Supercars has a new TV deal

UNLESS you’re one of the minority who believe all sport should still be live on free-to-air TV, today represents a very good day for the Supercars Championship and Australian motorsport in general.

It didn’t take long for the anti pay-tv brigade to jump up and down following the announcement of the new five year, $200m broadcasting agreement between Supercars, Foxtel and Channel Seven.

But complaining about this agreement in a world where broadcasters are slashing budgets and sporting organisations are grappling for relevance is like saying you’re fine with the sport just shutting down all together.

In the current market the deal cannot be seen as anything other than a major victory for Supercars administration.

But the positive things are that there seems to be great value in it for the broadcasters, too.

All the key positive elements of this broadcast deal are in the first line of the announcement itself.

FIVE YEARS

The five-year time-frame is critical and perhaps even more important than the money involved itself.

With Supercars stakeholders Archer Capital keen to exit the business, having a five-year contract – and the five years of guaranteed income that comes with it – to offer prospective buyers gives the business value beyond the actual sporting property that it is.

In an uncertain time, a five-year deal gives incredible certainty and security to a business already deep into a process of reducing costs and adding efficiency.

The uncertainty around the future of the sport’s TV rights, especially in the current climate of broadcasters slashing budgets, was one of the key things holding back a potential sale of the business.

And a sale needs to happen to secure not only fresh investment, but also fresh eyes and a plan to move the sport forward.

Given the climate, there was a risk that the sport could fall into the same problem it had with the two year, stop-gap deal with Seven in 2013-14 that just about brought it to its knees.

This deal, however, is far, far away from what happened eight years ago and adds certainty to the business moving forward.

The existing long-term agreement with Sky Sports New Zealand also adds value to a championship that has as much interest on that side of the Tasman, as this one.

$200 MILLION

MUCH has been reported about the monies paid by broadcasters for their Sporting Media rights and in recent times, how much they want to slash the cost of it.

Cricket Australia’s current issues with Channel Seven and Foxtel are proof positive of that.

For Supercars to reach a deal worth somewhere in the region of $40m per year is impressive, especially given the previous deal was worth about the same.

In the current market, retaining your existing deal is every bit as good as getting more money.

Now, we don’t know the breakdown of how much of that $200m is cash or contra and there is a very strong likelihood that the contra component is much larger, and the cash component much smaller, than before.

The reality is that it doesn’t matter that much because as long as there’s perceived value at both ends it’s a good deal.

And right now it’s a buyers market, so James Warburton and Patrick Delaney wouldn’t have signed deals for their respective networks if they didn’t think it offered value for them as well.

Plus the additional marketing spend from the contra component of the rights deal will be a free value-add for the championship’s marketing and commercial teams, and a legitimate way to generate revenue by promoting ticket sales, events, online resources, new sponsors or more.

The Repco deal, plus a raft of other new sponsorship agreements for this year and the future, are proof of how commercially solid the championship is: Having more airtime to promote that will be a bonus.

What does it mean? Expect more Bert on your TV’s in coming years.

CHANNEL SEVEN

MUCH has been made of the sport ‘returning to its roots’ on Seven and there’s certainly something in that.

The network understands what makes Motorsport tick and how to promote it on free-to-air.

The fact that Seven owns two of the three most-watched sports on Aussie TV – Aussie Rules Football and Cricket – means that the potential for cross-promotion is outstanding and gathering like-minded eyeballs from those sports and selling them on the Supercars story will mean better ratings and more commercial crossover, too.

Seven are also Australia’s most watched broadcaster which is an enormous step forward from the struggling Channel 10, which sometimes struggles to achieve less than ten per cent of the total broadcast audience these days.

Of course not every race will be live on the Screens of Seven but they were never going to be either.

Traditional broadcast networks can’t possibly afford what professional sport is worth without partnering with Foxtel – but in the end it’s a concept that has worked for the last six years, despite what the free-to-air warriors will tell you.

The sport profits from the additional income and the blanket airtime that Fox Sports can provide while still drawing the eyeballs to the hallmark, major events like Adelaide, Bathurst and the Gold Coast that keeps governments and major backers engaged.

Only in the next five years it will work better because it is fact that more people watch the Screens of Seven than they do the Channels of Ten.

The bottom line is that while the COVID-19 Pandemic – and subsequently a large percentage of the population staying at home while also pulling back spending – has given free-to-air TV a boost, it is probably a temporary one.

While it may have delayed it, there’s still no getting around that the traditional, ‘liner’ way of consuming content is decreasing, not increasing.

The future is on-demand viewing, mobile applications, streaming products and a take-it-with-you approach to broadcasting so people can consume a race any time, anywhere.

It is worth noting that we don’t yet know how much of the sport will be shown on Seven’s dedicated application 7Plus – but expect that to play a sizable role.

Which brings us to the following:

FOX SPORTS

‘EVERY SESSION LIVE’ has been Fox Sports’ mantra since signing Supercars in 2014 and for fans willing to fork out, it’s been a windfall of content for the last six years.

Perhaps more importantly, though, is the addition of Foxtel’s premium sporting application, Kayo.

Foxtel just announced that the dedicated sporting service had just ticked over a record 600,000 subscribers this month, almost double from where it started the year.

More than anything, it is this element of the new broadcast deal that offers the most potential for the sport moving forward because those numbers are only going to grow in the future.

Having the championship positioned on an application like Kayo is hugely important and sets up some long-term thinking for the next deal in 2026, when the landscape is most probably going to look very different to what it does now.

Regardless, Supercars has been a ratings winner for Fox Sports for six years and the percentage of the Supercars audience watching the sport on Foxtel compared to free-to-air is proof that hardcore fans are spending their money and buying the premium product which will be music to ears of the powers that be Fox HQ.

Dropping Supercars was never really an option: After the two footy codes and the summer of Cricket, Supercars out-rates every other sporting property on the network twofold. It’s loads of content that brings eyeballs (remember, last year’s Bathurst 1000 was the most-watched day in Australian Subscription TV history, sports or otherwise) and hopefully for them, converts them into new or ongoing subscribers.

That model won’t change, even if the way people consume the sport does.

THE FUTURE

THIS TV deal offers the sport security for the short-term and an ability to start thinking long-term about where it exists in the landscape beyond 2025.

The lack of full-time free-to-air coverage will be a blow to a minority of fans who clamour for such things, but if they don’t understand how the market works these days by now, then they’re probably never going to.

The landscape is evolving quickly in the broadcasting world and this deal, financial security aside, is a massive win in a turbulent landscape.

I’d bet money that by the time we start talking about the next round of media rights, there’s much more emphasis being placed on the coverage on 7Plus or Kayo than there is on Channel 7 or Fox Sports’ linear offerings.

There’s already been significant movement in Europe and the States from professional sporting leagues selling games or entire seasons off to outlets like Google, YouTube or Facebook.

That will happen here in Australia – in fact, it already does via Optus and their English Premier League rights.

That’s the future, folks, and this deal puts Supercars in the right position to balance the traditional ways of consuming sport alongside the future of it – just at the right time.

Richard Craill

Working full time in the motorsport industry since 2004, Richard has established himself within the group of Australia’s core motorsport broadcasters, covering the support card at the Formula 1 Australian Grand Prix for Channel 10, the Bathurst 12 Hour for Channel 7 and RadioLeMans plus Porsche Carrera Cup & Touring Car Masters for FOX Sports’ Supercars coverage. Works a PR bloke for several teams and categories, is an amateur motorsport photographer and owns five cars, most of them Holdens, of varying vintage and state of disrepair.

http://www.theracetorque.com/

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