One man shaped the way we see sport today. Roone Pinckney Arledge, a graduate of Columbia University, picked up the inaugural copy of Sports Illustrated in 1954 and thought: “Why can’t we do that on TV?”
The prevailing attitude then was that the couch potato at home should not have a better view than the fan in the worst seat of the stadium. In 1960 Arledge joined the American Broadcasting Company (ABC) to produce sports shows, and from that moment he began to transform television and, in so doing, transformed sport into what sportswriter Steve Rushin could only describe as “something truly stupendous.” The fan in the stadium would become a ghost.
Arledge’s first shows (The Wide World of Sports and The American Sportsman) pioneered the use of handheld cameras, powerful graphics, field microphones (Arledge once miked a dead zebra so that viewers could hear the sound of flesh being ripped by lions) and the slow-motion action replay. When Arledge first replayed a 70-yard touchdown run by a college quarterback, it was, he said, “a whole new era opening up.”
Arledge produced 10 Olympics and the collective national experience he created around sport became global. The broadcast rights for the 1964 Olympics cost $250,000; the last, in 1976, cost $25 million. Twenty-four years later the broadcast rights for the Sydney Olympics brought in $2,236 million 50 percent of the budget. An additional 40 percent ($1,815 million) came from sponsors in the form of money, services, personnel, technology, etc. Licence rights for official paraphernalia brought in the eight percent, and ticket sales a mere two percent.
Televised sports is the perfect child of capitalism and entertainment, a multinational market-driven monster, impervious to the disciplinary action of granddad government and ubiquitous granny ‘public interest’.
As South Africa moves away from the fascist economy of the apartheid era and slips the socialist principles of democracy’s early dawn, business has had to adapt accordingly. Government, naturally, has attempted to legislate this transformation and the business of sport has not escaped.
The problem with sports is that not every one sees it as a business. Professional sport is entertainment business, measured by the sales graph and not the heart monitor. Broadcasters pay for television (electronic rights) in order to get an exclusive deal, ideally on a ‘must see’ event.
In South Africa, the Broadcasting Act of 1999, clause 30(7), states that “subscription broadcasting services may not acquire exclusive rights for the broadcast of national sporting events, as identified in the public interest from time to time by the Authority [ICASA] in consultation with the Minister [of Communications] and the Minister of Sport and in accordance with the regulations determined by the Authority through a public process.” (See page 41 for The Media’s legal specialists’ take on the Act).
The Act also makes it clear that the SABC must “include national sports programming as well as development and minority sports” [Section 10(1)]. If you decrease the competition for broadcast rights, however, you dilute their value. Group chief executive of JSE-listed sports business and sports franchise company, SAIL Group Limited, Selwyn Nathan, says this is why it submitted proposals to the Independent Communications Authority of South Africa (ICASA) and is confident that a “pragmatic ‘soft touch’ legislation concentrating on self-regulation between broadcaster and sport bodies will result.”
As SABC group chief executive, Peter Matlare, points out, other broadcasters don’t have such an obligation to what he calls the “transformation imperative.” He says this justifies SABC’s request for special treatment when it comes to buying sports broadcasting rights. The SABC, which spends a mere R280 million on sports each year, of which 65 percent is on local sport, proposes that competitors be “compelled to sublicense the rights” to the SABC at 20 percent of the original price for a live event, 15 percent if delayed live, 5 percent if a delayed broadcast, and 2 percent for a highlights package. ICASA hasn’t responded.
MNet/SuperSport did, and so did e.TV, saying SABC was abusing its position, and warning that such “unfair competition” practices would damage the market.
Nathan, a blunt-speaking, pragmatic former golf pro, confirms that the effect of limiting the market forces will only harm the sports federations. “If you take the 14 rugby unions who receive roughly R100 million from the MNet/Murdoch deal,” he says, “this will be halved and the guys who will suffer are the smaller unions.” He reckons that if the government wants to uphold the Broadcast Act 1999, then it must be prepared to subsidise sport. “The Australian model is often cited in these discussions,” he says, “but you must remember that the Australian government pumps more than A$350 million per year into sport. We only have a budget of about R100 million in South Africa.”
TAX MONEY is best spent on education, health and transport. If the corporate world finds a business niche in sport, and wishes to sustain it, then it must get involved in nurturing the young talent that will fill the future ranks (and their coffers). The issue of levelling the playing fields made uneven by a lengthy political aberration in our nation’s history, however, can not be wished away, especially when sport is seen as part of a nation’s heritage.
SAIL, which is the largest sports business and franchise company in the country (they acquired Vodacom Sport and Entertainment [VSE] in 2001) is taking a proactive approach. “The old business model of owning the brand and the rights was a bad one,” says Nathan. “It’s useless unless you activate it. We were giving people money and sitting and watching it. We’re not a bank. Now we’re acting on it.”
