As US stocks sank into a bear market and the Federal Reserve readied its biggest interest rate rise in almost three decades, a furious bidding war was under way in India.
By the end of Tuesday, companies from Disney to Viacom18 had agreed to pay more than $6bn to air the Indian Premier League, the world’s most watched cricket competition. A day later, Apple made its first foray into football, stumping up $2.5bn for the rights to stream Major League Soccer — the US men’s professional league.
The pair of record-breaking deals comes as surging inflation and rising borrowing costs hit the wider M&A market and force sectors from retail to property to prepare for an era of cash-strapped consumers. But for those in the sports industry, the ability of the IPL and MLS agreements to seemingly defy economic gravity comes as little surprise.
“Sports rights are a very strange beast, it seems, because nothing seems to stop their march,” said one executive involved in the IPL bidding. “People don’t want to be left out — and the fact is people consume sport regardless.”
It is a thesis facing its toughest test yet as central banks threaten to lift rates further and inflation forces consumers to retrench. There are already signs that investors are demanding more restraint from media groups such as Disney — its share price is down 40 per cent this year.
Last month, a US-led consortium acquired Chelsea FC in a £2.5bn deal. Days later, the €1.2bn purchase of Italy’s AC Milan marked a new peak in Europe, while the $4.6bn purchase of the Denver Broncos NFL franchise by a scion of Walmart’s founding family set a new record across all sports.
The 2018 deal to screen the English Premier League in the UK shows that the value of media rights is not predestined to keep rising at every contract renewal, as broadcaster BT reined in its sports ambitions, allowing rival Sky to pay less than the previous deal.
But for those executives confident that the sports investment boom can ride out the looming downturn, the fallout from the 2008 financial crisis offers some comfort.
“Sport rode 2008 out really well,” said Tim Crow, who advises rights holders on broadcast deals. “It’s difficult to call anything recession proof, but the fact is there were long-term contracts and they had to be honoured.”
The most gung-ho in the industry claim a tougher economic backdrop could even be a benefit as consumers are forced to pick which streaming services they subscribe to more carefully. In that environment, access to exclusive premium content, such as live sport, would become vital in the battle for eyeballs. Roger Goodell, the NFL commissioner, said in 2012 that the recession spurred by the global financial crisis even benefited the league by attracting more television viewers for games.
“The value of the rights has more to do with competition than it does have to do with the current economic conditions,” said Daniel Sillman, chief executive of rights marketing company Relevent Sports Group.
The boom in media rights has in recent weeks fed through to a series of record-breaking acquisitions of individual clubs.
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