Will soccer stay a ‘killer app’?
According to recent reports, there are more than 50 pure sports channels broadcasting in Europe, almost all available on satellite and cable. Most of the 50-plus sports and sports-related channels available in Europe feature football somewhere, sometime. Soccer continues to capture the imagination of all sports fans. Its star players can achieve Hollywood-type fees for their services.
In April 2001 Manchester United Football Club agreed to pay GBP19 million ($28.5 million) in transfer fees to acquire Ruud van Nistelrooy from PSV Eindhoven in the Netherlands.
European clubs have also started paying huge sums for talented players originating from Asia. Arsenal paid more than $5 million for Japan’s Junichi Inamoto. AC Parma in Italy paid $26 million to rivals AC Roma for Hidetoshi Nakata, another Japanese player. Meanwhile, Feyenoord in the Netherlands paid $2.6 million for Shinji Ono. The presence of some of Japan’s most popular players in the European teams also enhances the possibility of selling matches featuring these players to Asian broadcasters. Soccer is not just a big local TV business, it is a big international TV business.
Despite investing in Nistelrooy’s on-pitch skills, Manchester United has not had the best of seasons, but it still managed to top last week’s soccer “rich list” table from Deloitte & Touche/Sports Business Grp, helped by a stunning GBP117 million in revenue for its 1999-2000 season. Real Madrid came second with GBP103.7 million.
Europe’s biggest football teams are planning to launch and operate their own club-branded TV and radio channels. The trend was triggered in 1998 when the UK club Middlesbrough introduced Boro TV, a cable-delivered channel, to its fans. Manchester United, the world’s most successful and affluent football club, followed later the same year with MUTV, a joint venture owned by the club, BSkyB and Granada Media Group (a major UK terrestrial broadcaster). In France, the Olympique de Marseille team followed suite with OMTV, which kicked off in January 1999. A month later, Spanish viewers were introduced to Real Madrid TV.
Since then, other European football clubs have been exploring how to bypass existing broadcast structures when existing contracts expire. More club-based channels will emerge, says the report, helped by developments in digital TV and broadband that offers TV quality viewing. Media groups have also fuelled the activity by directly investing in football clubs. BSkyB has minority shares in Chelsea, Leeds United, Manchester City, Manchester United and Sunderland.
Cable outfit NTL has invested in English clubs Newcastle United, Aston Villa and Leicester City. French pay-TV group Canal Plus, now a subsidiary of Vivendi Universal, has stakes in Paris St Germain (PSG) and Swiss team Servette de Geneve. In fact, Canal Plus has been forced to deny rumours that it is to acquire OMTV from Robert Louis-Dreyfus, president of sports goods giant Adidas-Solomon. UFA Sports, the German sports rights company belonging to media giant Bertelsmann, has a stake in Italian club Sampdoria.
The question Juliana Koranteng poses is whether there is a future for these stand-alone services away from the highly successful mixed genre pay-TV channels. Soccer clubs, having reaped the benefits of local pay-TV income are reckoning on distant markets to keep their coffers full. “The global appeal of football is indisputable. A phenomenon that has emerged in the last five years is the global appeal of local clubs such as Manchester United, Spain’s Real Madrid and Barcelona, and Italy’s Inter Milan. Several successful European clubs want to form the breakaway lobbying G14 Group. They argue that their success, domestically and internationally, has formed the foundation of what makes European football the most exciting sport on TV today,” says Koranteng.
She adds that broadcast signals, whether via TV, radio and – in future – broadband Internet services, are powerful ways of accessing consumers. “But in today’s more business- oriented environment, that achievement is no longer enough. Several of these clubs need to win new fans at home and abroad to generate the income to maintain high performance standards. TV and the Internet are powerful tools for attaining these goals.” She argues that clubs will need to sustain millions of dollars in investment losses “for another decade before even one becomes profitable.”
There’s another risk. “With the growing options of media platforms and services in the European market, will fans be happy with an inept broadcast service, even if no one else was offering a channel dedicated to only their team?” she asks. The report points out that while clubs with limited services (delayed match reports, exclusive player interviews) are a step in the right direction, “Some will then take on greater challenges, such as offering branded interactive TV games. Others might, mistakenly, even diversify to also offer non club-related content to boost subscribers as their original business plans collapse. By 2010, the successful will have established what works and offer profitable services.”
She predicts a certain inevitability about the process. “The long-term potential of marketing directly to fans via their own TV channel and generating extra income is too good to ignore. Europe’s soccer channels are here to stay. The question that the sector needs to answer is: ‘which ones?’ Like their fans, the industry is betting on those with the most on the pitch wins.”