TV deals to reward wealthiest footy clubs
Daniel Ramus
August 29, 2010
A LIKELY $2 billion from the next AFL and NRL television rights deals is set to deliver an unprecedented boost to the brand value of the top clubs from the two codes, The Sun-Herald has found.
A list of the 10 most valuable football clubs in Australia across Australian rules, rugby league, rugby union and football, compiled by entertainment and trademark lawyer Wayne Covell of worthyofthename.com, highlights the critical role of television exposure in adding value to a club's brand.
For example, Covell's list attributes a value of $263million to Collingwood with $87.9million of that due to television revenue and audience projections.
In the NRL, television revenue and audience figures are also vital. Of the $169million value applied to Brisbane Broncos, $89.2million can be attributed to television weightings. For the Parramatta Eels, television revenue accounted for $86million of the club's value of $141million.
Interestingly, on a table compiled by brand analysis specialist Repucom International, highlighting the cumulative television audience of all football clubs in Australia across the four codes for 2009 on free-to-air television and Fox Sports, the Broncos are No.1, the Eels are No.2, and Collingwood are No.3.
The AFL's television deal, which expires at the end of next year, is worth $780million while the NRL's television deal, expiring at the end of the 2012 season, is worth $500million. Both codes will be looking for $1billion from their next deals.
Covell emphasises the central role television plays in his valuations.
"The size of the television deal has a huge impact on the football team valuations," he says.
"A large slice of the television fees paid are attributable to a team's viewership. Their audience drives sponsorship, advertising and merchandise deals."
With the NRL's potential to double the value of their current television deal, and the AFL set to increase its deal by $220million, it's interesting to compare their numbers to the English Premier League - its television deal is worth about $5billion, confirming its stature as the biggest football league in the world.
NRL chief executive David Gallop says he does not have a target price in mind for his code's next television deal, but feels the game has put forward a strong case to potential broadcasters.
Gallop told The Sun-Herald: "Our expectation is to get an increase in TV revenue that reflects the game's standing. We have not set a dollar value on that but we believe we have compelling content for any broadcasters and our ratings consistently reflect that."
He said the NRL was doing everything in its power to secure the best deal. "It is an enormous opportunity,'' Gallop said. ''It is unquestionably our biggest single revenue source so it plays an important role in growing the financial strength of the game and in helping the game reach as many people as possible. I don't think anyone is underestimating the significance of the next broadcasting deal."
AFL chief executive Andrew Demetriou says his code isn't in a battle for the same television money as the NRL, despite having signed NRL players Karmichael Hunt and Israel Folau.
"We do not believe we are competing for the same television dollar in our next round of TV rights negotiations," Demetriou says.
Covell's list comes after the release last month of Forbes magazine's valuation of the world's top 10 sporting franchises.
Manchester United topped the Forbes list, with a valuation of $2billion.
The total value of Australia's top 10 football brands is $1.8billion, which is about the value of the New York Yankees baseball team, which Forbes ranked as the world's third most valuable sports team.
Calculating the value
1. The top 10 list is based upon six key indicators - television rights, sponsorship, merchandise, hospitality, membership and ticket revenue projections for the next five years.
2. Four football competitions were considered: AFL, NRL, Super Rugby and the A-League.
3. The figures do not take into account revenue from gaming or poker machines, or club operating expenditure.
4. Each valuation is based upon the value of the sports team to the trademark owners (AFL or NRL) and the franchisee (the club).
5. AFL and NRL TV deals will be renegotiated in 2011 and 2012. Each is reported to be worth $1billion or more over five years.
6. The clubs' proportionate share of TV deals is based on Television Audience Comparison figures provided by Repucom International.
