What can we learn from the EFL's new landmark rights deal?

Last month the English Football League (EFL) agreed a new five year deal for its domestic broadcast rights with Sky.  This was notable in many respects:

• A 50% uplift in the headline value of rights, against a challenging market backdrop

• 1,059 live matches per season; the biggest deal in world football

• Sky introducing a streaming service for many games

• The deal leaves in place the 3pm Saturday blackout, introduced to protect attendances at lower league football from the perceived threat of live broadcasts

• Commitment to early calendar changes, giving fans more notice of fixture movements

Reaction from the football community and the market has been very positive.

O&O was involved throughout the process.  As other sports confront the challenges of softening demand and increased consumer expectations, what are the lessons we can learn from it?

Time

The days of instituting a quick sales process and expecting the market to deliver more money are over.  The team at the EFL started working on this two years ago – it takes a lot of work and a lot of preparation to get it right.

Product

Even the most carefully constructed rights sale needs something to sell.  For the EFL, it helps that the core product is compelling – with history, deep links to communities across the country, and engaging individual storylines (the playoffs, the fallen giants, the rebirth of Wrexham…).  Moreover, in terms of what we consider to be the key drivers of value (Volume – Quality – Narrative – Jeopardy - see previous article here), the EFL delivers on all counts.

Engagement

EFL management were incredibly proactive throughout the process.  Talking to and listening to prospective buyers of all sizes, business models and degrees of seriousness; engaging with the wider football family to ensure a unified approach and no misunderstandings; listening to clubs, fans and other stakeholders and reflecting their interests and concerns.  All this takes time and effort – but it does make a difference.

Homework

To ensure we made the best possible decisions, an awful lot of groundwork was undertaken to provide a huge resource of information to underpin each element.

This included: developing a comprehensive understanding of the market and potential buyers, their current portfolios, strategies and economics.  Thorough research of the fan – as supporter, attendee, consumer and customer – to understand their needs and concerns; detailed modelling of potential packaging, valuation scenarios and auction outcomes; and gaming through the process to understand the likely strategies and responses of bidders.

Not only did this provide confidence that the decisions taken would be the right ones, it also meant that communication with the various stakeholder groups could be clear, fact-based, focused and allayed any concerns or issues.  Which brings us to:

Communication

A process lasting this long is very much a “journey” for all involved.  To bring everyone along on that journey, to ensure that there are no surprises along the way, regular communication is vital.  This ranged from set piece events such as the summer conference attended by Chairs and CEOs of all the clubs, to regular meetings of specialist groups and committees and short notice zoom calls, all through which there was ample opportunity to ask questions and voice concerns.

Moreover, external communication was disciplined and there was clear messaging, which reinforced the image that the EFL knew where it was going, and how it was going to get there.

Process

To be as flexible as possible, once initial conversations had happened, the formal part of the process had two stages.  Firstly, an RFP was sent to all potential buyers and those who had expressed an interest.  This was a genuine request for proposals – without constraints, what would buyers like to see, and how would they approach distribution in today’s complex media landscape?  Responses were encouraging, thoughtful and innovative – with almost every one being markedly different in some way to the previous model.

The second stage, informed by responses to the RFP, was a more formal ITT.  But this was structured to be as attractive as possible to as many bidders as possible – with rights packages appropriate for free to air networks, pay TV broadcasters and global streaming services. 

Keep the fan in mind

Although the objective of any rights sale is to maximise revenue, the impact on the fan can’t be forgotten.  Will they have to take out more than one subscription?  Will fixtures get rearranged for TV at the last minute?  Will they get to see their club on TV, or will coverage be restricted to a small number of favoured teams?  These considerations need to be factored in for the long term health of the sport.

Evolution

The needs of the fan, consumer and subscriber are very different today than they were 20, 10 or even five years ago, and this was reflected in recognition that a sport’s offer needs to change to meet them.  The RFP element of the process was designed to explore what the market would do if it was starting with a blank sheet of paper, and the EFL was prepared to evolve to make it work.  This included a willingness to think the unthinkable – yes, we’re prepared to consider the implications of the 3pm blackout; yes, we’re prepared to look at streaming if it’s the best way we can get more matches to more fans; yes, we can look at new business models and new entrants.  Some of this is challenging, even scary; but exploring all the options and considering all their implications meant that any change would be adopted for the right reasons – and riskier or unhelpful options could be avoided.

Help

No sports body can undertake all the above.  Although a rights renewal does secure the single biggest source of revenue for the sport, its management also have day to day responsibilities and a sport to run.  The EFL recognised the need for support and engaged O&O at an early stage.  Bringing our market understanding, rigorous approach and voice as an independent advisor to the process and the various meetings meant that the small team at the EFL were able to secure a deal which sets a new benchmark for football’s broadcast rights.