under the mark for rugby league for years and years and will be continuing to do so during the rest of this contract.

 

[Green Machine]

http://www.smh.com.au/news/sport/packer-plays-his-final-card/2005/12/23/1135032184458.html
Packer plays his final card

By Roy Masters
December 24, 2005
THE AFL announced yesterday it had accepted a huge five-year, $780 million offer from Channel Nine/Foxtel to televise the game, turning the battle for those rights between a Seven/Ten consortium and the Nine/Foxtel camp into the final hand of a high-stakes game of show poker.

Seven/Ten, which holds the first-and-last offer rights, has 14 days to respond to what is clearly the richest TV offer to any football code in Australian history. The NRL, which agreed to new terms with Nine/Foxtel earlier this year, conceded the AFL offer was, in cash terms, $40m a year more.

Nine proprietor Kerry Packer, who loves a gamble, this week reacted instantly to a wildcard thrown by Seven late on Thursday when it put the management rights to Telstra Dome up for sale.

Packer's involvement, taking over from Nine chief Sam Chisholm, signals the stakes are now stretched possibly beyond the means of the players.

The $780m deal involves $80m contra, surpassing the $98m cash the NRL receives per year.

The AFL rejected an earlier Seven/Ten offer as inadequate, yet it is believed to be 25 per cent more than the cash component of the current deal. A Seven source said of his network's offer: "Five-hundred-million dollars cash over five years is not far out."

Although there is a $200m difference between the two offers, Seven/Ten still holds the best card in the pack and it's currently laid face down. Their first-and-last rights mean they only have to equal Packer's bid to win, but the bidding game, previously expected to be over by Christmas, will now extend past the new year.

A Seven insider admitted the offer to sell Telstra Dome's management rights to the AFL, as predicted in the Herald in March, was a distraction in the high-stakes game. The AFL, which will assume ownership of the Melbourne indoor stadium in 2025, is the only realistic buyer of the rights and its sale is consistent with Seven's policy of disposing of non-core assets.

Still, AFL chief executive Andrew Demetriou has admitted the AFL is interested in the management rights to a stadium where 50 AFL games will be played next year.

Assuming the clubs are willing to sacrifice $200m off the TV rights to acquire Telstra Dome, Seven concedes it could be integrated into the final contract if it takes up the rights.

The Nine/Foxtel bid, announced by AFL chairman Ron Evans yesterday, stunned Seven executives, who suspected Packer was playing a game of bluff designed to force them to pay over the odds.

They were confident the AFL would buy their commitment to develop the game in NSW and Queensland by televising it in prime time on Friday and Saturday nights. However, the AFL's acceptance of Nine/Foxtel as the preferred broadcasters signals they prefer dollars over their destiny.

A Seven source scoffed at suggestions that an additional $20m to the Sydney Swans would make any difference to development of the code in NSW, saying live national free-to-air viewing was the only way to achieve exponential growth of the code.

When the last AFL TV contract was done, a Nine/Ten consortium paid $44m a year and pay-TV kicked in $36m, with $10m contra. Foxtel judged this disproportionate, considering it screened only three of the eight games live, and when its plan to sell AFL on a separate pay-for-view platform failed, it compounded its bad deal. It is not thought Foxtel will contribute the same proportion this time unless it receives more games.

Nine's proposal splits the games four apiece. The Seven/Ten consortium proposes it televise five games and Foxtel three games.

The card Packer has up his sleeve is the amount Foxtel is prepared to pay. The AFL insisted on an eight free-to-air game bid, meaning the $780m price tag is for full weekend rounds from 2007-2011, with Nine aware of the commercial reality of what Foxtel will pay.

Should Seven/Ten match the bid, it will be forced to deal with Foxtel later to determine how much Foxtel pays it for its three games.

One of the most critical hands in the game was Saturday night. Seven/Ten's card saw live national coverage of 22 AFL games on Ten - all capital cities and all regional markets. This is an improvement on the existing agreement, where Ten broadcasts only Swans or Lions matches into Sydney and Brisbane on a Saturday night.

Nine has no NRL obligations on a Saturday night but is committed to ratings, unlike Ten, which doesn't care if SBS's The Iron Chef beats it in the Sydney ratings. Ten has traditionally preferred advertising revenue, confident it can grow the game.

