Sports strategy

    The key legal points to remember when negotiating for sports production and broadcasting deals.
    Comment, Broadcast Business

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    The 1980s saw the emergence of sports broadcasting as a major revenue source for the business of sport and that trend has continued on an upward curve ever since, with most sport now depending on broadcasting for their popularity and, in some cases, their existence. Football, cricket and Formula One seem to have done it better than most, constantly driving up the value of their broadcast rights. How do they do it? What is it that enables them to sell their rights at ever increasing prices?

    There are a number of key elements while dealing with sports broadcast rights, which include amongst other things, getting the right production values; ensuring that your broadcast partners are capable of giving you the right kind of exposure; and critically, ensuring that whatever you are selling is getting you the most value. The following are some of the things to look out for while dealing with sports broadcast rights:

    Get your production value

     

    Getting the right production value really is the starting point for effectively marketing and selling your sport. I deliberately use the word ‘value' here and not ‘quality' since finding the right balance between cost and quality is really the key to a well-negotiated sports production agreement. The following are some of the things that should be borne in mind while dealing with the production of a sporting event:

    • Generally, finding the right balance between cost and quality really is the key to a well negotiated sports production agreement.

    • While it is always tempting to go for the cheapest production option, quality in such cases suffers and as a result, the ability to sell your rights does as well. Spending a huge amount on production obviously eats into your bottom line, so developing a clear understanding of what you want the broadcast to look like is extremely important.

    • Having the contract in place before the production starts ensures that everyone knows what is required and in the final analysis leads to less confusion and lower costs.

    • Having a production contract that clearly spells out what is being produced and how something is being produced is critical. The following must therefore be clearly defined in the agreement:

    1. What are the programmes that are being produced (including how many episodes or if live, for what duration). While dealing with the duration of a production, the broadcaster should also bear in mind that the longer they wish to telecast something, the more they will have to pay for satellite time as well.

    2. The budget must be deemed to be sacrosanct and except for minor variance in costs, the endeavour of the production contract must be to hold the producer to his word. He must deliver a particular production to you at a particular cost. All costs and obligations of the producer must be clearly spelt out in the agreement including what format the production will be made in. Whether there are any third party costs which will have to be borne (often, producers will outsource items like animation), what is the delivery time for the production and critically, what is the acceptance procedure for the production.

    Here's how you sell a sports production

    Effectively defining what rights you have to sell is the most important factor in broadcast sales or for that matter, in the sale of any rights. Defining your rights well allows you to ‘split them' more effectively and ensures that you can maximise the number of revenue streams available. For example, initially, golfers used to go to a golf club manufacturer and just ask them to make their golf clubs and then endorse the product. In Gary Player's case in the 1960's, he split the golf club into grip, shaft and club and effectively had three endorsements while most others just had one. Broadcast rights are no different. In order to ensure this, you must have a Broadcast Rights Agreement in place, which clearly defines the following:

    • The programme you're selling (this should be in line with what is in the production agreement). This will allow you to sell the same footage in multiple ways. For example, you may sell the rights to a live broadcast to one broadcaster, but you may sell the right to broadcast the highlights package to someone else.

    • Where you're selling it, that is, in which countries you are selling the right to broadcast is significant. This will allow you to distribute your programmes to a wider audience since you will be able to approach multiple broadcasters in different territories.

    • On which platforms it is being sold, i.e, are you selling the right to distribute the programmes on terrestrial television, cable television, satellite television etc...

    • In which languages are you selling the right to broadcast (again, the production contract needs to include dubbing in case you wish to sell the programmes in multiple languages).

    Things to look out for

    Oddly, what you aren't selling is as important to specify as what you are selling. For example, in the early 1990s, broadcast rights essentially meant television and a number of channels that bought rights. All had contracts that focused primarily on television. No one at the time envisaged the internet or mobile phones with the consequence that when these distribution opportunities opened up, rights holders had effectively sold ‘all broadcast rights' (including mobile and broadband rights, which weren't defined) to a television channel.

    There have been problems in the past with poor definition of where these rights are sold as well. As most people associated with the broadcast industry will know, satellite footprints don't conform exactly to national or regional boundaries, so when you have a contract which specifies that you are selling the right to broadcast a sports event in the Middle East and the satellite beam spills into North Africa, you would effectively be in breach of your broadcast rights contract. This has happened in a number of cases and such disputes have mostly ended in tears, or worse, in court. Fortunately, all the above issues can be resolved through having the right contractual framework in place.

    Sport is about winning and winning the right way. That philosophy has increasingly come under threat recently with numerous scandals tarnishing a number of sports. Sports administrators are doing all they can to prevent such things and maintain the character of sport. Similarly, the sports business, which was founded on handshakes and trust, has also changed with large amounts of money flowing into sport from the broadcast industry. Doing the right thing and doing it the right way in the business of sports broadcasting equally ensures that sport and broadcasters win and win the right way.

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