Phillip Browne On The Question Of Television Rights

Much of the coverage over the past number of days on the issue of TV broadcast rights, culminating in the move by the Government to propose a list of events to be made available on terrestrial stations, has largely failed to grasp the real issue, which is that sport has irrevocably changed over the last ten years.

The coverage, some of which has been uninformed and even hysterical, has demonstrated little informed comment regarding how modern sport is financed.

Taking the I.R.F.U. as an example – rugby is a professional game at the top tier operating in an international marketplace with a cost structure dictated by our wealthy international competitors. Irish rugby must invest in professional rugby because the financial well being of the game is dependent on Irish professional rugby being competitive internationally and adding value to the expensive sporting properties purchased by broadcasters and sponsors alike.

The reality is that the profit derived from the sale of broadcast rights, sponsorship/advertising and gate receipts surrounding the professional game, funds the delivery of recruitment and participation programmes for children in schools and clubs around the country. Some 52% of I.R.F.U. income derives from the sale of television broadcast rights and associated sponsorship and perimeter advertising. Gate receipts count for 15% of income, a further 22% derives from a variety of other income sources and the recent announcement of Government grant for underage development programmes will account for 11% of I.R.F.U. income in this coming season.

Whilst the Government has only recently truly engaged sport by providing more realistic levels of funding, mainly for capital projects, it is quite clear that the commitment being made by the I.R.F.U. to grow and develop its sport in schools and clubs around the country simply could not be sustained by Government grants alone. For instance, I.R.F.U. development and support programmes aimed at clubs and schools will this year amount to in excess of Euro 10 Million – the Government grant for I.R.F.U. operational programmes at Euro 3.7 Million falls well short of this figure.

Some commentators and politicians question the value of sport, and whether it needs State support. Sport, and Irish sport is no exception, generates a number of dividends for society – some more tangible than others. There is clear and compelling evidence that modern sport has become a major contributor to the economy of our country. The Department of Education commissioned a report in 1994 entitled, The Economic Impact of Sport, which showed that Irish sport contributed some Euro 711 Million (or more than 2% of GDP) to the economy at that time.

In 1998/99 the I.R.F.U. commissioned an Economic Impact Assessment in relation to rugby internationals held in Dublin and it demonstrated that the economic contribution by four rugby internationals in that period was some Euro 63.4 Million. 54% of this contribution was derived from outside Ireland, i.e., effectively fuelling invaluable Tourism related revenue.

There is also a compelling argument that there is a health dividend to be gained from sport. Well funded, well organised sport can deliver effective participation programmes to children and youths at schools and clubs throughout the country. Studies show that there is a good return on investment in sport for children in terms of a reduced Public Health Bill in the future.

For the major sports, the only way in which they can fulfil their prime objective of promoting and developing their sports for the benefit of local communities and society at large, is through the exploitation of their key commercial properties – the most critical being television broadcast rights. There are two elements in the sale of television broadcast rights that sports organisations focus on. There is the need to expose the game to the widest possible audience via the medium of television and this not only means the much sought after international sporting events but equally importantly exposure of the domestic game at club or schools level.

There is also the need to generate income from the sale of the rights to fund the activities of the sporting organisation including the development and expansion of the sporting programmes delivered to schools and clubs throughout the country.

Maximum revenues can be achieved through sale of rights to subscription broadcasters but this is at the cost of exposure. Conversely maximising exposure through sale of rights to ‘free to air’ broadcasters has a revenue implication. Sports organisations have to assess their requirements for exposure and revenue and find a balance in terms of where they sell their broadcast rights.

Unfortunately Irish sport has not been in a position to find this much sought after balance because RTE have ruthlessly exploited their dominant position in the Irish broadcasting marketplace. Whilst the entry of TV3 to the ‘free to air’ market is to be welcomed, it has only one channel and minimal resources and offers no real competition to RTE which maintains its dominant position and effective monopoly in the ‘free to air’ sports broadcasting market.

In the context of rugby, RTE paid no rights fee until 1994 and only in the last five years has this balance been redressed somewhat with RTE paying a modest rights fee. This could only be achieved by the I.R.F.U. using the appeal of its major international fixtures and the threat of selling broadcast rights elsewhere to generate a minimum cash rights fee from RTE and to leverage vital exposure for the domestic game.

Regrettably all the recent indications from RTE suggest that it has embarked on a retrenchment of its sports broadcasting remit. The removal of ‘Saturday Sports Stadium’ from our screens deprived the licence paying public access to regular domestic sport. It has also been evident from our negotiations with RTE that the national broadcaster has little interest in Irish sport other than a cherry picking of the major events to the detriment of exposure for domestic and local sport.

There seems to be an identity crisis within RTE. On one hand it acts like a commercial broadcaster seeking only the prime events and rejecting its public service remit to provide a service to the licence paying public in providing proper coverage of domestic grassroots exposure of sport on national television. Yet on the other hand, RTE vociferously supports the proposed Government legislation to list major sporting events effectively protecting those events for RTE. RTE is either a commercial broadcaster or a public service broadcaster – it cannot have it both ways.

If the proposed Government legislation designates or lists the major sporting events effectively forcing their sale to RTE, the only real ‘free to air’ player in the sports broadcast market, there is a real danger that Irish sport will suffer significant damage. It will reduce or eliminate the negotiation power of the sports organisations with a double impact on firstly the ability of sports organisations to negotiate exposure of the domestic club game with a consequential knock-on in terms of reduced sponsorship at club level. Secondly, it will inevitably allow RTE to continue its policy of not paying a fair value for broadcast rights – a broadcasting double whammy!

The concern of sports organisations is that listing of sports events will completely strangle their capacity to negotiate with RTE and lets face it, there is no evidence to suggest that RTE is going to change its attitude. Irish sport at grassroots level in schools and clubs around the country will be the loser and ultimately it will affect the competitiveness of Irish sport.

Protection or listing of sporting events is an appropriate tool for protecting the interests of the public when there is a genuine and vibrant broadcasting market, such as in Germany, U.K. or in the U.S.A. with multiple terrestrial broadcasters competing for sports programming content. However, in a small country with a dominant or monopolistic broadcaster, listing of sporting events is a very blunt weapon with the potential to have disastrous consequences for sport.

Where does this lead us? Sports organisations want coverage and exposure on RTE, but they want payment of fair and proper rights fees and a genuine commitment to meaningful sports programming at all levels of the game for the licence fee paying public. The Government obviously has a responsibility to the public, but it equally has a responsibility to Irish sport, which makes a significant contribution to Irish life, to our society and indeed to our economy.