SAIL has restructured into a single operating unit, with two primary business divisions: the Sports Rights and Brands Commercialisation division, which focuses on adding value to sports franchises, and the Corporate Marketing division, which “helps create and manage sponsorships and events on behalf of corporates.”
“We basically look at three things for our partners,” says Nathan. “One, the percentage of the gate (tickets sold); two, the electronic rights; and three, the corporate sponsorship.”
At the moment all three are doing okay, but there are problems. For starters the less important games such as the Vodacom Cup (formerly the Currie Cup) has poor stadium attendance.
“This is a development model,” says Nathan. “The games should be played in smaller stadiums around the country, such as George or Gugulethu. Can you imagine the interest this would create? The big teams will always fill the stadiums.”
As for broadcast rights, both the ICASA hearings and, further into the future, the issue of viewer saturation could prove problematic. Saturation means lower audiences and less advertising revenue. It’s happened in Europe.
European soccer is a US$5 billion (R50 billion) a year business, but the media giants that paid massively for broadcast rights seven times what they paid in 1995 are crumbling. Germany’s KirchMedia went bust in April 2002 and, in July, KirchSport cut its $1.49 billion (R16 billion) contract with Bundesliga by 25 percent. Britain’s ITV Digital also crashed in April, and British teams kissed goodbye $271 million (R2,846 million) in contract income. News Corp.’s BSkyB offered $36 million a year (R378 million) for a four-year contract a mere 25 percent of what ITV had paid.
Back home, e.TV splurged on the football world cup, paying more than R100 million for the rights, which it then had to sub-licence at a knockdown price to SuperSport for somewhere in the region of R25 million. Airtime ad sales did not cover the deficit.
SAIL were recently contracted by the Premier Soccer League (PSL) to manage their rights and commercialisation (SABC paid the South African Football Association R50 million per year for the PSL rights) along with Boxing SA, Swimming SA and USSASA, and has sports brand investments in eight rugby companies, the Border Bears Cricket Company and the Pro Range Golf Centres.
In order to maintain and grow broadcast revenues Nathan advocates globalising rugby. “If football and cricket can do it, why not rugby? What if we had a champions league in rugby?” One of his suggestions is to remove one team from each of the three super twelve nations and add three each from two nations in Europe, say England and France. “You’d then have a North-South Super 16 that would reach a far greater audience, and be more attractive to a global sponsor,” he says.
Nevertheless, sponsorship remains a fast growing business. While sport sponsorship equated to 7.87 percent of advertising spend in 1985, it equated to more than 14 percent in 2002. BMi-Sport has been tracking the sponsorship spend in South Africa since 1985. “The market increased by nearly 25 percent in 1996 and again by 38 percent in 1998,” says managing director Johan Grobler.
In November last year BMi-Sport Info polled the leading corporate sponsors in South Africa and found that 63 percent saw sponsorships as an integral part of the company and brand strategies and 30 percent said that sponsorships formed the core “around which the communication strategy and activities are leveraged.”
The figures back this up. In 1990 the total sponsorship spend was R174 million; by 1992 this had grown by almost 60 percent to R275 million. The spend for 2002 is a whacking (by local standards) R1.492 billion. Factor in the leveraging spend and we’re looking at more than R2.7 billion spent in SA in 2002. [See table: Historical Spend On Sport Sponsorships Since 1985]
By comparison, in 1979, corporations in the United States spent roughly $500 million on sports sponsorships. In 2001, this figure was more than $6 billion (R63 billion). Worldwide it’s an estimated $25 billion industry of which sport takes more than 70 percent.
James Monteith of BMi-Sport says that sponsorship spend in 2003 was helped by the cricket world cup, which probably brought in about $2,5 million to local broadcasters. But then there’s the issue of F1 racing. No local broadcaster wants it because it’s “too expensive”. SABC continues to flight it on an ad hoc basis because of the die-hard fans and it can make money on the ads it sells around the event. Bernie Ecclestone, who went all out to own every aspect of F1 seems to have eaten himself into a corner.
There are those who doubt the efficacy of sponsorship over plain old advertising. Sports Marketing Surveys in the UK found that 52 percent of British sports fans said they saw no difference between sponsors and organisations that advertised on the stadium boardings. More importantly, 64 percent of the fans said sponsors should do more for the sport. As one commentator put it, sponsorship works only when it “earns the respect of the fans[sponsors] have to be seen to be making a real contribution to [the fan’s] enjoyment of the sport.”
SAIL plans to launch a new sport/lifestyle television show next year taking the notion of brand management, sponsorship and added fan-value to a new level. Given that the adult television audience ratings (ARs) for the Proteas versus Sri Lanka match at the ICC World Cup Cricket was 14,6 and that Generations, The Bold and the Beautiful and Yizo Yizo on the same night all outscored the national team (18,4/15,6/15,1 respectively), it does make one think. Perhaps “reality-type” sports shows are the next big thing for sponsors. As Arledge would say: “Why can’t we do that on TV?”Source: BMi-Sport (www.bmisport.co.za)