PLUS EUROPEAN CHAMPIONSHIPS REVIEW • JEFF FOULSER • WORLD CUP AUDIENCES

ISSUE 17 | WINTER 2018THE MAGAZINE OF SPORTS MARKET INTELLIGENCE

BURSTAMBITIONS

TALK DIRECT

Contents

The Big 1004 The top sporting deals, controversies and moments of the year (part 2) World Cup TV audiences06 Why traditional TV viewing is not dead yet European Championships08 An innovative (and successful) addition to the multi-sport calendar Jeff Foulser12 The Sunset+Vine chairman on wins and losses in the production game Cover feature18 Analysing MP & Silva’s financial implosion, the rights surrendered and the lessons to be learned from its plight Numbers Game24 A snapshot of Sportcal Media research and insight Index29 Key information on the major events and summits on the horizon

jonathan.rest@sportcal.com

Jonathan RestEditorSportcal Insight

There will be a large, noticeable void in the Grimaldi Forum as the

media rights industry makes it annual jaunt to the Principality for the 2018 Sportel Monaco Convention in late October.

MP & Silva’s collapse has been described in newspapers as “the biggest fail in sports marketing history.”

The demise has certainly been quick. There’d been talk in the market that the

agency and its Chinese owners had been in dispute for much of 2018, principally over the levels of investment, but it wasn’t until July that its troubles were publicised.

A couple of high-profile rights losses accentuated the problems and once word was out, the domino effect ensued as lucrative contract after contract was torn up amid missed instalment payments and key executives exited.

MP & Silva’s plight is expertly deciphered by Martin Ross in our cover story, posing the question of where does the downfall of one of the industry’s heavy hitters leave the sector’s balance of power?

A Sportel Monaco veteran remarked to me on the sidelines of last year’s convention that “it’s a bit boring this year… there’s no gossip, nothing really going on.”

I’m sure his thirst for gossip will be suitably quenched this year.

While MP & Silva’s bubble may have burst, linear TV’s remains very much afloat, despite its much predicted death.

The Fifa World Cup in Russia proved that, for big-ticket sport, there’s still nothing better than the big screen, and the numbers prove it.

Elsewhere in this market-focused edition of Sportcal Insight, Jeff Foulser, chairman of Sunset+Vine – the production firm seemingly intrinsically linked with sailing in recent years – talks us through plans to diversify the client base.

Foulser has spent decades in the media industry, and says to survive you need to have a “strong chin.”

For MP & Silva, it seems the knockout blow was fatal.

The Absent Agency

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One of a kind in Switzerland Launched in 2017

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CAS/DAS in Sports Law

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3www.sportcal.com Sportcal InsightWINTER 2018

THE BIG OF 2018

USA—Discovery, the US-based media giant that owns Eurosport, agreed a blockbuster 12-year deal to acquire the international rights for golf’s PGA Tour, in a $2-billion agreement set to kick in next year. The deal covers TV and online rights and the development of an OTT service, covering more than 140 tournaments a year, including about 40 PGA Tour events.

SAUDI ARABIA—A number of sports organisations and broadcasters joined BeIN Sports in the fight against the beoutQ pirate network active in the Middle East and North Africa. Arabsat, the Riyadh-based satellite provider in which Saudi Arabia is the largest investor, denied claims that its satellite frequencies were being used by beoutQ.

NORWAY —Norwegian administrator Anders Besseberg stepped down as president of the International Biathlon Union amid a prosecutors’ probe in Austria and his home country into allegations of doping, fraud and corruption involving Russian athletes and officials. Nicole Resch, the IBU’s secretary general, was also provisionally suspended by the IBU’s executive board.

MALAYSIA—The Asian Football Confederation accepted an offer from Wuhan DDMC Culture Co., the Chinese sports and entertainment firm, and Fortis Sports, a special purpose vehicle set up by former Team Marketing senior executives Patrick Murphy and David Tyler, for its commercial rights over an eight-year period. The deal runs from 2021 to 2028 and includes rights to the Asian Cup and AFC Champions League, the top national teams and clubs competitions, respectively.

FRANCE—TF1 registered an average audience of 19.3 million viewers and an 82.2-per-cent viewing share as France defeated Croatia 4-2 to win the 2018 Fifa World Cup in Moscow. The figures for the game, which kicked off at 5pm locally in France, represented the best audience of the year in France and the seventh-biggest audience in French TV history.

SPAIN—LaLiga, the top soccer league, entered into a 15-year joint venture with Relevent Sports, the organiser of the International Champions Cup, the multi-continent pre-season exhibition soccer tournament, which will involve a regular-season game being played in USA. The initiative was promptly opposed by AFE, the players’ union.

CANADA—Canada will host matches at a men’s Fifa World Cup for the first time in 2026. The country was part of a three-way bid along with USA and Mexico that defeated Morocco by 134 votes to 65. It will be the first tournament to feature 48 teams. Canada and Mexico will stage 10 games each, with 60 held in USA.

BRAZIL—Jose Maria Marin, the 86-year-old former president of the CBF, the Brazilian soccer federation, was jailed for four years for corruption, the latest development in the long-running ‘Fifa-gate’ probe into allegations that bribes and kickbacks were paid for media and marketing rights to soccer competitions across the Americas.

GERMANY —Allianz, the German insurance giant, will become one of the International Olympic Committee’s elite TOP sponsors in an eight-year deal starting in 2021 that also includes an extension of its global partnership with the International Paralympic Committee. Allianz will cover the IOC and local organising committees of the Olympic Games, with the aim of expanding this to national Olympic committees, their teams and athletes.

