Sports: The Golden Investment in Times of Crisis
In the world of money and investment, there is the Golden rule: Gold prices tend to increase during times of economic and political uncertainty, or at least never lose their value against growing inflation. In other words, it guarantees less risk and more stability for investors, and very rarely does Gold decrease in value.
SNF Stadium
If we draw a parallel between the investment and broadcasting world, the equivalent of Gold in the TV world is Sports. The value of the rights never goes down and its popularity is relatively stable if not even growing from season to season. Television channels and streamers can always rely on “guaranteed” results when they hold a certain portfolio of sports rights, and amid constantly dropping viewership this becomes more and more important. Budgets might be reduced in other areas, but not when it comes to Sports, and oftentimes the success of certain streaming and broadcasting businesses in certain markets largely depend on the sports events that they offer to their viewers/clients.

This dependency is most pronounced in a market like India where the IPL costs billions (recently sold for $2.6 billion for streaming and $3 billion for linear TV), but also affects the overall performance of giants like Disney and their strategic decisions on a global scale. In smaller markets, like the Netherlands, holding certain rights is the only reason for the existence of certain market players, like ESPN (thanks to the Eredivisie) and Viaplay (thanks to the Formula 1).

Besides ratings for the TV channels, Sports means steady cash income for streamers. A recent study by Toluna in the U.K., showed that Sports drives streaming subscriptions up, with 80% of respondents saying that they are ready to pay more to keep their access to sports events. It was also found that the average viewer spends £270 per year (about $340 per year) to watch live and time-shifted matches, mostly on satellite TV platforms. At the same time, around one-third of British streamers said that they are cancelling subscriptions to general entertainment services. This makes Sports “one of the most-resilient forms of entertainment on television”.

Following this rule, both Disney and Warner Bros. Discovery are looking to beef up their streamers with more live sports as Americans have started spending less on SVOD services in recent years. According to a fresh study by Parks Associates, the monthly spending on streaming subscriptions has declined 25% from $90 in 2021 to $73 in 2023, with more people moving to ad-supported platforms as streaming costs increase across the board due to the rising inflation.

Rugby on TF1

However, Sports has once again proven its Golden value in the U.S. The recent arrival of Lionel Messi in the Major League Soccer meant a more than double increase in subscribers for Apple TV’s MLS Season Pass between July and August this year. According to media reports, the MLS Season Pass counted around a million subscribers before Messi’s arrival. Apple is reportedly paying $250 million a year for the MLS broadcast rights which is a relatively small price when compared to the Big 4 Sports in the U.S. For comparison, last year each NFL team cashed in $372 million from national media rights, league sponsorships, merchandising and licensing, according to Forbes.

Apple is now reportedly looking into a multi-billion deal for the Formula 1 rights which could largely affect broadcasting and streaming markets on a global scale. However, there are a just a few “commodities” that can have such an impact and proven value.

The NFL remains the absolute champion in this respect as it scored an all-time high $11.9 billion (climbing up to $20 billion from non-NFL events) revenue in 2022, up 7% compared with the previous year. When it comes to media rights thru the next 11 years, Forbes estimated the following numbers: NFL - $12.3 billion; MLB - $5.2 billion; NBA - $3 billion; and NHL - $1.2 billion. For comparison, during the 2021/22 season the Premier League generated £5.5 billion ($6.73 billion) in revenue, £3 billion ($3.67 billion) of which came from broadcasting rights. In other words, the value of the most popular soccer championship in the world is only half the value of the American football championship which also has a two times shorter season, and much less revenue from international TV rights compared to the Premier League which is literally broadcast in every corner of the world.

U.S. national media rights make up about 67% of the league’s total football-related revenue, according to Forbes. There is a good reason behind this as year after year the NFL continues to deliver new audience records to the struggling U.S. TV networks. At the start of the current 2023 season all NFL broadcasters, from Amazon to ESPN and NBC, reported a record interest for their live broadcasts. The first Sunday Night Football match scored 27 million viewers, up 24% over the previous season opener, while on the next day the first Monday Night Football on ESPN (also shown on ABC) became the most-watched MNF ever with 22.6 million viewers. (For comparison, the big entertainment shows in the U.S. now get no more than 6-7 million viewers.)

Premier League Trophy

Clearly, there is no other similar example with any other type of championship across the world. The success of the NFL can be explained easily with the very rules of the game which guarantee “drama” in almost every game and during the whole season, which lasts only 18 weeks and naturally “explodes” during the Playoffs and shoots into space for the Super Bowl. For comparison, the NBA teams play 82 regular games within almost 8 months, and there are 38 regular games for the Premier League teams from September until May. In other words, the NFL is much easier to schedule during the TV season in order gather a large audience as most games are played on Sunday nights. The games in all other sports are spread over different days across the week and thus miss this “audience build-up” effect for most of the season.

On the other hand, the scheduling of games on different days and in different timeslots gives the Premier League the ability to fully monetize its broadcasting rights on an international scale. But that policy makes the domestic rights too expensive for the national broadcasters because they are not able to gather audiences that are large enough to generate ad revenues similar to those of the U.S. networks. Thus, for many years already, the top European soccer leagues remain mostly “niche”, in primetime or daytime.

However, as viewing numbers continue to drop across the board the traditional broadcasters become more willing to “risk” and acquire rights to important sports events that guarantee regular and hefty audiences for their advertisers. We observe this more and more now, especially in Europe, where sports events regularly top the annual viewing charts. Thus, in Germany RTL “stole” the NFL from ProSieben this year and continued to invest in live football from the UEFA competitions. In France, the TF1 Group is betting heavily on rugby which leads the primetime any time it airs on free TV.

This trend is even more pronounced in smaller markets like Denmark where this year TV 2 scored 1.8 million viewers for the Tour de France, while DR got 800.000 streaming users for Wimbledon. (For comparison, now a show like Dancing with the Stars barely gets half a million viewers on Friday night). With handball and soccer, the streaming services of the public broadcasters continued to break linear streaming records in 2023.

Still, there are executives who believe that Sports is better on cable TV than on-demand, or on free TV. “Right here, right now, the most effective way for a consumer to receive sports and news is still the bundle, and the most effective way to monetize our content remains the bundles,” Fox Corporation Chief Financial Officer Steve Tomsic said during the Bank of America Media, Communications, and Entertainment Conference. “It’s incumbent upon us to get a higher share of wallet from those distributors in order to justify the fact that we remain in that bundle,” said Tomsic, as Fox looks set to remain the only big U.S. player without a dedicated sports streaming service. Earlier, CEO Lachlan Murdoch said cable “drives value of Fox Sports and will for a long time to come.” According to its most recent earnings report, the network stands firm as revenue streams bring in $3.03 billion.

NFL- Rams-Broncos

One thing is certain, Sports is one secure investment for the future of broadcasters and streamers alike and its value will only continue to grow. However, as prices increase these players will start prioritizing their budgets and portfolios which will mean that a lot of leagues will be left out and start experiencing real financial troubles. Even big leagues like the Serie A and Bundesliga are currently feeling this, as the former has still not closed a deal for the next five seasons (from 2024) in Italy due to “low” bids, while the latter recently reported that it is missing around 640 million euros from international TV rights per season. ′
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