What happens when the money runs out?
Many industries have been through profound change; some have completely died. Modern sport has changed, but it has never truly suffered.
Yes, it has suffered from scandal. But not from financial crisis. Even while the world adapted to the crash of 2008-09 it ploughed on, oblivious, a distraction in which even greater sums of money were poured into the bank accounts of young men, generated by billionaire owners, TV networks and pliant fans who put up with ever-increasing costs. Modern sport, which you could argue emerged in the early 1990s with pay TV, the evolution of stats and the emergence of more stringent drug-testing, has only gone one way: bigger.
Is that all about to change? Three recent articles are worth examining.
Let’s start with the NFL. Derek Thompson in the Atlantic points to four possible culprits for why ratings just “fell off a cliff”: the election, structural changes in TV habits, fragmentation, and the end of a golden age.
the league may have to grapple with the possibility that people aren’t tuning into football for the same reason they don’t show up to some movies: They just don’t think they’ll have much fun watching. And there is so much else to watch.
Meanwhile, Kevin Clark in the Ringer suggests that there is simply too much supply.
Despite understanding that scarcity was part of the appeal, the NFL kept growing, simultaneously turning itself into what long appeared to be an unstoppable TV powerhouse and undermining its own value. After horrendous scandals failed to stifle ratings, after replacement referees and even replacement players barely caused a drop-off, the sheer scope of this season’s offerings has shown that the product isn’t bulletproof.
That’s the NFL. What about that other football? Could this happen to the most expensive league in the world, the Premier League? The Guardian’s Owen Gibson looks at some similar factors: other distractions such as the Olympics; the question of piracy; and a decline in standards. His conclusion is similar:
could the very ubiquity of the modern game, its endless noise and hype, eventually start to eat away at the exclusivity that has fuelled its growth over the past two decades. In short, will it finally eat itself? More likely is that fans will continue to make an “appointment to view” for the biggest matches but that they could become fewer and further apart.
Let’s say that all of the above are in play: tech troubles, too many matches, falling standards. What happens next?
The economics involved are complicated. This is not a fluid market where price reflects demand and supply. Sports leagues sell TV rights for several years at a time, and the TV companies work out expected returns from advertisers and subscriptions, and take it from there. In this way, the TV networks bear the brunt: the £5bn deal struck with the Premier League runs till 2019. The question is what happens at the next round of TV rights. It’s game theory.
In short, if viewing slumps and advertisers flee, nothing much happens straight away. Fans will still go to the games, players will still be paid. There will be lots of scare stories about what happens next, and where the money will come from. But TV companies aren’t going to go out of business over this.
Then what? It’s up to the TV companies. Either they hope and pray for a turn around and throw more billions at the game, or they reduce their offer. In the case of the Premier League, the hope is that competition between BT and Sky (and possibly the BBC or ITV) will keep prices up. Let’s say that it doesn’t, and the offer comes in at a more modest £2bn, back to 2010 levels. What then?
In simple terms, clubs have less to spend. More accurately, average clubs will have less to spend – the big name clubs (Manchesters U and C, Arsenal, Liverpool etc) will still be able to pay big wages. What will happen is that the levelling out of standards across the Premier League will reverse, with mid-size clubs less able to outspend clubs elsewhere in Europe. The Premier League will revert eventually to how it was before – dominated by a few mega-clubs.
Ironically, that was the era of the Premier League that was easiest to sell. Super Sunday games of Man U vs Arsenal meant something when they were neck and neck for the title. Southampton vs Everton might showcase two teams that can beat any of the bigger clubs on a given day, but it has less of a ring to it. The levelling out of the league has not necessarily been good for business.
What won’t happen is some sort of ‘implosion’, much as we might talk of it. A club may go bust; agents will get less cash; a few players may get a bit tetchy about their contracts. But the world won’t end, and nor will sport.
In effect, any looming crisis such as exists is not a sports crisis – it’s a TV crisis. It might not be pretty, but if clubs can adapt – sell access directly, or strike different deals – they will be fine. Some will struggle more than others, but a club exists to entertain its fans, who luckily are usually rather loyal. TV shareholders might be less impressed.
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