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The Outer Line: Why are cycling’s TV rights so under-valued?

Either people are paying you to consume your content or you are effectively paying them to consume your content.

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Daam van Reeth contributed to this story.

The fact that cycling plays out on the road, rather than in a stadium where tickets can be sold, is often cited as the primary reason for the financial challenges of the sport. The inability to collect gate receipts certainly differentiates cycling, but there’s more to the equation than that. A quick bit of research shows that many other sports rely more heavily on TV broadcast rights than on ticket sales to guarantee their financial success. And contrary to conventional wisdom, cycling’s real problem is not so much that organizers don’t share the revenue; the real problem is that the total TV revenue is so tiny, to begin with. This is a challenge the sport must work collectively to solve, and analyzing other sports can yield some useful lessons.

The popular English football club Liverpool FC is representative of English Premier League teams, in that it makes only 16 percent of its 2019 revenue from match-day sales, which includes not only ticket sales but also concessions. Meanwhile, TV broadcast revenue accounted for a whopping 49 percent of the team’s $650 million in total revenue. And similar breakdowns characterize other major sports. In the National Football League (NFL), for example, the majority of revenues are derived from merchandising and TV deals, not ticket sales. Similar trends are seen in the other major professional sports.

These examples go a long way towards dispelling the myth that cycling teams cannot be self-sustaining simply due to the lack of a physical playing ground. However, they also underline the massive opportunities which the sport is currently failing to capture. By its nature, cycling will never be able to generate much revenue in the way of ticket sales, but there are some ways in which it can extract more value for television rights.

Most other professional sports leagues, like the English Premier League, the NFL, NBA, and NHL all have very lucrative television broadcast deals. These deals – with television networks like ESPN, NBC and Sky Sports – pay billions of dollars to those sports for the right to broadcast their games. The English Premier League, where Liverpool FC plays, has a $2 billion/year domestic broadcast rights deal with Sky, BT, and Amazon. Likewise, the NBA has a $2.6 billion per year domestic deal, while the NFL brings in $3 billion per year with their U.S. deal.

2018 Tour de France
Andrey Amador of Movistar Team during the 2018 Tour de France.

These huge sums of cash are then distributed among all the teams, allowing them to pay higher salaries to their athletes and managers, to build their franchise values and to collectively grow the sport. Contrast that to the situation in professional cycling, where teams get no revenue from television rights, and have very limited alternative revenue sources – a situation in which the current COVID-19 tragedy has only served to underscore.

Pro cycling will never enjoy the audience levels of mainstream pro sporting leagues, but if one adds up the raw viewership numbers, there are a surprising number of global viewers for top races like the Tour de France, the Ronde van Vlaanderen or Paris-Roubaix. For example, the 2019 Tour de France averaged over 10 million daily viewers in the major markets of France, Germany, the U.K., U.S.A., Belgium, and Spain for each of its 21 stages. And Paris-Roubaix race tendered close to five million viewers from just Italy, France, Belgium, and the Netherlands.

In the U.S., the 2019 Tour de France averaged 323,000 daily viewers. This is very comparable to the National Hockey League, which averaged 330,000 viewers per game in the U.S. for the 2018-2019 season, and not that far from the English Premier League, which averaged 457,000 viewers per game in the U.S. on NBC Sports. The Premier League gets $167 million per year for its U.S. broadcast rights, while the NHL gets $200 million per year. Yet, NBC reportedly only pays ASO $8 million per year to broadcast the race in the U.S. The bottom line is this: cycling’s TV viewership isn’t insignificant, but the value of cycling TV rights is disproportionately – if not ludicrously – low.

Let’s consider a couple of direct apples-to-apples comparisons. The pay-TV contract of Major League Soccer (MLS), which airs in the U.S. on Fox and ESPN has a $90 million a year broadcast deal in place. Last year, the league had a weighted average of 329,000 viewers across 70 individual game slots lasting 90 minutes each. This results in a total of 6,300 total broadcast minutes, and a total of 2.1 billion “viewed minutes,” or approximately 35 million “viewed hours.”

Across its schedule of 380 Premier League games, NBC drew an average of 457,000 viewers for each 90-minute match during the 2018-2019 season. This results in 34,200 broadcast minutes, and a total of 15.6 billion viewed minutes or 260 million viewed hours, for which they paid the $167 million figure.