Seven/Ten suspects Packer may have agreed to a 9.30pm start in Sydney and Brisbane and thrown in a wildcard of $10m-$15m as compensation. However, Seven/Ten understands the AFL will allow it to study Nine/Foxtel's proposed timeslots as part of its right to make the final offer.

The Friday night hand was never as important as Saturday. Nine is obligated to two consecutive NRL games in the northern states (where it could offer the Friday night AFL game to SBS) but can show AFL in the southern states.

Aussie rules lovers in NSW and Queensland would be able to watch games live on Foxtel or, more specifically, on the Fox Sports channel, which is 50 per cent owned by … guess who? Packer.

Pay-TV sport works only when the game is live, meaning Friday night could become a subscription driver.

Seven/Ten offered an early broadcast time on Friday nights in Sydney and Brisbane and confirmed live coverage in regional NSW, Queensland and the ACT.

Canberra and the Gold Coast are the battlegrounds of the push by the AFL to gain hegemony over rugby league but Seven/Ten would also show games live, or in early time slots, in future growth areas - Dubbo, the Sunshine Coast, NSW's northern rivers and Cairns.

One of Packer's favourite songs is Kenny Rogers's The Gambler. He's been known to warble:

"You got to know when to hold 'em, know when to fold 'em;

Know when to walk away and know when to run."

He's gambling that Seven/Ten will walk away or do its money on AFL. But it'll irk him if he doesn't hold the last card.

 

[Surandy]

They can't. 7/10 own the first & last bidding rights.

Ch 7 owns the first & last bid rights, I've seen no mention that the AFL are in any way obligated to accept the first or last bid though.

 

[El Diablo]

well if they match 9's offer and don't get given the rights the AFL will be in deep, deep poo

they've already offered better coverage

 

[Razor]

Ch 7 owns the first & last bid rights, I've seen no mention that the AFL are in any way obligated to accept the first or last bid though.

What do you think the advantage of paying millions a year for the first and last bid rights are?

If you own the last bidding rights you don't actually make a last bid. You just get the opportunity to match the winning bid decided by the organisation, if it wasn't you. So Channel 7 doesn't actually make a last bid. If they invoke their rights, they get the AFL for the terms of 9's winning bid. Channel 7 don't even have to show Friday and Saturday nights live in QLD & NSW which was in their prior bids. They just have to accept 9s conditions (exactly - if they want to pay more the AFL can reject them, but if 7/10 match the terms exactly the AFL has no choice). Channel 9 also can't reduce their bid to guarentee prime time coverage in QLD & NSW. If they do, the new conditions must be offered to 7.

You haven't seen it mentioned that the AFL is obligated to accept if Channel 7 invokes their last bid rights, because theres' no need to mention it. Because it's crystal clear and common knowledge. - Once the organisation has decided on a bid to accept, the terms must be offered to the owners of the last bidding rights. If they invoke their last bid rights they get it for the terms in the winning bid.

well if they match 9's offer and don't get given the rights the AFL will be in deep, deep poo

Yep the AFL will be in deepsh*t. Channel 7 will still be given the rights but at a vastly reduced price due to the massive compensation the AFL will have to pay. The AFL is already being sued by 7 for the prior rights deal, and that's a 50/50 decision. The AFL is going to hand Channel 7 a 100% certaintity court case win.

 

[Surandy]

What do you think the advantage of paying millions for the first and last bid rights are?

If you own the last bidding rights you don't actually make a last bid. You just get the opportunity to match the winning bid decided by the organisation, if it wasn't you. So Channel 7 doesn't actually make a last bid. If they invoke their rights, they get the AFL for the terms of 9's winning bid.

You haven't seen it mentioned that the AFL is obligated to accept if Channel 7 invokes their last bid rights, because theres' no need to mention it. Because it's crystal clear and common knowledge. - Once the organisation has decided on a bid to accept, the terms must be offered to the owners of the last bidding rights. If they invoke their last bid rights they get it for the terms in the winning bid.

Given the differing natures of the bidding consortiums it would be impossible for 7/10 to meet the exact same terms as Ch9 has offered.

 

[Perth Red]

Whichever way you look at the AFL is getting more money and just as importantly excellent coverage into non heartland areas. The NRL deal looks very shoddy in comparison.

 

[Razor]

Given the differing natures of the bidding consortiums it would be impossible for 7/10 to meet the exact same terms as Ch9 has offered.