ITALY—Games from Serie A are being shown live in a number of territories on an over-the-top subscription service developed by IMG, the agency that holds the international media rights to the Italian top flight for the next three seasons. The ‘Serie A Pass’ service went live in time for the start of the new season on 18 August, showing all live games, match replays, magazine and archive programming.

The Big 10 of 2018 5www.sportcal.com Sportcal InsightWINTER 2018News4

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News6 Analysis 7www.sportcal.com Sportcal InsightWINTER 2018

platforms, an organisation record, while 4.3 million people tuned in for the semi-final against Croatia via the ITV Hub, creating a new streaming record for the commercial broadcaster.

It is just that the gap between the linear and digital audiences was bigger than many would have envisaged.

The main ITV channel registered an average audience of 24.3 million viewers for England-Croatia, the highest football audience on a single UK channel ever.

A total of 26.1 million people in France watched the World Cup final once around 5 million of out-of-home viewers were added to the 19.3 million on TF1 and 1.6 million on pay-TV’s BeIN Sports., according to Médiamétrie.

Germany disappointed on the pitch, but at-home audiences were strong, averaging 26.3 million across the three group games on public-service broadcasters ARD and ZDF.

Spain went one game further, and the penalty shoot-out defeat to Russia drew

Russia 2018 injects life into linear TVNo-one watches that box in the corner of the living room anymore.

By Jonathan Rest

Or so we’re told. But for one month in June and July,

the remote control was dug out from the bottom of the sofa, mobiles and tablets were put to one side – still within easy reach though – as, worldwide, the Fifa World Cup emphasised the enduring power of linear television when it comes to broadcasting live, big ticket sport.

According to early estimates from Fifa – a deep dive analysis is not expected until the fourth quarter – the total number of unique viewers of the 2018 World Cup in Russia is expected to exceed three billion across all viewing methods.

More than one billion are projected to have watched France crowned World Champions with a 4-2 win over Croatia on 15 July.

Eurodata TV Worldwide believes 10 per cent of the global final audience came from 19 European markets, fuelled by the presence of France, England, Belgium and Croatia in the final four.

As Yassine Berhoun, sports director at Eurodata TV Worldwide, puts it: “This clearly shows once again that even at the age of mobile devices and non-linear viewing, major sports events are the only shows capable of gathering such large audiences in front of a TV set.”

It’s not that the digital audiences were not there.

Fifa says that around 22 per cent of the total tournament viewership watched out of home or on computer/mobile devices.

Indeed, TF1 reported a record 1.9 million live visits to its digital platform during France’s quarter-final win over Uruguay, while in USA the tournament delivered the top three authenticated streaming events in Fox’s history (830,000 for Croatia v England; 657,000 for France v Belgium; 615,000 for Brazil v Belgium).

In the UK, a unique total (not an average audience) of 3.8 million people streamed England’s quarter-final win over Sweden via the BBC’s online

a 14.3 million peak for Telecinco, the highest audience of the year so far in Spain for an event on a single channel.

Audiences will continue to fragment and the gap will no doubt shrink by the time Qatar kick off the next World Cup on 21 November, 2022, but linear is still alive and kicking.

Josh Smith, director of Fifa TV Services, tells Sportcal Insight: “With TV viewing considered to be in decline overall, people look towards the enduring power of live sport to bring together large TV audiences.

“It’s clear that the Fifa World Cup brings people together around a television screen in a way that is almost unparalleled. If you put the event in the context of proliferating devices, shorter attention spans, and greater competition for people’s time, the Fifa World Cup becomes even more valuable in bringing together a massive, diverse, global audience around a single live event with 64 matches that are each like a final.”

Lucas Hernandez of France hands the trophy to teammate Florian Thauvin as they celebrate victory after the 2018 FIFA World Cup Final between France and Croatia at the Luzhniki Stadium on July 15, 2018 in Moscow, Russia

8 9www.sportcal.com Sportcal InsightWINTER 2018European Championships: TV Gold?Opinion

August’s inaugural event was created with the mission statement of combatting dwindling viewing figures for Olympic sports in Europe by amalgamating standalone European Championships and enabling each sport to feed off the multi-sport concept.

So was it a success? In short, yes. The European Broadcasting Union heralded audiences “beyond its expectations.” Athletes revelled in the additional media interest on-site, Glasgow’s reputation was cemented as a sports city that delivers gold-standard sports presentation and ticket sales, like viewer interest, gathered momentum during the 11-day event held in Scotland and Berlin.

It wasn’t without its glitches - notably those from scoring and timing provider

Atos - but the event concept emerged stronger following its premiere and left other small- and mid-sized sports looking on enviously.

Convincing the bulk of the EBU members to showcase action on their main channels proved crucial in driving sizeable ratings and audience shares that comfortably hit two figures. In Poland, the rowing audience tripled compared to the sport’s standalone 2017 European Championships. In the UK, the BBC trumpeted an audience of

2.7 million viewers for mixed triathlon on a Saturday evening. Frankly, not the kind of audience you could attract by shifting coverage of a standalone championships online or hiding it behind a red button.

Such figures left TVE in Spain’s decision to programme action on sports channel Teledeporte to look retrospectively baffling. Coverage from an early-evening swimming session that produced a Spanish silver medal netted just 93,000 viewers (a 1-per-cent share). An exception to the rule, though, as the ‘strength in numbers’ of seven different sports and a tightly-packed schedule designed to retain the interest of the impatient millennial sparked improved audiences. The broadcast reach was one that the rival European Games has come nowhere close to matching.

