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What the new NRL TV deal means for the code

| September 3, 2012

Broadcasting rights play a key role in the development of sporting codes in Australia. Tim Fuller looks at the recent NRL agreement.

The historic broadcasting agreement reached last Tuesday (28 August) between the Australian Rugby League Commission, Nine and Fox Sports sits well for the future existence and survival of the current NRL clubs and future franchises.

It is an indication of how much the value of rugby league media rights have grown. With the introduction of colour television in 1975, the commercial value of rugby league escalated dramatically. By the 1980s television had played its significant part in revolutionising rugby league, transforming it from an activity with restricted coverage, witnessed in person, broadcast on radio and reported in the press into a product mediated spectacle with national and international audiences of millions. 

In 1989 the Ten Network paid $48 million for a three-year contract to broadcast the NSWRL, rugby league State of Origin matches and international rugby league tests played by the Kangaroos. On Tuesday the ARLC announced a five-year broadcasting agreement that will invest more than $1 billion in the future of the code.

The RLPA in conjunction with leading NRL players has been agitating for increases to the salary cap and structure of salary cap payments upon reaching a new broadcasting agreement. The extra revenue for the game must now flow down to the clubs (and players) to assist in sustainability of the competition for the foreseeable future at least. Rugby League is enduring a challenging time with changes to the governance of the game, increased competition from the AFL and their venture into traditional rugby league heartlands like western Sydney, player movement between the different football codes and heightened angst between the custodians of the game and the players with the vision for the code. The new broadcasting deal has been received positively from most participants in the game.
 
Although the financial signs for the future may be positive for the game at the elite level, caution is required by the ARLC given the magnitude of the commercial investment to ensure that a critical perspective on what is best for the game remains. With the status and salaries of players increasing the integrity of the NRL cannot be compromised in any way with the misconduct that has tainted aspects of the game in recent years. In particular, betting on the sport has reached levels not previously envisaged.
Maintaining fan interest is crucial and dependent on uncertainty of outcome and competitive balance. Each club has an interest of upholding the quality on rivals, as the Louis-Schmeling paradox suggests; the stronger the contender the better the product and the bigger profit (opposite to traditional industries). Although the ARLC negotiates the collective sale of TV rights through a cartel like arrangement where the league can come together and fix prices and then redistribute to clubs equally, a competition that begins to see few clubs dominate at the expense of others may not only fracture its fan base but also encourage the stronger clubs to negotiate their own individual TV rights.

In the US the NFL rights are sold collectively but the MLB, NBA and NHL rights are sold through a mixture of collective and individual sale arrangements. Alternatively a future model where the rights are negotiated collectively but with mixed distribution formulas may emerge. Maintaining harmony amongst current clubs is essential to ensure some clubs do not explore these opportunities in the future.

The final question is how does the NRL increase its media revenues in the future? To begin, the game must continue to evolve. Rule changes to encourage attacking play to enhance the code’s entertainment value must continue but at the same time they must recognise the implications for the players’ welfare. The real opportunities will emerge as the media landscape continues to change.

New commercial revenues will become available and new challenges will present themselves the ARLC, as the Optus Now recent court case demonstrated. The growth of the game will no doubt be important. Media organisations want more global leagues that provide new markets for their acquired product. A national/international expansionist policy that creates the potential for new TV revenues is perhaps the biggest future challenge the NRL faces.
 

 

Tim Fuller is a former professional NRL player with South Sydney and the Gold Coast, and has a background in law and business that is diverse and wide-ranging. He has been involved in professional sport for over 20 years in varying capacities, including representing leading professional athletes in contract negotiations, sponsorship endorsements, media engagements and corporate ambassador roles. Prior to joining Walsh Halligan Douglas Lawyers, Tim worked in Sydney and his clients included high profile professional athletes, clubs and organisations, event and facility managers, sports agents, media organisations and national sporting brands. His experience includes working on matters involving protecting professional athletes from unauthorised use of their image and reputation, employment contracts for Fox Sports media representatives, athlete-agent agreements for a number of Australia’s leading professional rugby players, sponsorship agreements for film and music festivals, franchise and licensing agreements in the health and leisure sector, and commercial agreements involving virtual advertising technology in professional sporting events. He holds a degree in Law and an MBA with a specialisation in Sport Management,  and is completing a PhD in Law.

 

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0 Comments

  1. foggy

    foggy

    September 5, 2012 at 6:57 am

    The lens of the media

     

    I read your article and found it very engrossing.How it encapsulates the history before the heavy advent of the media and its collaboration with the world of sports (here about the NRL)And after.Seeing the media focus its lens on the sports field and bring the game and its players to the National and international scenario shows the tremendous evolution taking place at a quick pace in -the land of Evolution since primordial times.Grossing colossal amount of profit is the immediate striking effect.Which makes one impelled to point out that whatever amount is required to encourage the growth of the game must be spent with a large heart.Of course there has to be a balance between the player’ s image cast as a sportsman and a star at an international level also.
    Much money will flow to maintain and protect this star quality image.But it is hoped that much more will be channelised to insure a comfortable and secure life of the sportsman at retirement.Especially for those who are single,homeless, without family and riddled with crippling injuries sustained during their active and endearing sports’ life.That would make a large fanbase truly relieved, thankful and less guilty!