Double or nothing: Why the NRL TV rights are worth $1 billion

[Tom Shines]

Another fine article by Roy, but i think there is alot of wishful thinking in there.

Roy implies that AFL games and NRL games should be worth the same, but AFL games run 50% longer and have alot more oppurtunities for ads...probably not double an NRL game but not far off.

So if you have an AFL game and an NRL game with the same amount of viewers, should advertisers pay double for the NRL ad?

The only way that an NRL game is going to be as valuable as an AFL game is if we extend it and chock it full of ads....which is not worth it i reckon.

Basically, what has changed from last time? We have the Titans, but we were hardly struggling in South East Queensland previously, the Broncos are the biggest sporting commodity in the country.

The AFL is going to have 2 new teams in Sydney and Brisbane, in exactly the places where they are very weak. They are going to have 9 games a week to sell, and they will still have an open bidding process.

What are we going to have? What has changed for us? It seems like they have improved their television product while ours has stayed the same.

I think we are in for a shafting, and the AFL is going to get another ocean of money to swim in.

Hi Roy.

 

[Perth Red]

I reckon only hope we have is if we bring in Perth and another Q'land team. Anything else isn't going to add much value wise to the TV rights. I wouldn't be adverse to 4 quarters as long as we reduced the subsitutes to 3 and subsititutions to 6.

Having said that any massive tinkering of the rules like this would require International agreement imo.

 

[Phil McGrawhan]

Another fine article by Roy, but i think there is alot of wishful thinking in there.

Roy implies that AFL games and NRL games should be worth the same, but AFL games run 50% longer and have alot more oppurtunities for ads...probably not double an NRL game but not far off.

So if you have an AFL game and an NRL game with the same amount of viewers, should advertisers pay double for the NRL ad?

The only way that an NRL game is going to be as valuable as an AFL game is if we extend it and chock it full of ads....which is not worth it i reckon.

Basically, what has changed from last time? We have the Titans, but we were hardly struggling in South East Queensland previously, the Broncos are the biggest sporting commodity in the country.

The AFL is going to have 2 new teams in Sydney and Brisbane, in exactly the places where they are very weak. They are going to have 9 games a week to sell, and they will still have an open bidding process.

What are we going to have? What has changed for us? It seems like they have improved their television product while ours has stayed the same.

I think we are in for a shafting, and the AFL is going to get another ocean of money to swim in.

I have said it before ...It does not matter how many games of fumbleball are on a week or how long they go for IF HARDLY ANYONE IS WATCHING.
55% of our population live in QLD & NSW yet they are lucky to get 100,000 people watching ...Geez thats advertising $$$$$ well spent ...
Check the ratings thread...When the Swans play in SYD THEY CONTINUALLY RUN LAST IN SAT NIGHT RATINGS.
Beaten by reruns of 30yr old movies & reruns of Japanese cooking shows.
SO why would you pay big money for something that in the largest viewing market has very few viewers?

 

[Dogs Of War]

I think having 20 minute quarters, similar to what they do in March with Queensland games, where they stop play for 2 minutes, and have a drinks break, and then start play again from where it stopped could be a good addition, adds 8 ads to the telecast, thus making sure we maximise the advertising potential, but don't affect play as much. Could also have 2 less interchanges due to it, as there is a built in rest period for both teams in the match.

Though I do feel adding teams to our stronghold areas is the key, another Queensland team is a must, and one to an expansion area like Perth, so we are opening a new market, but also solidifying an existing one. This is the sort of thing that will cause the AFL to fail, as they will be fighting an uphill battle to change the hearts and minds of the dominate sport in the region.

 

[Ray Mosters]

I have said it before ...It does not matter how many games of fumbleball are on a week or how long they go for IF HARDLY ANYONE IS WATCHING.
55% of our population live in QLD & NSW yet they are lucky to get 100,000 people watching ...Geez thats advertising $$$$$ well spent ...
Check the ratings thread...When the Swans play in SYD THEY CONTINUALLY RUN LAST IN SAT NIGHT RATINGS.
Beaten by reruns of 30yr old movies & reruns of Japanese cooking shows.
SO why would you pay big money for something that in the largest viewing market has very few viewers?