Indeed, the exposure generated will leave would-be sponsors bemoaning a missed opportunity (just Spar and Strathmore signed up as Glasgow 2018 top-tier commercial partners).

The unravelling of the sponsorship matrix proved – alongside the schedule – one of the biggest headaches for stakeholders. Visiting the different venues, aquatics events were typified by generous room for LEN sponsors (a scenario that irked some broadcasters on site).

Indeed, you could feel the LEN influence – be it the swimming confederation’s generous ticket allocation, the army of LEN blazers or the crackdown on any illicit video filming.

UEG, the European gymnastics body, had to forego any exposure for its major

“THE BROADCAST REACH WAS ONE THAT THE RIVAL EUROPEAN GAMES HAS COME NOWHERE CLOSE TO MATCHING.”

EUROPEAN CHAMPIONSHIPS: TV GOLD?By Martin Ross

sponsor (SmartScoring) but heads into negotiations over 2022 unwilling to make the same compromise. Issues that can be overcome, of course, especially with the smaller federations having now reaped the benefits of piggybacking on the popularity of other sports (not how they’d put it). There will always be some level of compromise over commercial inventory or primetime scheduling to keep the big boys happy.

So what of the benefits on different sports of the top-level uniform host broadcast undertaken by the EBU’s Eurovision?

The 220 cameras deployed at the Glasgow events (including 32 for mountain biking) as part of the £8-million ($10.4-million) production contract generated stunning images, although the likes of gymnastics and swimming are already accustomed to high standards for their events (at least when held in major markets).

Rowing certainly felt the impact, receiving approval for a cable cam to cover the last 250 metres with 90-degree images. The graphics and logo also looked slick, as you might expect given the involvement of a former TEAM Marketing man and an ex-Uefa marketing director (event co-founders Paul Bristow and Marc Jörg).

Given its success, other sports will surely target 2022. But the strength of the concept is that it is compact and does not jump from event to event haphazardly (a risk at an Olympics). It can only be a certain size. The concept also keeps the hosting burden down for cities at a time when European candidates are not exactly throwing themselves forward to stage multi-sports games.

But could golf free up a slot? Quite possibly.

ZDF, the public-service broadcaster in Germany, bemoaned its inclusion as

a “concession to Glasgow.” The EBU, disappointed by the strength of the field (not aided by the clash with the US PGA Championship), has put a marker down, warning that “the 2022 entrance card can only be the quality of the athletes.”

German broadcasters have already cited beach volleyball as a possible addition (and the EBU is keen on “another team sport or a modern urban sport”). While they won’t make the decision, surely the broadcasters’ voices will be listened to.

The European Championships debut wasn’t perfect. Certainly some of the printed media failed to convey the feeling of a combined event and more could have been done outwith the host cities to market (and explain) the championships in the lead up.

But these are minor grumblings that shouldn’t detract from a bold and novel concept that captured viewers’ interests and is surely here to stay.

“THE CONCEPT ALSO KEEPS THE HOSTING BURDEN DOWN FOR CITIES AT A TIME WHEN EUROPEAN CANDIDATES ARE NOT EXACTLY THROWING THEMSELVES FORWARD TO STAGE MULTI-SPORTS GAMES.”

11www.sportcal.com Sportcal InsightWINTER 2018

HOSTING WINNERS

Sport Event Denmark is celebrating 10 Years! With numerous World Championships and European Championships in Denmark, we are proud to welcome the World of Sport. In the coming years Denmark will host many more world-class events.

Starting in 2018 including: Sailing World Championships for all Olympic classes, ITU Multisport World Championships Festival and IIHF Ice Hockey World Championship.

See you in Denmark!

12 The Producers

But it’s not all been plain sailing. Simon Ward reports.

The competitive and changing nature of the host broadcasting and production business means that firms in the sector need to be inventive and resilient if they are to be successful.

That is the view of Jeff Foulser, the long-standing head of Sunset+Vine, which has worked on a wide range of major leagues and competitions for the likes of UK broadcasters BT Sport, the BBC, Channel 4 and Channel 5, and with federations such as the International Cricket Council and World Sailing.

Its recent experience includes prominent international events such as the Commonwealth Games, Olympic Games, Paralympic Games and IAAF World Championships.

Speaking to Sportcal Insight at Sunset+Vine’s headquarters in Hammersmith, west London, Foulser claims that these associations have helped Sunset+Vine to build “a good reputation” around the world, and that it is perceived as “innovative and creative and [a company that] always delivers what we say we’re going to deliver, so we work very well with clients.”

However, he acknowledges that some major contracts have been lost along the way: the upshot, he argues, of operating in an unpredictable and, at times, fickle sector.

“You have to take it on the chin and move on,” says Foulser.

“We’ve done a lot of taking it on the chin over the years. You do need a strong chin in this business. You need to be able to pick yourself up.”

Sunset+Vine has demonstrated resilience and flexibility in landing commissions for new sports, recently being appointed as host broadcaster of the second season of Super League Triathlon, the Singapore-based professional series that mixes five new race formats.

This, together with deals to act as the host broadcaster of September’s World Equestrian Games in Tryon, North Carolina in USA, and next March’s European Athletics Indoor Championships in Glasgow, Scotland, helped to compensate for missing out on the production contract for Channel 4’s coverage of the Tokyo 2020 Paralympics.

