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AFL faces cash crunch as big TV rights deal in limbo
AFL boss Gillon McLachlan faces a deepening drama if the league fails to strike a revised deal with broadcasters Channel 7 and Foxtel before the season restarts. And as the networks push for a payment cut due to COVID-19, the game’s finances could be hit hard .
The AFL is in danger of restarting its season without a TV rights deal in a deepening drama for league boss Gillon McLachlan.
Failure to strike a revised agreement with broadcasters Channel 7 and Foxtel before next Thursday night’s Collingwood-Richmond MCG clash will leave the game’s finances in a precarious position.
“There’s a lot of uncertainty,” an insider told the Herald Sun on Thursday night.
The networks are pushing for a reduction of about $150 million on their 2020 payments because the season has been compromised by the COVID-19 crisis.
The size of the TV shortfall will be crucial in determining cash distributions to all 18 clubs, the extent of staffing culls across the industry and pay for players.
It can also be revealed discounted payments for 2021 and 2022 are being sought by both broadcast partners.
The prospect of a two-year extension for seasons 2023 and 2024 also remains unclear.
“The various parties are nowhere near a deal on that,” the insider said. “The game has changed in the media world and peak sports rights are five years ago, really.”
Reports on Monday that Seven and Foxtel had withheld payments to the AFL were incorrect.
The league received a full payment last December and again in mid-March, meaning broadcasters have forked out two instalments for a single round of football.
The next payment is due in July. An AFL commission subcommittee, including McLachlan, former News Corp boss Kim Williams, Paul Bassat and Robyn Bishop, is leading the league’s negotiations.
Seven this week announced it was dumping its Monday night and Sunday morning footy review programs because of savage costs cuts, while Fox Footy and Kayo subscribers have been lost during the season shutdown.
Broadcasters are also concerned they have no clarity on the AFL fixture beyond Round 5, while a decision has not been made on what date or time of day the Grand Final will be played.
Rival code NRL, which relaunched its season last weekend, has already locked away an extended new TV rights deal.
Before the coronavirus, the AFL pocketed an average of $417 million a year in TV rights as part of a six-year, $2.5 billion deal with Seven, Foxtel and Telstra that expires at the end of 2022.
Google, Facebook and Amazon are not considered serious players in the race for the AFL’s broadcast rights.
Club chiefs are bracing for cuts in TV revenues of 15 to 20 per cent.
Hawthorn president and ex-Seven board member Jeff Kennett said last night: “It’s essential that we get a good price because if there is a reduction, every dollar it is reduced by will impact on the code — not only this year but will have a flow on effect next year — because of the borrowings that the AFL will have to undertake.”
RMIT sports marketing expert Con Stavros last month said the league’s media rights would take a hit in the post-COVID world, declaring the free-to-air networks were “not the money-making machines they once were”. Broadcast money accounts for about 62 per cent of the AFL competition’s total revenues.
CURRENT SIX-YEAR AFL TV RIGHTS DEAL
FOXTEL $1.3b
CHANNEL7 $900m (includes $60m contra)
TELSTRA $300m
TOTAL $2.5b
AVERAGE ANNUAL PAYMENT
FOXTEL $217m
CHANNEL 7 $140m (plus $10m contra)
TELSTRA $50m
TOTAL $417m
REVISED 2020 DEAL
WORST CASE 50 per cent payment — $208.5m total, $108.5m from Fox, $70m (plus $5m contra) from Seven, $25m from Telstra
TOTAL LOSS $208.5m
BEST CASE 75 per cent payment — $313m total, $163m from Fox, $105m from Seven (plus $7.5m contra), Telstra $37.5m
TOTAL LOSS $104m
https://www.couriermail.com.au/spor...o/news-story/1c7a9912eadf5bad063177a4def71c31
AFL boss Gillon McLachlan faces a deepening drama if the league fails to strike a revised deal with broadcasters Channel 7 and Foxtel before the season restarts. And as the networks push for a payment cut due to COVID-19, the game’s finances could be hit hard .
The AFL is in danger of restarting its season without a TV rights deal in a deepening drama for league boss Gillon McLachlan.
Failure to strike a revised agreement with broadcasters Channel 7 and Foxtel before next Thursday night’s Collingwood-Richmond MCG clash will leave the game’s finances in a precarious position.
“There’s a lot of uncertainty,” an insider told the Herald Sun on Thursday night.
The networks are pushing for a reduction of about $150 million on their 2020 payments because the season has been compromised by the COVID-19 crisis.
The size of the TV shortfall will be crucial in determining cash distributions to all 18 clubs, the extent of staffing culls across the industry and pay for players.
It can also be revealed discounted payments for 2021 and 2022 are being sought by both broadcast partners.
The prospect of a two-year extension for seasons 2023 and 2024 also remains unclear.
“The various parties are nowhere near a deal on that,” the insider said. “The game has changed in the media world and peak sports rights are five years ago, really.”
Reports on Monday that Seven and Foxtel had withheld payments to the AFL were incorrect.
The league received a full payment last December and again in mid-March, meaning broadcasters have forked out two instalments for a single round of football.
The next payment is due in July. An AFL commission subcommittee, including McLachlan, former News Corp boss Kim Williams, Paul Bassat and Robyn Bishop, is leading the league’s negotiations.
Seven this week announced it was dumping its Monday night and Sunday morning footy review programs because of savage costs cuts, while Fox Footy and Kayo subscribers have been lost during the season shutdown.
Broadcasters are also concerned they have no clarity on the AFL fixture beyond Round 5, while a decision has not been made on what date or time of day the Grand Final will be played.
Rival code NRL, which relaunched its season last weekend, has already locked away an extended new TV rights deal.
Before the coronavirus, the AFL pocketed an average of $417 million a year in TV rights as part of a six-year, $2.5 billion deal with Seven, Foxtel and Telstra that expires at the end of 2022.
Google, Facebook and Amazon are not considered serious players in the race for the AFL’s broadcast rights.
Club chiefs are bracing for cuts in TV revenues of 15 to 20 per cent.
Hawthorn president and ex-Seven board member Jeff Kennett said last night: “It’s essential that we get a good price because if there is a reduction, every dollar it is reduced by will impact on the code — not only this year but will have a flow on effect next year — because of the borrowings that the AFL will have to undertake.”
RMIT sports marketing expert Con Stavros last month said the league’s media rights would take a hit in the post-COVID world, declaring the free-to-air networks were “not the money-making machines they once were”. Broadcast money accounts for about 62 per cent of the AFL competition’s total revenues.
CURRENT SIX-YEAR AFL TV RIGHTS DEAL
FOXTEL $1.3b
CHANNEL7 $900m (includes $60m contra)
TELSTRA $300m
TOTAL $2.5b
AVERAGE ANNUAL PAYMENT
FOXTEL $217m
CHANNEL 7 $140m (plus $10m contra)
TELSTRA $50m
TOTAL $417m
REVISED 2020 DEAL
WORST CASE 50 per cent payment — $208.5m total, $108.5m from Fox, $70m (plus $5m contra) from Seven, $25m from Telstra
TOTAL LOSS $208.5m
BEST CASE 75 per cent payment — $313m total, $163m from Fox, $105m from Seven (plus $7.5m contra), Telstra $37.5m
TOTAL LOSS $104m
https://www.couriermail.com.au/spor...o/news-story/1c7a9912eadf5bad063177a4def71c31