Phil Lines – THE RIGHT LINES


PHILLINESAs head of media rights at the English Premier League, Phil Lines drove values to unprecedented levels, establishing it as the richest soccer league in the world and a magnet for top talent. Since then he has had influential roles at Lagardere Unlimited and Creative Artists and now consults to rights owners worldwide.  So  how does one of the industry’s most experienced executives see sports media reacting to technology and the changing world economic balance?

 

 There has been a lot of talk and media reporting of falling TV audiences for major sports properties. Is there any reason to panic?

In all the time I have been working in this industry it has never stood still. Over the years there has been talk of bubbles and bursting   and to understand it you have to break it down into components.

Technology is always changing so you have the effect of that on rights values while, of course, the popularity of different sports can change and has to be taken into consideration.

Over the past five years or so I have also come to realise there are emotional factors behind the current turbulence which you can’t totally put down to logic. Younger people don’t want to follow the paths of their parents and young men, in particular, don’t want to consume sports entertainment in the same way that their dad does.

They want to consume on their laptops and smartphones and they don’t want to pay a subscription – even though ad hoc buys can be more expensive in the long run.

The fact is there is a thirst for change and nothing stands still. The existing powerhouses in sport sense this and are trying to deal with it.

The only reason to panic would be if the actual popularity of football was falling and I don’t think it is. We need to take account of this turbulence and sit down and work out what is happening and what can be done about it.

There are no easy answers.  Ultimately it is not that important how a live football match arrives at a device. What is important is the revenue model behind it.

Originally new media was against subscription models and was advertising based. Now we have to come up with a business model which generates more revenue that the pay TV model and I think that has to be some sort of subscription.

The only people who don’t want to be the Netflix of sports are Netflix and that’s because they haven’t yet worked out the model. That’s not to say they won’t –  or that some of the others like Amazon and Alibaba wont. They are all looking for it and so are the traditional Pay TV broadcasters who are trying to ride two horses – their old-style cash cow model and the rising star of new technology. No one is standing still and the old generation is trying hard to adapt.

In the US the model was different because they didn’t pay individual premium sport channels. Things tend to spread from the States which is still the most entrepreneurial country on earth and its sports governing bodies are more commercially minded and innovative.   Change will start in the US, then Asia and, perhaps surprisingly, Europe might be the last place to feel it.

What would be the impact of a fall in rights fees for major football properties such as the Premier league?

I don’t know how it will play out but any threat to revenue is taken seriously by the clubs which naturally want to increase revenue all the time. One of the things which could happen is that if the rights revenue which goes to clubs reduces, the amount of money to pay players goes down and the players may decide to go. After all, footballers will go to where the money is.

Lower Premier League rights fees would impact on the quality of the product because there would be less money to pay top players. You can kill it (the product) and that wasn’t really a danger five years ago.

If the USA had fully embraced football it would now be the biggest football market in the world.  Now what has happened   is that China has money to invest in top players and has a massive domestic market to serve.  We have seen leagues fall away dramatically over the past 15 years because they have small TV markets and it is just possible that the world league – which is currently happens to be played in England could switch to China.  Everything is globalising and a lot of things will get shaken up.

So, couldn’t smaller nations get together to create bigger cumulative TV audiences?

The Biggest obstacle is FIFA because they want to keep everything pigeon-holed. If national Federations start busting out of their boxes and join together that is seen as a problem.

But they don’t seem to worry about that in North America where US and Canadian teams are in the same league…

FIFA sees anything which happens is North America as an opportunity where elsewhere it would be a threat.  That’s because it is such a big new market for football. There would be no gain for FIFA if Scandinavia and Scotland form a league.

How do you believe a 48 team FIFA World Cup will play out?

Leading football nations are in the same place as the leading European clubs. They are being asked to play in competitions which are much bigger than they were – like the champions league which has expanded and changed its format. Revenues from that are being divided among more countries so you have to ask what the top clubs and nations think about that.

When revenues are going up they will tend to go along with it. But f revenues go down the big clubs and nations would conclude they are much better off playing in a smaller – say 16 team – competition and keeping a bigger share of the revenue. It’s the same argument in the Premier League where dividing international rights revenues equally is fine when the revenue are going up. But is it starts to tail off it will become an issue again. It’s all a case of how far UEFA and FIFA push. before you get a revolution. In that respect, it is like It’s like running a country.

