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Champions League Eyes $2.4B Haul for U.S. Rights Amid Soccer Glut

johnwallstreet
·6 min read
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Relevent Sports Group recently issued an RFP for the U.S. rights to UEFA, including the UEFA Champions League and the Europa League. A source familiar with the process said nine media companies have expressed interest in submitting bids by the Aug. 15 deadline. The volume of potential bidders, combined with rising value of premium sports rights, has pushed expectations for a deal into the six-year, $2.4 billion range.

A Relevent spokesperson could not comment on the bidding process, but confirmed the interest from broadcasters. “The UEFA club competition offers the legacy, format, and global superstars that deeply resonates with American audiences,” the spokesperson said.

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Media rights consultant Patrick Crakes, who went through two rights cycles with the soccer property during his Fox tenure, is not convinced. He said linear distributors, who have traditionally been willing to allocate resources to international soccer, have largely been underwhelmed with the results (see: Fox and Bundesliga). He noted several streaming providers already have soccer rights within their respective portfolios and may not feel the need to add another costly rights package and pointed out that questions remain about the soccer fan’s ability to pay for another streaming service, anyway.

“Toss in the scheduling complexities, and I’m not sure this is the sure-fire, $400-million-a-year super property that is being pitched,” Crakes said.

JWS’ Take: Crakes acknowledges that outside of the NBA and the Big Ten, there is a dearth of premium sports rights up for renewal over the next few years. He also believes the UEFA Champions League is a “super high-quality” property. In terms of international soccer, the club competition is rivaled by only the English Premier League and La Liga (the two most important domestic leagues in Europe).

Premium sports properties continue to command premium dollars for their broadcast rights (see: NFL). A bidding war for Champions League rights is certainly possible—particularly with UEFA and the ECA willing to consider six-year bids for the first time.

Historically speaking, Champions League rights were sold in three-year blocks (because of European antitrust regulation), but the short-term deals negatively impacted the value of the rights and the amount rights holders were willing to invest into marketing. By the time a broadcaster was able to pick up some traction with the property, the rights were up for renegotiation again. UEFA and the ECA have since altered their guidelines.

A six-year deal would carry the rights holder through the 2026 World Cup in North America, which should only help to raise interest in the game (even if history has not reflected a television viewership increase for the sport in its wake).

For those reasons, the UEFA package is best suited for a streaming provider looking to grow its subscriber base. Soccer fans have shown a willingness to subscribe to a streaming service (or multiple streaming services) in order to watch their favorite club team play.

The games also take place on Tuesdays and Wednesdays in the middle of the traditional American workday (12:45 p.m. and 3 p.m. EST). So, it is imperative that UEFA’s broadcast partner has the ability to deliver games in a flexible manner—for example, to an office computer or mobile phone.

The revised Champion League’s format serves streaming providers’ needs too. The group stage used to run from September through Christmas, with the knockout rounds starting in mid-February. That left time for cost-conscious subscribers to cancel their subscriptions. The league phase now takes clubs right up to the start of the elimination rounds, which should eliminate some of the churn.

While streamers might make the most sense and be willing to offer the most money, UEFA and the ECA are said to be prioritizing audience development during the next rights cycle, which emphasizes the ability to deliver the reach of linear television.

But don’t write off Apple and Amazon yet. Apple has grabbed MLS rights, and Amazon recently won the Champions League’s top package in the U.K. However, if a streamer wins the rights in the U.S., expect its bid to be coupled with a linear partnership. FWIW, B.T. won the second package in the U.K.

If Amazon and Apple are interested, and/or if Paramount Global is motivated to retain the rights, a bid in the $400 million/year range is possible. But Crakes said it is not a layup. “This property has had three separate broadcasters in the last four years, including one that said it made a big mistake,” he said.

The midweek slate remains a challenge—and making games available via mobile doesn’t fix that, Crakes said. While U.S. fans may keep an eye on the game at work, they are less likely to tune in for the pre-game and post-game shows that drive much of the advertising value. Remember, soccer has less in-game commercial inventory than most U.S. leagues, so rights owners rely on additional programming windows around the matches to maximize revenues.

Another challenge is where to air league-stage inventory. “Many of the matchups [pre-knockout stage] are not attractive except to ultra-fans,” Crakes said, explaining why a digital component is necessary.

It is not clear how serious the nine prospective bidders are. Several already have soccer properties on their platform, and it is not certain adding another will incrementally grow the audience—particularly, if one assumes soccer fans are on a static budget. Until the great re-bundling occurs, many will likely be forced to decide between their favorite leagues.

Then again, one would assume European football fans are prioritizing Champions League and their favorite team’s domestic league.

Crakes believes the rights will ultimately sell for $200-250 million a year. If he is accurate, Relevent will break even, at best. Stephen Ross’ company guaranteed UEFA $250 million to land the commercial broadcast rights.

When told of the prediction the source with knowledge of the ongoing bidding process said, “No chance,” suggesting a bid in line with the $2.6 billion the EPL received may not be out of reach.

Dan Cohen (EVP, Global Media Rights Consulting, Octagon) doubts the Champions League will command EPL-like dollars. “The Champions League stands out in an elite group of Tier 1 audience aggregators and with the format changes starting in the next cycle, the property becomes even more attractive to broadcasters,” Cohen said. “But the midweek nature of the property and the middle of the afternoon timing in the U.S. make the Champions League a tougher sell than the English Premier League and for that reason these rights will not surpass that of the most recent Premier League renewal with NBC.”

Time will tell.

(This article has been updated in the 13th paragraph to note Apple’s purchase of MLS rights.)

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