13www.sportcal.com Sportcal InsightWINTER 2018

Sunset+Vine, the UK-based sports production company that has 35 years’ experience in its field and can boast leading broadcasters and federations among its clients, has recently diversified into new areas, while seeking to expand its international footprint.

THEPRODUCERS

Interview

14 15www.sportcal.com Sportcal InsightWINTER 2018The Producers

Sunset+Vine launched in 1983, and Foulser joined from ITV as an executive producer in 1989, rising to become managing director in 1995. In 2003, he became chief executive of parent company The Television Corporation, and, when the business was acquired by Tinopolis in 2006, moved back to Sunset+Vine as executive chairman.

Last October, Tinopolis, the Wales-based international television production and distribution group, was the subject of a management buyout that ended nine years of ownership by private equity firm Vitruvian Partners.

Sunset+Vine employs around 200 full-time staff, including 150 at two sites in London, with the remainder split between regional offices in Cardiff, Wales and Glasgow, Scotland and in Dubai and Singapore, as it seeks to spread its wings outside the UK.

The company’s main client remains pay-TV operator BT Sport, which accounts for around a third of the company’s annual turnover of £60 million ($78.1 million), and for 70 employees based permanently at the broadcaster’s headquarters at the Queen Elizabeth Olympic Park in east London. The contract was recently extended by four years, until 2022.

Foulser cites Sunset+Vine’s “reputation for delivery and quality” as the reason it has been able to diversify into new sports and global

events, claiming that landing the host broadcasting contract for the 2014 Commonwealth Games in Glasgow was “a big turning point.”

He adds: “The majority of what we do is centred around big, live sports events. That’s what we’ve tried to concentrate on over the last 10 years or so: targeting federations or broadcasters with big events.”

Sunset+Vine reprised its Commonwealth Games role for the 2018 event in Gold Coast, Australia and is optimistic about staying on board in 2022 given that the games of that year will be held on home soil, in the English city of Birmingham.

However, Foulser insists that the company now sees itself as “a global operation” and more than capable of competing with major players like IMG, Infront’s Host Broadcast Services and the International Olympic Committee’s Olympic Broadcasting Services for big contracts.

He says: “They hate us coming in and pitching for stuff, they really do. [But] anyone can come in and do anything. People pitch against us all the time. That’s life, that’s competition, get on with it.

“If you’re good and you produce good pictures for the right price, you’ll get the business. If not, we might nick something off you. What’s wrong with that? Competition’s great, it’s been good for this business.”

Sunset+Vine has itself come out on the wrong end in tenders, often when circumstances are beyond its control, according to Foulser.

He says: “The difficulty we have really is because we’re perceived as high-end, and I think to a degree we are. You always get people who are going to come in and undercut you. That’s life and sometimes we lose things because we won’t do things we don’t think we can do a decent job on and make some money.

“We’re a business and we have to make money for the shareholders and we need to make money to pay the staff. There are companies out there that will do things as loss-leaders just to get into the market. That does happen from time to time, but I don’t think that’s a long-term sensible plan for any business.”

Even taking into account the vagaries of the industry, Sunset+Vine was hurt by its failure to secure the production remit for Channel 4’s coverage of

the next Paralympics, especially after winning awards and plaudits for its role in the broadcaster’s ground-breaking presentation of the London 2012 and Rio 2016 games.

After what it described as “a rigorous and competitive tender process” Channel 4 instead plumped for Whisper Films, a company in which it has a minority stake, and which produced the network’s coverage of the 2018 winter Paralympics in PyeongChang.

“When you lose things you’re always upset, but honestly we’ve put so much into Paralympic sport,” says Foulser. “We won broadcast awards over the previous two games and basically transformed the way people view para sports. We now employ a lot of disabled people in the business, it’s opened our eyes to that side of the community, and we put our heart and soul into developing it.

“You can say we don’t have a divine right to get it, but they’ve given it to Whisper who are 25-per-cent owned by Channel 4. Now they say it’s got nothing to do with that and they made the best bid. Well, fine. But I promise you we made the best presentation document and the best pitch we’ve ever done for anything.

“They said it was a really tight decision. Fine. But wasn’t there a little bit of loyalty left over from what we’d done previously? Clearly not. There’s no loyalty in this business sadly.”

Foulser is also disappointed that Sunset+Vine will not have the opportunity to follow up the 2017 IAAF World Championships in London, for which it was the host broadcaster, with the next edition in Doha, Qatar in 2019.

The IAAF has instead gone in a different direction by launching a joint venture with ITN Productions, the production business of the UK-based television news and content provider, as it seeks to take greater control over the way its major events are presented.

IAAF Productions will deliver host broadcasting of IAAF World Athletics Series and World Indoor Tour events, plus all the organisation’s non-live production requirements, including magazine and feature programming, digital and branded content.

Foulser says: “The frustration with something like athletics is we did a fantastic job [on London 2017], we had over 80 broadcasters on-site. It was a massive event, it doesn’t get much bigger.

“We had nearly 80 cameras in the stadium and 25 cameras on the road races. It was very successful as an event because the British people always support those sorts of things, so it looked great in terms of crowds, and I think we did a really great job and the broadcasters were delighted.

“But bizarrely the IAAF has done a joint venture with ITN which nobody can quite understand. They’re totally new to it. You’ve immediately lost all the experience and understanding of how to run that event so when they come to Qatar next year, it’s like starting again.