Viewed in a similar manner, the 2019 Tour de France yielded comparable figures for the U.S. market. As mentioned above, it averaged 323,000 viewers on NBC Sports across 21 individual “game” slots lasting roughly four hours each – an estimated total of 5,040 (21 “games” X four hours X 60 minutes) or broadcast minutes. This translates to 1.6 billion viewing minutes or some 27 million viewing hours. The table below summarizes the comparison.

tv rights table

While the Premier League’s total viewing hours dwarf the Tour de France’s, when you factor in the costs of the respective broadcast rights, the Tour still presents a better value per viewing hours for NBC – less than half the cost of the Premier League deal. But because this viewership figure is actually calculated for a “match window” in which two or three games may be shown at the same time, the cost figure in the table is likely underestimated by a factor of two or three. Hence, the cost per viewed hour of EPL broadcasts is probably four or five times more expensive than cycling. And, as the table shows, the MLS is more expensive than cycling by a factor of almost ten.

The bottom line is that cycling represents a value comparable to other sports, but it clearly has not yet figured out how to squeeze a greater financial value out of it its television rights.

To address this challenge, stakeholders must identify and then address the key challenges. And there are several major systemic problems standing in the way. First, while NBC’s Tour de France payments discussed above may seem absurdly low relative to the market for other live sporting events, they are actually higher than what ASO receives from certain other European state channels with much larger audience numbers. And herein lies yet another unique legacy problem of pro cycling. ASO has a broadcast deal with the European Broadcasting Union, an umbrella body of mainly public-service broadcasters, to air the race on each individual country’s free-to-air channel.

And not only that; there is actually a French law which dictates that the Tour de France and Paris-Roubaix be aired on a free-to-air channel in France that can reach 85 percent of the country’s residents. This seemingly antiquated legal requirement means ASO simply cannot auction off these rights to the highest pay-TV bidder, like the way in which English Premier League rights were pulled from free-to-air TV and placed behind a paywall on Sky.

Finally, there is the added cost and sheer complexity of capturing and broadcasting a bike race on an open course. While stadium sports can set up a few fixed camera positions, cycling needs highly trained professionals filming from the back of motorcycles while riding over cobblestones or from helicopters high above mountain passes, and relaying those signals to circling overhead aircraft. High costs like this may prohibit upstart pay-TV outlets like Eurosport from bidding for exclusive rights, but technological advancement, creative partnerships, or even the rethinking of open-road courses could potentially be deployed to alleviate these issues.

photojournalists on a motorbike
Bradley Wiggins was a commentator for Eurosport at the 2019 Tour de France.

But there is another, and more fundamental reason why cycling has not come anywhere near maximizing the value of its television rights. As former Giro d’Italia director Michele Acquarone emphasized on a recent Put Your Socks On podcast, cycling’s key stakeholders greatly devalue their own television rights by failing to coordinate and bundle them for sale. Instead, by individual organizers auctioning them off individually in an a la carte fashion, broadcasters can cherry-pick the premier races and leave the vast majority of the remaining top-level events – as many as 500 – basically unable to sell their broadcast rights. The simple creation of a single business entity to bundle all these rights would simultaneously create two huge benefits for cycling: (1) it would allow much easier accessibility for a wider range of fans, and (2) it would create greater revenue potential to the overall sport – which could be shared amongst the teams and used to create a financially healthier sport. It seems that this could be in everyone’s interest.

In a post-COVID recessionary era, media companies will be forced to navigate diminished advertiser budgets, and we should expect to see more sporting events – and more media publications – pull back from the free-to-air model and rely more and more on optimizing their ways of charging viewers for the privilege of seeing their events. While the current sponsorship-based model of professional cycling has “worked” at least marginally up to this point, alternative television monetization strategies should be seriously pursued in the coming months, as the sport tries to emerge from the COVID era. As we’ve said in the past, either people are paying you to consume your content or you are effectively paying them to consume your content. As a sport, cycling will hopefully learn to package its broadcast rights more efficiently, for the benefit of the fans and the good of the sport.

Daam van Reeth is a Professor of Economics & Business at the Katholieke Universiteit Leuven, in Leuven, Belgium.

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