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Analysing the AFL’s record-breaking media rights deal

After the AFL’s new AUS$4.5bn agreement with Foxtel, Seven Network and Telstra became the biggest sports broadcast rights deal in Australian history, SportsPro evaluates what it means for the league over the next seven years.

21 September 2022 Ed Dixon

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Australian Football League (AFL) chairman Richard Goyder couldn’t hide his delight at the competition’s new domestic broadcast rights deal.

“This is a historic day for football,” he told the watching media earlier this month. “Not just at AFL level but for football at every level.

“It’s a historic day for our supporters all over the country and it’s a historic day for our code and the future of the code because of the legacy of what we will announce today which will live on for decades.”

Goyder and the rest of the top brass at Australian rules football’s pre-eminent competition had plenty to celebrate. The seven-year partnership with Foxtel, Seven Network and Telstra will bring in AUS$4.5 billion (US$3.03 billion), providing teams post-pandemic financial certainty while enabling the league itself to chart a course for fresh growth.

With a record-breaking contract signed and sealed, SportsPro unpicks the agreement and contemplates the long-term effect it will have on the AFL.

Who got what?

Pay-TV network Foxtel, free-to-air (FTA) broadcaster Seven Network and telecommunications company Telstra were able to continue their union with the AFL, though they had to make history to do so.

The pact is the biggest sports broadcast rights deal in Australian history and will run from 2025 until 2031. It equates to AUS$643 million (US$433 million) a season, a healthy uplift on the AUS$473 million (US$319 million) the league is getting from its existing two-year deal that runs until the end of the 2024 season.

Fox Sports and Seven will continue to jointly broadcast games after prolonging a partnership dating back to 2011. Their respective streaming services, Kayo Sports and 7plus, will also stream games. Telstra has retained live match access through the AFL Live app, as well as highlights, replay and on-demand rights.

The financial split between Foxtel and Seven was not disclosed. According to the Sydney Morning Herald (SMH), the current arrangement for the rights and costs represents a 65-35 split between the pair.

Broken down, Seven will air Thursday night games in each of the first 15 rounds of the campaign. All marquee matches will be shown live on Seven, as well as at least three additional top fixtures such as the season opener. At least 30 AFL Women’s (AFLW) home and away games, as well as the AFLW finals and the AFLW grand final, will also be broadcast by Seven and 7plus.

All AFL and AFLW home and away games and finals, excluding the AFL grand final, will be shown on Foxtel and Kayo. Additionally, the two will exclusively air a ‘Super Saturday’ of games in each of the first eight rounds of the season.

The AFL itself has retained control of the grand final starting time, which will be an annual decision. The league has made changes to its broadcast structure, though. This has resulted in there being Thursday night games in the first 15 rounds of the campaign from 2025 onwards.

The AFL is also in talks to bring forward the start time of Friday night matches in the next deal.

The AFL signed its current domestic broadcast rights deal in 2020

Was there much competition?

There was ample interest given the AFL’s status as the golden goose of Australian sport.

The three-month negotiation process saw Network Ten and its streaming partner Paramount+ reportedly table a AUS$6 billion (US$4.04 billion) offer over ten years. Nine Entertainment and its over-the-top (OTT) service Stan Sport also put forward a proposal said to be worth approximately AUS$500 million (US$337 million) a year.

Goyder revealed that talks went down to the wire, with no clear favourite emerging until just before the final whistle.

“Foxtel [and] Seven was not a knockout bid, all three of the final contenders were close in price,” he told The Age and the SMH. “The last 48 hours of negotiations was about terms and conditions.”

Commenting on the bidding process, Foxtel chief executive Patrick Delany added: “In the last 48 hours, and in particular on Monday with the shoot-out, the competition became very intense and cutthroat.

“It was a matter of putting your best foot forward, otherwise it was time to go home. All bidders took that extremely seriously and there was very hot competition for the rights.”

Despite the bidding war, the AFL’s eventual decision should not come as a shock.

“Am I surprised in terms of who got it? No,” Jon Marquard, an experienced strategic advisor to the digital media, sport, telco and technology sector, tells SportsPro.

“I think incumbency is always a natural advantage. The thought of losing something when you’re an incumbent, when it’s strategically important to you, then you can really assess the value of what your business looks like without it.

“I think both the Seven Network and Foxtel certainly were forced into that.”

Marquard states, however, that negotiations got off to a lukewarm start, with things only picking up as the finish line came into sight.

“When you get to the pointy end, everybody really focuses,” he continues. “It’s like selling a house at an auction. All you need is two people bidding against each other and suddenly you’ve got a hot market.

“In some cases, you can drag a third one in as well who goes ‘I don’t want to miss out’. So the paranoia wins.”

Foxtel, Seven Network and Telstra saw off competition from the likes of Nine Entertainment and Network Ten 

Is the price tag too high?

The AFL had reportedly been holding out for AUS$600 million a year and its patience was rewarded.

The record amount the league is trousering was always going to attract attention and scrutiny. But it could be argued the cost of losing the rights would have been even higher for Foxtel and Seven. The latter has been synonymous with the AFL for decades and relies heavily on its advertising pull. The competition’s national appeal means it translates to multiple states and territories in a way other winter sports, such as both rugby codes, cannot.

Waving goodbye to the AFL would also have hit Foxtel’s business prospects. Marquard even reckons it would’ve left the media giant “mortally wounded” due to the hangover on the cost of other sports rights it pays for. He adds that landing an exclusive Saturday fixture is a good win, even if it meant a sizeable outlay

“I’m never surprised in relation to rights increasing,” Marquard continues. “I’ve heard for 20 years in this business that sports rights are too expensive and have topped out. I’m firmly in the camp about the importance of sport as a genre.