Nope. Nine won the rights to all 8 matches with the right to sell upto 4 games if it wants. There is no guarenteed live or near-live coverage in QLD or NSW. 7/10 just have to match the offer for all 8 games with the right to sell upto 4 games. 7/10 no longer have to show both Friday & Saturday night live which was in their original bid.

 

[griff]

One of the reasons, which nobody has mentioned so far, is that the AFL rights are being awarded after the NRL rights. By waiting until last, they make it much more valuable.

That's why Nine were so keen to stitch up NRL rights so early on. That would mean Seven and Ten would be forced to pay massive amounts for the AFL rights or be left high and dry with nothing.

Nine's offer of $780m is way more than it is worth and would be loss making. But what it does is paint Seven and Ten into a corner and force them to pay over the odds. In a lot of ways it is a bluff. But even if Nine is called on the bluff, it will still be able to make a profit out of its NRL rights to offset the loss from the AFL. Ten and Seven won't be able to do this.

 

[nqboy]

The NRL still sold us short by not even considering rival bids.

 

[Perth Red]

I guess the problem is as long as the NRl is part owned by News Ltd they are not likely to allow the rights to be sold to a rival company that will then on sell a handful of games back to them at a hefty price.

There must be some monoply/ fair trading/ conflict of interest issue with News Ltd part owning the comp, negotiating the TV rights to itself then taking a slice of the agreed price back! only RL could get itself into such a mess!

 

[russ13]

Just a few unrelated points:

1) I said in an earlier post the total 2005 NRL GF audience was 4.321 million. It should have been 4.123 million (average not peak). The AFL GF had (as EA said) about 300,000 more viewers this year.

2) The AFL can not get 4 million plus viewers without the Sydney AFL team being a participant.

3) Roughly $100 million of the new AFL is contra & not cash. The extra cash the AFL will receive (more than the NRL) is about $20 million per year according to Roy Masters.

4) Those TV channels who have been screening AFL have been losing money except during the finals.

5) Queensland's population officially passed the 4 million mark in December.

 

[Green Machine]

I think there is a lot more in this saga to go. I would not be surprised that the AFL deal could not be done until the AFL was realised by C7 from court action and that is why it has gone on o long. 12 months ago, Roy Masters was saying the AFL would go first. I would not be surprised if control of Telstra Dome is not part of their AFL TV offer. Will the AFL prefer more cash to more coverage in NSW and QLD?

If Channel’s 7 & 10 do not match the offer, it will be interesting if AFL coverage on Friday or Saturday night in NSW and QLD appears on SBS at a very reasonable time.

Next week, I’m sure we will find out all the fine details, that the AFL would not elaborate on at their pre Xmas press conference, with their Channel 9’s proposed AFL coverage,

 

[Surandy]

If Channel’s 7 & 10 do not match the offer, it will be interesting if AFL coverage on Friday or Saturday night in NSW and QLD appears on SBS at a very reasonable time.

I thought SBS had already said they wouldn't televise AFL as it doesn't fit in with their charter.

Also, they get better ratings in Sydney by showing The Iron Chef.

 

[El Diablo]

they have

 

[jed]

If SBS knock it back (remember, they also said that they wouldn't televise The Ashes last year), Fox Sports will most likely televise the Friday night game, which would also work well for Ch 9 (PBL) as they own 50% of Fox Sports. Wouldn't do much for the folk that don't have Foxtel, they'd have to wait until 9 had shown the Friday double-header.

 

[Surandy]

If SBS knock it back (remember, they also said that they wouldn't televise The Ashes last year), Fox Sports will most likely televise the Friday night game, which would also work well for Ch 9 (PBL) as they own 50% of Fox Sports. Wouldn't do much for the folk that don't have Foxtel, they'd have to wait until 9 had shown the Friday double-header.

But The Ashes were held in a foreign country and was deemed to be of national interest and therefore able to be televised under their charter. The main roadblock to SBS showing the cricket was always the cost to purchase the telecast rights.

 

[El Diablo]

If SBS knock it back (remember, they also said that they wouldn't televise The Ashes last year), Fox Sports will most likely televise the Friday night game, which would also work well for Ch 9 (PBL) as they own 50% of Fox Sports. Wouldn't do much for the folk that don't have Foxtel, they'd have to wait until 9 had shown the Friday double-header.

SBS will not do it

Fox Footy would show it.