Well because they dont pay for just that market, they pay for it overall of course. You dont just pay for places where it rates poorly, you pay for where it dominates.

In fact, the poor AFL ratings in Brisbane or Sydney are a DRAIN on the value of the rights, because the broadcasters are FORCED to show the AFL in good times. They would much rather bury it or not show it at all, as they do with RL outside Sydney and Brisbane

Just look at Friday night...we split games, and the first game timeslot is something like 750k a week. The second game is about 500k, for a total of 4 hours. The AFL has one game on Friday night which averages 700k for 3 hours.

So we make alot more money on Friday night.

The problem is, the AFL then has 7 more games to show for the rest of the weekend, which is 21 hours of football. In a couple of years with the new teams this will be 24 hours.

The NRL has only 6 games left, 12 hours for the rest of the weekend.

Tha AFL is simply selling alot more product. What would you prefer to have, a product that dominates Sydney for 16 hours, or a product that dominates Melbourne for 24 hours?

 

[Ray Mosters]

I wonder if there is a way for us to take advantage of the fact that we have alot fewer ads, rather than simply adding more. I cant think how though.

I would support Dogs of Wars suggestion, having 2 minute breaks in the middle of each half, would be OK

I wouldnt want much more than that though.

 

[Dogs Of War]

I wonder if there is a way for us to take advantage of the fact that we have alot fewer ads, rather than simply adding more. I cant think how though.

I would support Dogs of Wars suggestion, having 2 minute breaks in the middle of each half, would be OK

I wouldnt want much more than that though.

Yeah no more than that. You could also control other elements, with time off immediately after a try, give the kicker 2 minutes to take a kick (well time off for it), and run ads (min 2 ads, maybe 3), and then return to the action with enough time to show the kick or kick replay, and get back on with the action.

This also has the bonus of making more time on the field for action, thus making the game go longer as well, providing more opportunity for ads where possible. Other areas could be 40/20's automatically stopping time (thus increasing the reward for doing them), and scrums only being set after a ball has gone out, 30 secs afterwards, to allow an ad. It would require some fine tuning, but it's not out of the question to maximise the product for TV.

Some elements would be going to far, and really it should start with simple elements like quarters, and 2 minutes for a kick. That would increase the TV stations revenue immediately, and thus the NRL's revenue as well.

 

[Ray Mosters]

Yep, with a bit of good timing even just 30 seconds can contain an ad. The key is to try and get a balance.

This actually has a follow on effect of making the Foxtel product more valuable too, because they can not show these ads and instead stick to try replays, and commentary during the quarter breaks. Diehards then prefer foxtel because of that.

 

[Lambretta]

The length of the half time, breaking the game into quarters, the opportunities for ads etc etc etc will do nothing to increase the revenue that Rugby League earns from it's TV rights.

If we go to quarters - that will mean extra ads for the broadcaster - but they wont pay extra to earn it. We'll be f**king our game up for the benefit of someone else.

The ONLY thing that will drive up the price of the TV rights is a bidding war.

If Seven and Ten stay out of the race - then Channel 9 will do their usual deal with Foxtel and we'll get whatever scraps they decide to throw our way.

 

[Dogs Of War]

The length of the half time, breaking the game into quarters, the opportunities for ads etc etc etc will do nothing to increase the revenue that Rugby League earns from it's TV rights.

If we go to quarters - that will mean extra ads for the broadcaster - but they wont pay extra to earn it. We'll be f**king our game up for the benefit of someone else.

The ONLY thing that will drive up the price of the TV rights is a bidding war.

If Seven and Ten stay out of the race - then Channel 9 will do their usual deal with Foxtel and we'll get whatever scraps they decide to throw our way.

By having the broadcasters able to generate more income from the broadcast means they can afford to go higher in a bidding war. It's a fine balance of how far is too far, but some concessions need to be made to maximise the dollar. There will be no bidding war if they don't believe they can make there money back and then some. Something maybe to look at next year as a freebie, so we can actually start getting the broadcasters interested in our product, before actual bidding can be started. Once the sums are done, I am sure we would see the value of the rights go up very quickly.

