Rights owners need to think and act like entertainment franchise owners. Creating more assets and inventory with relevant products and services to attract, entertain, and retain new, adjacent and younger audiences.
— CEO, Sports Media Company
Media rights have long been sports organizations' main source of income. But in today's fragmented and economically challenged media landscape, some rights are facing potential devaluation. Factors like cord-cutting, market saturation, and competition from other sports have already led to flat domestic rights revenues for four out of five European soccer leagues. Even though rights deals continue to climb for top-tier U.S. sports, some 85% of industry leaders believe that rights owners are not actively addressing the changing needs of their media partners.
Despite this challenging media environment, the reach of top leagues and athletes has never been more global, with fans in some markets willing to pay hundreds of dollars a year to stream games and events from their favorite leagues. Sports organizations can innovate their product offering and experiment with new direct-to-consumer distribution models geared toward these fans – especially given that elite domestic leagues, like the NFL and major European football leagues, appeal to over 80% of fans in their respective domestic markets.
For rights owners to mitigate market risks, they should expand their addressable market by:
- Looking towards international distribution deals and investing in marketing their league/teams on a global scale.
- Packaging and negotiating media rights to bring more bidders to the table, including upstart tech platforms, streaming services, and gaming sites.
- Focusing on long-term partnerships with longer media rights cycles and performance-based variables. Deals, like that between Major League Soccer and Apple TV, amounting to $2.5 billion over ten years with potential upside based on subscriber growth, are largely seen as the future of rights deals.
- Creating new categories of rights in emerging areas like gaming and Web3.
The sports industry is undergoing a massive transformation, and sports organizations must adapt their business models accordingly and take a more active role in their media rights. By better understanding who their fans are, and getting clarity on their business model, including distribution strategy, buyer profiles, and ways to innovate, sports rights owners can thrive in uncertain times while rewriting the playbook on monetization.
Single-mindedly focus on fans, obsessively build strong products/propositions and seamlessly collaborate with stakeholders including licensees, for maximization of value (commercial and non-commercial).
— Sanjog Gupta, Head of Sport, Disney Star
