Broadcasting Has BeCome One of the Major Revenue Sources for Sports. Discuss the Implications Broadcasting Has Had on the Sport Industry

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The richest league is the English Premier League: their broadcast revenue reached £1.76 billion in 2013/14, accounting for 54% of the league’s total revenue. This shows the demand for the league rights is so high and is so expensive as it is the richest and most popular league (Addesa, Caruso and Di Domizio, 2016). Simmons and Szymanski (2004) analyse the influence of televised matches on English Premier League match-day attendance between 1992 and 2001 and they found that Sundays and Mondays did not cause a decline in gate attendance which shows support for broadcasting.

Selling of sports rights

Selling of the sport rights differ per league and country. The main 2 ways of selling of sport rights is collective selling and individual selling. Collective is when there is equal distribution and individual is limited and more revenue to clubs with higher demand. The main argument for collective selling for distribution of broadcasting money is that it helps there to be a competitive balance, and raises the quality which is more attractive for fans and spectators (Heubeck, 2004). However, it can create over pricing of players and other restrictions on output. These rights and broadcasting in general have been affected in many ways due to illegal streaming. An example of this is FirstRow Sports who stream a number of games and different sports and owners of broadcasting have been affected by this. In turn this has been said to affect the sport and the leagues in general (Horner, SN 2014).

Cournot (1927) the probability that one game will be bought would decrease. Hence, in such a setting collective sale of broadcasting rights should even be sustained from a social welfare point of view. This means that it will help with the sports development and in this case football development. However, countries like Italy and Spain adopt individual selling which only focuses on a handful of teams and this has been deemed to harm competitive balance and makes the leagues less efficient (Noll, 2007). This shows how impactful broadcasting and the sale of these rights are on leagues and sport.

However, the selling of sport rights has not always been successful as in Germany the pay TV operator Sky Deutschland had only enticed 3 million subscribers in a market of 81.8 million. This is because of the availability of free to air channels (Evens, Iosifidis and Smith, 2013). This shows the teams in the league would get less from broadcasting as they have less competition and possible coverage opportunities. One way mentioned to stop exclusive deals for live sports rights is to impose a ban on them (Szymansi 2004:3).

Broadcasting rights revenue & Events

Broadcasting rights revenue sharing focuses on equal distribution to the teams. In the Premier League they share by 50% equal shares, 25% sporting merit and 25% television appearences whilst for France this differs as they would have 73% equal shares and 27% sporting merit (Andreff and Bourg, 2005). Whereas TV revenues tend to be distributed equally as in the US NFL or only partly on the basis of merit (Szymanski, 2001). This shows how the leagues differ and how they tackle with competitive balance to ensure its fair for all teams. Looking at other determinants premium for games held in primetime, demand increases with tenure in a market, and team quality is a encouraging indicator of broadcast ratings which is why the rights are so important due to it increasing them (Kaplan, 1975; Robinson & Godbey, 1997; Stodolska & Alexandris, 2004).

Looking at broadcasting rights revenue the revenue for companies has highly risen. For example, Additionally, ESPN agreed to pay $1.1 billion annually to carry Monday Night Football for 8 years, however NBC secured the rights to show Sunday night games through 2012 at an average annual rate of $650 million (Tainsky, 2009). One of the main reasons channel broadcasters want sports rights is because of the opportunity to attract larger audiences and more customers. Loooking at channel inertia this is when customers are watching one channel are more likely to watch that then switch another (Cowie and Wilson, 1997). This looks at the brand loyalty to established channels and gain the most viewership such as BSkyB who may overpay alongside BT to keep the most viewership on sports and majority of the audience (Congdon, 2004).

Looking at listed events in the UK this was established which affected some broadcasting companies such as Sky as the act prevented satellite TV from bidding for exclusive rights to a number of events. These events can include such as the Olympic games, Derby, Wimbledon final and many more. This is because international sporting success for a national team or national sporting figure is a public good (Gratton and Taylor, 200). However, many sports wanted their events delisted this is because due to their belief of increased revenue of pay TV such as from Sky or BT (Smith, 2017). Another downfall of listed events was from BSkyB when they said due to listed events you can’t set the right balance across a complex of factors, including income, exposure, depth of coverage and promotional support (Speech at a Sports Industry Group event, 2009, p.6). However, listed events are essential because some sports are so rooted in British culture (Tsoumita, S., 2013).

Conclusion

To conclude broadcasting has had many implications on sports and the industry. The growth in broadcasting revenue and other commercial aspects this has made it more professional and has helped different structures from the elite to community based sport (Bradbury and O'Boyle, 2017). Different researchers have opinions on broadcasting where it has crippled certain leagues at teams which affects competitive balance whilst some thing it has helped teams and the sport massively by proving more opportunities. Looking at appendix 1 this shows how important broadcasting is for sport and how influential it is however appendix 2 shows how people feel about broadcasters and how expensive it is for them (Mintel 2017). Finally, for sport to be where it is today it needed broadcasting and the push from broadcasting to help it further which is shows in the premier league.

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References

Academic.mintel.com. (2017). Login to Mintel Reports - Mintel Group Ltd.. [online] Available at: http://academic.mintel.com/display/813645/ [Accessed 28 Apr. 2017].

Addesa, F., Caruso, R. and Di Domizio, M. (2016). The Determinants Of The TV Demand Of Soccer. Empirical Evidence On Italian Serie A For The Period 2008-2015, 1(1).

Andreff,