 

[1 Eyed TEZZA]

On the Footy Show last year, some one suggested that if we extended the game to 100 minutes, 25 minute quaters, then we would have 20% extra opportunity for extra revenue. Its a bit extreme, but it would get us what we need, more money. But if we are to do something that extreme, it must be announced soon, so that channel 7 and 10 get intereseted and want to have a crack at the NRL TV Rights. If they did get interested, it would in turn lower what ever deal they are willing to offer the AFL.

Granted for that to happen we would have to get approval from the RLIF first.

I know that alot of people are going to poo poo this thought, but If you are going to do that, please offer your own idea aswell.

 

[LeagueXIII]

More money. How about we grow our audience in SA, Victoria, WA etc.

Surely it isn't about ads it's about reach ie the more people watching the more money you can expect. Soccer (international) doesn't have heaps of breaks for ads but has a large audience.

 

[Baron Vo Mandor]

The only problem is that AFL are going to start negotiating their new contract later this year. The NRL do not have permission to negotiate their next contract until mid-2010. Channel Seven & Ten's money will most likely be tied up well and truly by the time we get to negotiate.

So guess who that leaves us with?

We're getting nowhere near that figure. We'll be lucky to get an increase.

You've hit the nail on the head Alex28.

 

[Edwahu]

I expect the AFL will not be able to force stations to show games in non heartland states if it wants to get simmilar cash. It would be a tremendous drain on the stations at the moment.

As for how we could get more cash, maybe we could sell more games to FTA, including Toyota Cup. Based on Fox ratings the interest is there to get a better deal for it.

 

[Dogs Of War]

Originally Posted by Alex28
The only problem is that AFL are going to start negotiating their new contract later this year. The NRL do not have permission to negotiate their next contract until mid-2010. Channel Seven & Ten's money will most likely be tied up well and truly by the time we get to negotiate.

So guess who that leaves us with?

We're getting nowhere near that figure. We'll be lucky to get an increase.


You've hit the nail on the head Alex28.

Yeah, this is where the NRL needs to be creative. You have to review how we using the product, thus the discussion around how we can offer something now to Channel 9, that will increase the value of the product, and get the other stations interested before the NRL rights can be negotiated.

2 minute break at the 20 min mark is one way, and time off for all goal kicks with a 2 minute timeout for them, could both be ways of doing this without hurting the action on the field. This then allows a few more ads, thus increasing the broadcasters return on investment, and allowing more money to be allocated for the NRL rights.

 

[Lambretta]

By having the broadcasters able to generate more income from the broadcast means they can afford to go higher in a bidding war. It's a fine balance of how far is too far, but some concessions need to be made to maximise the dollar. There will be no bidding war if they don't believe they can make there money back and then some. Something maybe to look at next year as a freebie, so we can actually start getting the broadcasters interested in our product, before actual bidding can be started. Once the sums are done, I am sure we would see the value of the rights go up very quickly.

For a bidding war to occur, you need two parties to be bidding against each other.

If Nine is the only broadcaster - what you have is Rugby League making growing concessions towards the broadcasters demands in begging for more money. Channel 9 is in the position of power, not Rugby League. It's a 1 way street and the only benefactor is the broadcaster.

For every 10 things we give them, they'll give us 1 thing back in return. That's what you get when you're forced to beg.

Channel 9 needs to know that it can build in additional revenue - therefore they will cushion margins in a changing World. We cant assume that x minutes of ads = x $ in income - and nor can Channel 9.

If we start offering increased advertising space you can bet that Channel 9 will start to argue that they currently get $1,000 per minute for example. But with "falling revenues etc" they'll offer us $600 per minute - so even doubling the advertising space we give them - the game will end up only getting a small raise in income.

We really need 7 & 10 to get together to make a joint bid against 9. It doesnt matter if they're serious or not - we need it to get the $ up.

We need the NRL to start pushing the other Channels to come to the party and try and fight for rights. But the NRL isnt going to do this whilst it is owned by Foxtel. It doesnt make sense for them to do so.