“I’m not saying we’ve got a God-given right to keep on doing things, but if you’ve got something that’s worked so well, and the broadcasters said it was the best-handled and covered world athletics event they’ve ever been to, why would you then throw all that out of the window by going with someone else who’s never done an event before? It’s a strange one.”

Sunset+Vine’s relationship with BT Sport began with the launch of the network five years ago, and entails production of coverage of soccer’s Premier League, Europa League and Scottish Professional Football League, rugby union’s Premiership Rugby, Heineken Champions Cup and European Rugby Challenge Cup and Australian cricket.

The production company will be responsible for 1,200 hours of content per year under the extended contract, and, while BT Sport is known to have driven a hard bargain in negotiations as it sought to cut costs across its businesses, Foulser welcomes the financial security it provides, while stopping short of dependency.

He says: “They’ve been a fantastic client for us. We were in at the beginning in 2013, and we’ve re-signed with them now for another four years so there’s a good feeling of trust between them and us. We’ve been good for them and, clearly, they’ve been good for us. We helped establish them instantly as a credible sports broadcaster.”

Foulser admits that the BT Sport contract initially accounted for half of Sunset+Vine’s revenues, adding: “It’s never good to rely too much on one client. That was probably too much. If we lost it now it would be pretty devastating, but it wouldn’t kill the business. It was important that we re-signed with them.”

The company is also producing Channel 4’s nine live Heineken Champions Cup rugby matches and rival Channel 5’s five Premiership Rugby games, and has teamed up with Premier Sports after the pay-TV broadcaster landed the UK rights to the PRO14, involving provincial rugby teams from

Ireland, Scotland, Wales, Italy and South Africa, in a three-year deal that amounts to 200 hours of live coverage per season.

Sunset+Vine arguably made its name in cricket as the producer of Channel 4’s innovative live coverage of the sport between 1999 and 2005, and remains involved in the sport as the host broadcaster of all ICC cricket events through to the end of the 2019 Cricket World Cup in England and Wales, continues to produce highlights of England matches shown on Channel 5, and is the production partner of the Pakistan Super League and Caribbean Premier League.

As it has targeted more lucrative opportunities in other sports, sailing has become less important, but, as the host broadcast and distribution partner, Sunset+Vine enabled the recent Sailing World Championships in Aarhus to be the most widely distributed ever, with 38 broadcasters for the live medal races and 59 for the daily highlights.

It had a similar role at sailing’s 2011 and 2014 World Championships, and has worked on four editions of the Volvo Ocean Race, including the 2017-18 edition, while producing the BBC’s sailing coverage at the last three Olympic Games and BT Sport’s coverage of the 2017 America’s Cup.

Interview

News16 Analysis 17www.sportcal.com Sportcal InsightWINTER 2018

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19www.sportcal.com Sportcal InsightWINTER 2018Cover story18 Riches to Rags

The demise of one of the industry’s leading players shone a light on China’s hesitancy to continue investing in sport worldwide, but also poses questions for the agency rights sales model. Martin Ross takes a look.

At the start of 2015, I sat down with the management of (then privately-held) MP & Silva and asked about a possible sale. Chief executive Marco Auletta claimed the agency was turning down “weekly proposals from investment companies and equity funds” and wanted to continue harnessing the advantages of speed and self-determination that independence affords.

Fast forward three and a half years and the agency has switched from being able to pick and choose from a queue of investors to the verge of collapse under Chinese ownership, amid newspaper headlines decrying “the biggest fail in sports marketing history.”

Can this be the same MP & Silva that established itself alongside IMG and Infront as the industry’s three

heavyweights, asked those who casually follow the agency sector? The company that kicked off its investment search boasting of its profitability, $750-million turnover and zero debt? The very same.

The response has been different among those agency executives who followed the 2016 takeover of MP & Silva by an arm of the state-owned investment group Everbright and technology company Baofeng Group. Eyebrows were raised at the size of a deal valuing the agency at over $1 billion despite the brevity of its rights catalogue. The ensuing Chinese government crackdown on foreign spending in sport served up more ammunition for the doubters.

News of the gravity of MP & Silva’s predicament first broke in July as it emerged that the agency had been at loggerheads with its Chinese owners for most of this year, having been prevented from signing off business plans and having missed instalment payments to right-holders. Everbright had effectively taken charge after Baofeng, which had initially hyped up its

plans for sports technology investments, had shed 90 per cent of its share value since 2016.

There were attempts by co-founder Riccardo Silva to recapitalise the agency at the start of 2018, as MP & Silva faced up to a deficit of around 10 per cent of the $700 million paid by Everbright and Baofeng for a 65-per-cent stake, and following some high-profile contract losses and ill-judged rights investments by the agency. Those attempts met with resistance from the owners, who showed no appetite to cover the losses.

MP & Silva’s PR take at the time of the sale promised the provision of “additional financial resources to accelerate the growth of the business.” In truth, this was never forthcoming. The new owners shied away from plugging the gap, thus preventing a restructure of the business.

As one former MP & Silva executive tells Sportcal Insight: “When they started getting reports with the numbers, the Chinese got concerned about the results. We knew back in June 2017 that we needed a cash injection.

Then they started challenging the numbers.

“They couldn’t bring any value. They didn’t know our market. But I don’t think they ever had any intention to put more money in. They thought they would milk the cow forever and get an €80-million [$94-million] Ebitda every year for eternity. In their mind they thought they were buying Serie A forever, or that MP & Silva owned the IP to Serie A.”

A savage assessment perhaps, but a common one when talking to those at the agency or close observers.