South East Asia is a major market for the Premier League. But as other European Leagues make concerted efforts to break the territories, is their dominance under threat?

If things are going to change it may be because of the Chinese Super League. If I were Richard Scudamore (Premier league CEO) I wouldn’t be too worried about La Liga or the Bundesliga but I’d be looking over my shoulder at China. You only have to look at the demographic make-up of those South-east Asian territories. They’ll be very happy if the best league of the world as in mainland China, particularly if the top players were going there.

And can the Chinese Super League become more than filler content in established global football markets?

When I was growing up the top football league wasn’t nearly as big in terms of press coverage – maybe there would be two pages of sport at the back of the ‘paper and you might find reports of the clubs in your area. You certainly didn’t see the six-page pull outs you get now.

The change was when Rupert Murdoch bought Premier League rights for Sky. It’s no coincidence that all of his national newspapers then started to promote it. Suddenly the Premier League was in the sports pages, the business pages, sometimes on the front page. For the Chinese Super league to be watched in mature markets it has to really market itself.  Of course, there will be noticed when players like Oscar leave Chelsea to go to China but there’s a danger that fans just forget about those players.

It’s not just about having the best players but being the best in every respect – the best playing surfaces the best stadia, atmosphere and then you have to market it like any other product. You have to remind people   of all the great players they could be watching.

I don’t think it will be easy for the Chinese Super League because there is not a natural heritage for any sport in China. The people love gambling and like sport to gamble on but playing or watching for the sake of it is not in their history and it will take time.

But can’t culture change? Look at the NFL in the UK

I would rather have the job of marketing Chinese football in the UK than marketing the NFL anywhere outside the US. One has a future and I think the other is going to struggle.

There are events which can happen twice a year and those that can happen once a week. It’s what’s in the DNA of a culture. Football is not in the DNA of China yet, and the NFL is definitely not in the DNA of any but a very few people outside of America.

Is the growing pressure to give more media rights back to football clubs going to become irresistible?

Not having live rights is a huge brake on their aspirations. They have everything else but that doesn’t come close to the value of the live rights and that’s the one thing they can’t get without risking killing the golden goose – the centralised sale of rights.

So far as the Premier League is concerned I don’t think any match should be wasted, Fans (in the UK) need to have the chance to watch games live and I can’t see the situation where some games are not shown being allowed to continue much longer.

People are prepared to go online and watch in lousy quality   with foreign commentary which is creating a window for piracy and I firmly believe that, like every other major league in Europe, every game should be available. There is a market that should be exploited and it has to happen. There is no evidence it would impact negatively on gates. In fact, putting a match on TV makes it more of an event.

What other sports can become major factors in the global rights market?

There are a few. One of the reasons WME IMG is working with MMA them is because they can – they are young, new, commercially minded governing bodies which are easier to work with than, say, established Olympic sports.

I had expected to see Olympic sports selling off their media rights into a subsidiary company in which they had equity and removing it from the traditional badge and blazer mentality but that hasn’t happened as much as I thought it would.  Of course, there’s The Olympic Channel created by the IOC because they need to have a platform for those sports outside the Games. The way it is done is important and it is costing a lot of money. I don’t know yet whether it will be worth it.

There are some interesting dynamics around Formula1. Discovery will own both F1 and Formula e. So much of F1’s revenue comes from hosting fees form cities around the world and in these environmentally conscious times it is hard to see public money continuing to be spent on something as un-green as F1. Perhaps ultimately there will be a coming together of the F1 and Fe series.  I am sure future of motor racing is electric.

Of course, there may be a future where it is all about e-sports. It is a factor and it is going to get bigger because that’s the world we live in.  We are in the twilight of the physical world and the move to virtual is irreversible – whether we like it or not.

So, can rights owners continue to go for the Big TV Bucks for major properties and see put them behind a pay wall. Surely the sponsors will walk away?

Well the UEFA Champions League rights are coming up this spring. So far as the UK market is concerned they are still important enough to BT Sport and Sky for them to compete but UEFA may well simply demand more for the rights because sponsors don’t like it.

F1 has also changed and gone on to Pay in some markets.  It all comes down to where the money is but if I was one of these Pay broadcasters I would look to collaborate with a free-to-air channel.