On face value, the AFL’s eye-watering broadcast deal could have Peter V’landys reaching for something stronger than coffee, but there remains strained optimism at Rugby League Central.
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Rubbery figures, but AFL has 100 million reasons to gloat over TV deal
September 7, 2022 — 11.45am
We are accustomed to paying $6.50 for a cup of coffee but the inflation implicit in the AFL’s $4.5 billion new broadcasting contract does evoke images of the Weimar Republic when 1920s Germans loaded up wheelbarrows with Reichsmarks to buy a loaf of bread.
OK, the seven-year deal does end in 2031 but a 36 per cent uplift on the current contract of $473 million a year is a significant inflationary rise, given the AFL’s free-to-air broadcaster, Channel Seven, complained it paid too much for cricket and subscription network Foxtel is bleeding red ink. Industry sources insist the genuine annual payment the AFL will receive from Seven and Fox is $550m, compared to the $643m trumpeted by the code on its website.
AFL chief executive Gillon McLachlan details which games will be shown on Seven, Foxtel and on streaming services
Built into the deal is money from Telstra for the AFL-owned Marvel Stadium, plus contra. Foxtel does receive exclusivity of Saturdays for the first eight rounds, which will force dedicated AFL fans to subscribe to Rupert Murdoch’s pay TV service.
However, the “flip-flop” clause where fans in South and Western Australia can see games involving their home teams on free-to-air TV – while the rest of the nation watches another game on Seven – is largely retained.
Still, industry sources claim the AFL will receive $100m a year more than the NRL’s $450m, a significant gap considering the broadcasting incomes for the two codes were similar a decade ago, allowing for the AFL providing one more game per week.
The current NRL deal, believed to be $2.3 billion over five years, ends in 2027. It’s the closing year of this contract which accounts for some of the strained optimism at Rugby League Central when the AFL announcement was made Tuesday.
The new AFL deal does not start until 2025 which means, given that negotiations usually begin about two years before the end of an existing contract, the NRL will be going to market for its next contract at the time the latest AFL arrangement begins.
Colin Smith, Australia’s leading sports and media analyst, describes AFL and NRL as “must haves” for broadcasters, arguing that while the value for other sports will stabilise or decline, the media value of Australia’s leading winter football codes will rise.
Still, there was significant disquiet in NRL clubland Tuesday at the AFL announcement which came after MCG finals crowds of 80,000 and 90,000.
Some insist the NRL’s annual TV income of $450m is exaggerated, but the code did receive a record doubling of its international broadcasting fees last year.
The NRL extended its broadcast arrangement with Foxtel by seven years during the pandemic.CREDIT:WOLTER PEETERS
Others believe the annual gap with AFL is $170m, not $100m, if contra is removed from both deals. The AFL mega payment further incited the critics of ARL Commission boss Peter V’landys, who renewed the Foxtel deal in the middle of the COVID-19 pandemic, rather than wait until this year when the original contract expired.
The AFL extended their rights for just two years. V’landys awarded Foxtel a seven-year extension until 2027, believed to be for an annual payment of $300m.
It was done at a time there was no rival bidder, and he separated pay TV from free-to-air, meaning that when Nine later renewed with the NRL, the owner of this masthead was in a one-horse race.
By contrast, the AFL orchestrated an auction, offering both pay and FTA rights, forcing Seven and Fox into sometimes fierce competition with each other. It also attracted bids from Channels Nine/Stan and Ten/Paramount, producing the competitive tension which forced up the price Seven/Foxtel initially offered and even exceeded the AFL’s own estimations.
Furthermore, V’landys agreed to greater COVID discounts to Nine/Foxtel than the AFL conceded. Nine subsequently used the savings to pay $100m over three years to secure the rights to NRL rival, rugby union. Nine also recently announced record profits for its broadcast division.
The NRL also effectively surrendered their digital platform to Nine/Foxtel, dismantling their only point of future leverage with broadcasters.
However, in an age of transparency, there is a crucial point of difference between the AFL and NRL. The AFL declare their TV contracts (albeit with add-ons), while the NRL have not disclosed broadcast income in audited accounts since V’landys made his exclusive deal with Foxtel back in the days when a coffee cost $4.