Indeed, wind back two years and it was already apparent that the new owners were far from au fait with the sports industry. I sat in attendance at Monte Carlo’s Hôtel Hermitage as Baofeng CEO Larry Feng laid out his vision of the ‘Baofeng Beetle’ and, as he reeled off recycled stats around the sports industry and China’s longing to win the World Cup, Sportel veterans rolled their eyes. Beyond the talk of investment in VR and apps (which never materialised), just what added value were the shareholders bringing?

The executive continues: “There were many mistakes... they didn’t know what they were buying. They paid a lot of money without many restrictions. They never did decent due diligence.”

Decimated rights portfolioAt the time of writing, the agency is

still not insolvent, given a healthy eight-figure sum it has had in the bank. But clearly there is no viable business left, with the rights catalogue ravaged and all key staff, including chief executive Seamus O’Brien, having exited stage right. A ‘showdown’ board meeting in London at the end of July yielded no positive result, yet the Chinese ownership hadn’t appointed an administrator, much to the bemusement of rights-holders owed money.

The former executive observes: “It’s become a political decision for them [Everbright]. Whoever will decide that the company is going bankrupt, it might affect their political career.”

It’s safe to say that the jury at the 2016 TMT Finance World Awards which voted the Everbright/Baofeng takeover as ‘Media M&A Deal of the Year’ might wish to quietly reallocate the prize.

Those critical of MP & Silva’s valuation at the time of the takeover point to the paucity of long-term rights signed up. They also raise questions over a company that had lost the day-to-day involvement of Silva and fellow co-founder Andrea Radrizzani, along with a stranglehold on the market as it went into tender processes.

Silva, who co-founded the agency on the back of a co-operation with Media Partners, the Italian rights agency, on the sale of Serie A broadcast rights on a club-by-club basis, is now focused on the likes of his Miami FC project and a minority shareholding in AC Milan. Radrizzani is also a club owner now after taking over Leeds United through his Aser investment vehicle, which also houses the Eleven Sports subscription broadcaster.

As one former leading executive at a rival agency tells Sportcal Insight, the cooling of a close relationship with beIN Sports – one also enjoyed by Mediapro and Pitch International – was one factor that appeared to interrupt some of MP & Silva’s momentum. He surmises: “MP & Silva had been heavily buoyed by beIN [Sports] given its relationship with them. Going back a few years, as beIN went in one direction, which was purporting to be a global dominator, MP & Silva was one of the agencies that got left behind.”

At the height of its powers, MP & Silva was, compared to its rivals, much “riskier in terms of its targets and the aggression with which it handled the marketplace,” according to the agency source. “Sometimes they were paying double what other agencies were willing to pay.”

The reasons for the financial deficit facing MP & Silva (which so alarmed its new owners) extend to more than just the loss of Serie A international rights, the iconic business on which the agency had been created. MP & Silva was also mired in arbitration with Fifa over payment for a World Cup media rights deal in Italy, a contract covering the 2018 tournament, which the ‘Azzurri’ failed to qualify for, and the 2022 edition.

The agency also faces a potentially hefty fine from the AGCM, Italy’s antitrust body, in a probe into alleged collusion between itself, B4 Capital and IMG over the sale of Serie A international broadcast rights. Further burdens included a deficit in its Bundesliga media rights sales in Scandinavia.

Despite its aspirations to become a full-service agency like rivals IMG and Infront, MP & Silva has lived and died by the success of its margins on media rights sales. There were no heavyweight sponsorship sales to fall back on, no dependable host broadcast business or even production facilities and

MP & Silva co-founder Riccardo Silva (right) at the Globe Soccer Awards, an event he has invested in

20 21www.sportcal.com Sportcal InsightWINTER 2018Cover story Riches to Rags

haemorrhaging of key people at MP & Silva became increasingly concerning. Roberto Dalmiglio, chief commercial officer, resigned at Sportel 2016. Suhyeon Cho, his replacement, left just four months after being promoted to the position. Other key commercial staff left and were not replaced and, in keeping with the theme of upheaval, new CEOs were unveiled ahead of successive Sportels (Lösch in 2016 and O’Brien in 2017).

The MP & Silva source notes: “We never invested in people. We were expecting to make some hires. Since the takeover by the Chinese they didn’t put a dime into the company. There was a short-term loan that was paid back.”

A new agency landscape? So where does the downfall of one

of the industry’s heavy hitters leave the sector’s balance of power? In the short term, IMG and Infront have swallowed up some of MP & Silva’s terminated contracts in deals for LaLiga rights (in Eastern Europe) and the Scottish Professional Football League’s international rights, respectively. Other rights-holders, such as the Premier League, Bundesliga and French Tennis Federation, opted to take back the rights and sell them in-house (see table opposite). Lagardère Sports has also taken on the International Handball Federation’s worldwide rights after MP & Silva’s €150-million contract was annulled.

From a wider perspective, the clear winners are IMG and Infront (even if the finances of the latter’s owner, China’s Wanda Group, remain under the microscope). The Endeavor-owned IMG has made some high-profile soccer rights additions in the last 18 months, including an unlikely $1.4-billion alliance with Perform for Conmebol club competitions and the €1.1-billion, three-year deal to replace MP & Silva as Serie A’s international rights distributor. An IPO is still predicted for the agency in due course, while Infront has steadily retained business.

The former leading agency executive argues: “IMG is in pole position as they can afford to overspend and hoover up rights that it might otherwise not have had access to because it would have lost them to MP & Silva overpaying. So it plays into their hands.