“I think [Foxtel and Seven] could see the importance of the monetisation, what the business looks like behind it. They’ve paid decent increases. It’s not toppy but it’s fully priced.”

How big a say did the government have?

As negotiations continued in August, the newly elected Australian Labour Party (ALP) decided to weigh in, calling for the number of AFL games on FTA to not be pared down.

“I encourage the AFL Commission and its broadcast and streaming partners to ensure there is no diminution in the availability of AFL matches on free-to-air television under the new deal,” said communications minister Michelle Rowland.

“All Australians should have the chance to enjoy iconic sporting events live and free, rather than those events being behind paywalls.”

Rowland’s comments came amid the government’s review of anti-siphoning laws. That forms part of a pre-election pledge to limit global streaming platforms’ ability to bid for top sporting events before FTA broadcasters and ensure they remain free for the public.

A new government looking to score more political points is hardly startling and, ultimately, the AFL’s split between FTA and pay-TV remains largely the same as its current contract. An anti-siphoning discussion paper is due to be issued, but Marquard is not anticipating seismic proposals.

“I think the AFL has got the balance right here,” he says. “You can always tell if there’s a big outcry on something because people come away feeling agitated about the deal. It’s actually managed to satisfy all parties who feel like they’ve actually improved their position.”

In Foxtel’s case, that is sewing up an exclusive Saturday fixture. Seven, meanwhile, has got digital rights for the first time – thus opening up another revenue stream.

“Consumers have come away pretty well,” Marquard says. “More hasn’t disappeared behind a paywall.

“There’s been a slight adjustment in some states. But, roughly, the split of games between free and pay is very similar in this deal.”

The AFL plans to use some of its next TV money to further engage with local communities 

Where will the money go?

All the way down to grassroots level, according to AFL chief executive Gillon McLachlan.

“We want to be the game for everyone,” he said at the media conference announcing the league’s deal. “And this partnership will help us to do more to engage with all communities, in all states and territories and across Indigenous and culturally diverse communities.

“This partnership will provide unprecedented levels of financial support to invest more in ensuring every person who wants to play footy will be able to play footy.

“It will allow us to invest heavily in expanding our reach into the local community and also to invest in the next generation through more digital products that are targeted at attracting kids and providing a pathway to engaging physically with our game.”

Indeed, the way the AFL is constituted means the money will not just end up with players and agents. A decent amount should filter through to the amateur level.

The AFLW hopes to go full-time by 2026

“It’s a bit of Robin Hood, because you’re taking money from billionaires in terms of who the media proprietors are and actually funding it back to the community,” notes Marquard.

The war chest could end up assuring the introduction of a 19th team, with the league edging closer to making a call on Tasmania’s bid for a licence.

The AFLW is also set to benefit. The women’s competition and its players association (AFLPA) inked a new collective bargaining agreement (CBA) in May, ensuring average salaries will rise by 94 per cent to AUS$46,280 (US$31,197).

While there is still a gaping chasm between men’s and women’s wages – the average male player earned AUS$372,224 (US$250,091) for the 2021 season – cash from the broadcast rights pact is likely to flow into the women’s game. That will continue the AFLW’s recent momentum which, having launched in 2017, wants to go fully professional by 2026. A future joint men’s and women’s CBA has not been ruled out to help achieve this.

What does this mean for the AFL’s next CEO?

It was announced in April that McLachlan would stand down at the end of the 2022 campaign after eight full seasons in the job. The lucrative rights deal will be deemed quite the legacy.

It also radically alters what the AFL is looking for from its next chief executive. The length of the rights contract means the new hire may not have to deliver another domestic media arrangement during their tenure.

The criteria, then, could shift away from broadcast negotiation expertise. As for who will take up the reins, Richmond Football Club chief executive Brendon Gale, and AFL executives Andrew Dillon and Travis Auld, are reportedly among the potential candidates. McLachlan himself will not be involved in the selection process.

“Richard [Goyder] and the commission, it is their decision to make,” he said. “I feel absolutely certain about that whoever replaces me will be completely different. They will have to bring their own style and be their own person, man or woman.”

Gillon McLachlan is departing as AFL chief executive at the end of the 2022 season 

How will this affect wider Australian sport?

Cricket Australia (CA) and the National Rugby League (NRL) have been on alert.

The former’s chair, Lachlan Henderson, has dismissed suggestions the AFL’s deal has reduced Foxtel and Seven’s ability, and desire, to stump up big money for cricket – both broadcasters have a six-year deal with CA worth AUS$1.2 billion (US$809 million) that was signed in 2018.

Henderson also believes CA’s domestic media rights are “undervalued” but is optimistic of a “great deal” for the next cycle. The national governing body has enjoyed a healthy relationship with Foxtel. The same cannot be said of Seven – the network’s owner, Seven West Media (SWM), has filed legal proceedings, citing ‘quality and standard breaches’, in an attempt to terminate its CA agreement.

Henderson may be feeling hopeful, but Marquard is not expecting a big increase there.

Meanwhile, the NRL is purportedly seeking tens of millions of dollars in compensation from Foxtel following its broadcast partner’s landmark AFL contract.

According to the SMH, clubs believe there was an understanding between the two parties to revisit the current Foxtel deal, signed in 2020 and worth around AUS$200 million (US$135 million) a season, if the AFL’s contract was bigger than that of rugby league. Factoring in Nine’s pact with the NRL and its various other rights, the league takes home about AUS$400 million (US$270 million) per year.

However those talks pan out, the AFL’s deal reaffirms not only its commercial heft domestically, but also where wider sport lies in the business plans of Australian broadcasters.

“It is super important,” says Marquard. “When I’m talking to people from overseas, they don’t understand how much of an important role it plays in media.

“If you are at the top of the tree, like the AFL is, then you can do extremely well.”

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