This is why the game needs to own itself - before we start offering changes to broadcasters such as four quarters or 20 minute half times or any other ideas that have the potential to damage the game.

 

[hutch]

the $1 billion is not unrealistic, we are worth that much but the lack of competition and weak leadership may mean that we wont get that amount.

along with an improvement in cash per year, the two other most important results is game shown nationwide at prime time, not just nsw and qld as it is currently, and that nrl, origin and test matches are all broken up and sold seperately, perhaps across different networks. imagine the fuss that would be made if 7 or 10 got the rights for origin, they would promote the hell out of it.

i cant see another station bidding for the nrl, but i can see them putting their hand up for origin and perhaps test match rights.

 

[Billythekid]

the $1 billion is not unrealistic, we are worth that much but the lack of competition and weak leadership may mean that we wont get that amount.

along with an improvement in cash per year, the two other most important results is game shown nationwide at prime time, not just nsw and qld as it is currently, and that nrl, origin and test matches are all broken up and sold seperately, perhaps across different networks. imagine the fuss that would be made if 7 or 10 got the rights for origin, they would promote the hell out of it.

i cant see another station bidding for the nrl, but i can see them putting their hand up for origin and perhaps test match rights.

Origin really is one of our big draw cards. It's like we have 4 GF's every year surely that must have a pretty big impact on our tv deal compared to AFL.

Hopefully the International game keeps improving so that it becomes a draw in itself much lie origin is now.

 

[Dogs Of War]

Channel 9 needs to know that it can build in additional revenue - therefore they will cushion margins in a changing World. We cant assume that x minutes of ads = x $ in income - and nor can Channel 9.

If we start offering increased advertising space you can bet that Channel 9 will start to argue that they currently get $1,000 per minute for example. But with "falling revenues etc" they'll offer us $600 per minute - so even doubling the advertising space we give them - the game will end up only getting a small raise in income.

We really need 7 & 10 to get together to make a joint bid against 9. It doesnt matter if they're serious or not - we need it to get the $ up.

We need the NRL to start pushing the other Channels to come to the party and try and fight for rights. But the NRL isnt going to do this whilst it is owned by Foxtel. It doesnt make sense for them to do so.

This is why the game needs to own itself - before we start offering changes to broadcasters such as four quarters or 20 minute half times or any other ideas that have the potential to damage the game.

I understand what you are getting at, my push was to say that the NRL can help itself, and get the other stations interested by offering better value.

Channel 9 then can't get away with saying that more ads equal minimal revenue increase, as you get the other 2 stations interested in telecasting the sport. I am sure there is a good chance that if the AFL rights don't go any higher (as they were overvalued last time), that Channel 7 may have a go at the rights themselves, as ultimately they want to be the AFL station. This will mean that Channel 10 can be part of the bidding.

Other options as have been outlined, is separating the products into NRL and ARL products (Tests + State Of Origin). This then means that bidding is more accessible for each station, as the commitment they make for each product telecast wise is a little less.

 

[Ray Mosters]

Yeah, its not so much a case of 10 and 7 showing interest, because they always show interest. Its more a case of being allowed by the NRL to show serious interest.

Its a closed market for the time being, the seller is News and the buyer is News. As long as News is in the game for 50% 9 and Foxtel are only ever going to be the ones telling the NRL how much the NRL is worth.

I dont know, C7 did make a bid for the rights.... how possible is it that 7 and 10 will be allowed to bid? Im sure they would like to make one just to push up the cost for 9

Its kind of worrying that the AFL is deciding their rights agreement first, it doesent really bode that well for us... if 7 and 10 win it, then 9 will have forced the price so high that they wont be the slightest bit interesting in bidding for the NRL rights, even if they are allowed too.

If 9 wins it, and with alot of their money wrapped up in the Olympics, they could cry poor, and if they are allowed to prevent interest from 7 and 10 being seriously considered, they could REALLY shaft us.

My money is nothing changing, no anti-siphoning law changes, no changes in the broadcaster landscape, no changes to the structure of the NRL ownership, im betting they get a free and open bid process and us getting shafted again