A $2 billion broadcast rights deal is within reach of both the NRL and AFL, provided they follow the lead of cricket, says Australia's leading expert on sports media rights.
Colin Smith, the managing director of Global Media and Sports, says this bonanza is conditional on both codes embracing change in 2015, ahead of the expiration of the AFL's current contract next year and the NRL's in 2017.
"2015 is the critical decision year for the future of the two dominant football leagues in Australia," Smith said.
"Cricket Australia has been the broadcast innovator building for the Australian team in Tests and ODI. Cricket Australia's T20 Big Bash League broadcast on Channel Ten has been very successful indeed with significant attendances and large TV audiences.
"I wouldn't have said that five years ago.
"[Cricket Australia CEO] James Sutherland has been the great innovator. To run the Big Bash concurrent with the India Tests and get good numbers on both, shows how strong it is.
"They will double their rights fees for Big Bash next time and Channel Ten will make money."
Live professional sport is a must have for free-to-air and pay TV broadcasters. Channel Ten's financial decline can be traced directly to the network losing AFL.
Four years ago, I interviewed Smith when he was advising the leading Australian sports on the detailed evaluation of the business case for their media rights.
He said: "Since that time, the media landscape has undergone further rapid revolutionary change with multiple access viewing platforms from FTA and pay TV and increasingly online using different devices - TVs, PCs, smartphones and tablets.
"These revolutionary changes have resulted in the increasing fragmentation of audiences across multiple channels and online portals.
"The only constant, globally, is that leading live TV sport, such as the NRL and AFL in Australia, soccer in the UK and Europe, or NFL in the US, continues to be the driver of very large TV audiences.
"Unequivocally, the NRL, AFL and cricket are the absolute must-carry sports for the commercial channels and Foxtel in Australia."
But Smith points out that sports fans who are not near a TV still want to watch live sport on an "anytime, anywhere" basis.
Furthermore, they are increasingly dual screening, using their smartphone and/or tablet for apps and connecting with their sports friends on social media (Facebook, Twitter, YouTube, Instagram).
Major sports will profit from the sale of these online rights, while broadcasters will seek to link them up with their TV coverage.
Australia's anti-siphoning laws mean that major sports must be offered to free-to-air TV first.
Smith argues that this legislation, together with the rising volume of online traffic, offers opportunities to new players, such as Stan, the joint venture between Channel Nine and Fairfax Media.
"There definitely are potential changes looming on the horizon that could ultimately be attracted to the AFL and the NRL," he said.
"Stan is one; Presto, the joint-venture between Channel Seven and Foxtel is another. Fetch TV, Apple TV and Google/YouTube could also bid.
"The big one is Netflix, a huge $US20 billion corporation. One third of all the volume on internet protocol in the US is Netflix.
"They could acquire the rights to both AFL and NRL in partnership with a free-to-air network and take these sports off the pay TV platform."
Smith, therefore, disagrees with News Corp's CFO Bedi Singh, who told a conference in San Francisco this week that he does not foresee Foxtel being caught up in the same bidding war in Britain that produced a record £5.136 billion quad play involving TV, mobile phones, broadband and telephony for live English Premier League matches.
Fox Sports, owned by News Corp, presently holds the pay TV rights to NRL and AFL.
"I don't think we are looking at getting into negotiations where you see the kind of stuff that's happening in the UK, hopefully," Singh said.
Apart from the online challenges from the new players, Singh has presumably not heard of the AFL's advanced plans to produce some of their own matches and stream them live to fans. With former News Ltd boss Kim Williams now an AFL commissioner, it represents an open challenge to Fox Sports to pay more than its share of the $1.25 billion the code currently receives.
The AFL has a media staff of 120 working on this project.
The NRL receives about the same as the AFL, when rights fees from New Zealand are added but, with potential audiences in Britain and New Zealand, would prefer to link up with a broadcaster with international ties, rather than produce games in-house.
Smith said: "A $2 billion deal is eminently achievable for both NRL and AFL."
Path to profits: Colin Smith's seven-point plan for the NRL to seal a $2 billion bonanza:
- "All games need to be live on TV, with opportunities for broadcasters to have more advertising. Swapping the Friday night games, where Brisbane sees a Queensland team at the same time as NSW sees a Sydney game and then flip the two games, works."
- "An additional team in south-east Queensland: either a new team or a relocated team from Sydney. The NRL must add another Queensland team to the Broncos, Cowboys and Titans to expand their TV programming options. Queenslanders love watching Queensland clubs. A second team playing out of Suncorp Stadium would give Nine and Foxtel the chance to gather more audience from Queensland."
- "The successful Auckland Nines must be the season kick-off for the NRL."
- "Build a World Club Championship of up to four teams between England and Australia." In the same way the ARU gained a financial bonus from Britain paying a fourfold increase for SANZAR rights, any added exposure of NRL in England will add value.
- "Develop a specific window for an annual Tri-Nations between Australia, New Zealand and England."
- "Protect and grow the game in Melbourne, if only to enhance the ultra premium product, State of Origin."
- "Ensure there are annually NRL games in Perth, Adelaide, Wellington and possibly Port Moresby and Wollongong, Cairns and Rockhampton."