“The gap between the big players and the small players is widening and it possibly leaves a gap in between.”

Lagardère Sports, at one time at the forefront of media rights trading (through predecessor Sportfive), shows signs of a willingness to take on some sizeable minimum guarantee payments again - although this is perhaps as a precursor to a sale, as it looks to compensate for the loss of its Asian Football Confederation agreement, arguably the juiciest part of its business. Mediapro, also under Chinese ownership in the shape of private equity fund Orient Hontai Capital, has prioritised its investments in soccer, including rights to Ligue 1 and LaLiga (plus a collapsed deal for Serie A).

The business models of single-client agencies CAA Eleven and Team Marketing remain watertight, so long as they continue to represent their contracted Uefa competitions. Fortis Sports, a company set up by Patrick Murphy and David Tyler, teamed up with DDMC, the Chinese sports and entertainment firm, to land the AFC rights from 2021 to 2028, a contract that MP & Silva bid aggressively for under O’Brien’s leadership in an attempt to reverse its fortunes. O’Brien’s arrival was coupled with high expectations of regaining the AFC business he originally built up at World Sport Group, bringing in various ex-colleagues in the process and leading onlookers to surmise that he was “betting the house” on winning that race.

The leading agencies are no longer merely rights traders, with the margins on deals increasingly squeezed as savvy rights-holders (or agencies themselves) go direct to consumer with OTT

offerings, IMG’s Serie A Pass being the latest case in point.

The agency executive notes: “Agencies need to be more discerning in their approach. They have to be more targeted in the rights they look to acquire and there are only a few things that differentiate the successful and unsuccessful players: relationships, experience, business acumen and careful targeting.

“As we move forward, agencies will have to be more and more mindful of the intricacies of the financial side of the equation: SPVs [special purpose vehicles] and financial modelling; structuring minimum guarantees in such a way that it makes sense. These have to form a much bigger part of the agency model moving forward if there is to be one, and mitigated by the growth of the major OTT players and until such time as complete aggregation takes place.”

In the cut-throat agency world, the fall of MP & Silva has no doubt been welcomed by some, after other agencies frequently lined up to criticise the way it went about its business. The presence of squads of glamorous models at the agency’s Sportel parties was seen as tacky, and tactics in rights tenders were regularly questioned by rivals.

However, as and when the death knell finally sounds, the industry will arguably be the poorer for it: particularly the rights-holders bemoaning reduced competition in an agency sector that has been left to analyse how it now reinvents itself in a digitally-focused era.

SUMMARY OF MP & SILVA’S MAIN MEDIA RIGHTS AGREEMENTS

PROPERTY TERRITORIES WHERE RIGHTS HELD

CONTRACT VALUE / LENGTH

CONTRACT STATUS

Arsenal TV Worldwide distribution of international programming block

2014-15 to 2018-19 Terminated.

Bundesliga 34 countries in Europe and Central Asia (including the Balkans, Bulgaria, Greece, Nordic countries, Portugal, Romania, Russia and Turkey)

€40m per year2017-18 to 2020-21

Terminated. Rights taken back by Bundesliga International and direct deals signed before 2018-19 season.

Copa America Worldwide 2019 tournament Terminated. Rival agencies, including Dentsu, pursuing the contract.

Copa Libertadores and Copa Sudamericana

Asia-Pacific region $2.25m per year 2015 to 2018

Terminated. Broadcasters advised to contract with FSA Media instead.

EHF Champions League & EHF Cup

Worldwide €8m per year 2013-14 to 2019-20

Terminated. Rights being sold in-house by EHF Marketing and existing deals with broadcasters honoured.

Fifa World Cup Italy 2018 and 2022 Payment subject to arbitration.

Formula 1 World Championship

Middle East and North Africa, Bulgaria, Poland and Romania

2014 to 2019 (2015 to 2019 in Bulgaria)

N/A

French Tennis Federation

Europe (excluding France) 2018 to 2021 Terminated. Rights being sold in-house and existing deals with broadcasters honoured.

IHF World Handball Championships

Worldwide €150m total, plus €20m on production 2019 to 2025

Terminated. IHF finalised a new agreement with Lagardère Sports (2019 to 2025).

LaLiga Albania (and Kosovo), Bulgaria, Czech Republic and Slovakia

€6.5m per year 2018-19 to 2020-21 (2018-19 to 2022-23 in Albania and Kosovo)

Terminated. Rights re-tendered by LaLiga and acquired by IMG and Saran.

Ligue 1 Europe (excluding France) €19m per year 2018-19 to 2020-21

Terminated.

NFL 42 territories in Europe (including France, Italy, Netherlands, Poland and Russia)

$6 million per year 2015 to 2019

Terminated. NFL had been signatory to contracts and took back control of selling.

Premier League 29 territories in Asia-Pacific (including Japan, Korea, the Philippines, Taiwan and Vietnam)

2016-17 to 2018-19 Terminated. Rights taken back by Premier League and direct deals signed before 2018-19 season.

Scottish Professional Football League

All territories outside EU (plus agreement with rights-holder Sky to sell in Europe)

£2.1m per year2014-15 to 2022-23

Terminated. Infront subsequently hired by SPFL to sell international media rights.

World Boxing Super Series

Worldwide (excluding USA and Nordic countries)

2017-18 to 2019-20 N/A

equipment that could be sold. MP & Silva’s dramatic rise was characterised by profitable media rights deals and talented sales and acquisitions executives. These are factors that made Everbright and Baofeng’s apparent failure in 2016 to look beyond the term of the agency’s then portfolio, and to replace the talent as it exited, all the more disastrous.

Not that the blame for a fall from grace rivalled in sports agency terms only by that of ISL can be placed solely

on China. The deficit that Everbright and Baofeng were asked to meet was MP & Silva’s doing. Power games behind the scenes led by former owners served to destabilise, as various parties backed various candidates for the chief executive position eventually taken by Jochen Lösch. The presentation of Radrizzani as the face of Baofeng’s sports operation shortly after the takeover also surprised and irked some at MP & Silva’s plush Mayfair headquarters in London.

Questions will also be raised about the decision to sell to the two Chinese entities, even if MP & Silva’s former owners had felt initially reassured by the government involvement at Everbright. The Italian-Chinese marriage never seemed a particularly harmonious or efficient one, with MP & Silva’s management repeatedly left frustrated by delays and a lack of answers from Beijing.

While a turnover of staff is always expected after a takeover, the

Ari Emanuel, chief executive of Endeavor, the agency giant that houses IMG

Source: Sportcal

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AT THE HEART OF

SPORT

AT THE HEART OF

SPORT

1012603504, Marc Atkins, 1021804440, Alan Crow

hurst, 1027975154, Julian Finney, 1025875346, Alex Livesey, 1020814822, Philip Brown, 1015717980, Alexander Hassenstein, 1023761270, M

ark Thompson

INDEPENDENTNEWS

DEALSDATABASE

RIGHTS FEES$$$

BROADCASTERPORTFOLIOS

TERRITORYANALYSIS

Whether it’s rights deals, revenue dashboards, media landscapes or media analysis, Sportcal Media has it covered.

Here’s a snapshot of some of the research and insight conducted over the past few months.

GAME

AUSTRALIAN OPEN (TENNIS)Tennis’ Australian Open generated a combined A$200

million in domestic media rights fees for the most recent cycle (2015-19). Following the recent auction for the tournaments 2020 to 2024 cycle, income will rise 50 per-cent to A$300 million, with a rise in international rights fees expected to bring in further revenue for event organiser Tennis Australia.

PYEONGCHANG 2018Twitter was the platform most used during the games with

half of all posts (among athletes, organisations and partners); however, it generated only 7 per cent of all interactions. It was Instagram that proved by some way to be the top platform for engagement, generating 53 per cent of all interactions from just 24 per cent of posts. Moreover, Instagram managed, from half the number of posts, to generate over four times more new followers than Twitter.

MENA PAY-TV SUBSCRIBERSThe pay-TV market in MENA has suffered as a direct result

of the political unrest, causing subscribers to drop by 21 per cent in 2017 to 4.2 million, according to economic marketing research company IHS Markit. IHS estimates that BeIN may be looking at as much as $200 million in lost subscription revenue due to the diplomatic row.

LIGUE 1France’s top-tier Ligue 1, Coupe de France and Coupe de la

Ligue generated a combined €766.9 million in the most recent campaign (2017-18). Following the recent auction for Ligue 1’s 2020-21 to 2023-24 cycle, with two packages still to be sold, income will be more than €1.17 billion per season between the league and the Coupe de France, with Coupe de la Ligue rights from 2020-21 to be sold at a later date.

70m

60m

50m

40m

30m

20m

10m

0

3.50

4.004.49

4.955.35

4.20

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2012 2013 2014 2015 2016 2017

25www.sportcal.com Sportcal InsightWINTER 2018News24 Media Insight

NUMBERS32,200

Combined total posts

21,109,880 Combined total

interactions

2,682,163 Combined total new

followers

15,313 Combined total posts

160,085,810 Combined total

interactions

11,654,317 Combined total new

followers

16,299 Combined total posts

96,222,403 Combined total

interactions

2,850,832 Combined total new

followers

1,400

1,200

1,000

800

600

400

200

02008 -09

2009 -10

2010 -11

2011 -12

2012 -13

2013 -14

2014 -15

2015 -16

2016 -17

2017-18

2018-19

2019-20

2020-21

2021-22

2022-23

2023-24

For more information please visit www.sportcal.com/media.

For up-to-the minute information on events, the people and the deals driving sports business. visit www. sportcal.com and subscribe to one of our packages.Index

Sports calendar

STAY UPDATED. DAILY CALENDAR UPDATES www.sportcal.com/calendar.

NO

VEM

BER

JAN

UA

RYFE

BRU

ARY

DATE SPORT EVENT LOCATION TV DISTRIBUTOR ORGANISER

6 – 18 Olympics Youth Olympic Games Buenos Aires, Argentina

IOC Buenos Aires 2018

19 – 21 Table Tennis Liebherr Men’s World Cup Paris, France ITTF, Lagardère Sports FFTT

21 – 28 Tennis BNP Paribas WTA Finals Singapore, Singapore

WTA Media WTA

9 – 24 Cricket ICC Women’s World Twenty20

Various, West Indies

Star India ICC

11 – 18 Tennis Nitto ATP Finals London, United Kingdom

ATP Media ATP

15 – 18 Golf DP World Tour Championship

Dubai, UAE European Tour Productions

European Tour

1 – 9 Floorball Floorball Men’s World Championship

Prague, Czech Republic

Broadreach Media Czech Floorball

7 – 9 eSports ESL Pro League Season 8 Finals Odense, Denmark ESL Gaming ESL Gaming

12 – 22 Soccer FIFA Club World Cup Abu Dhabi, UAE FIFA FIFA

13 Dec – 1 Jan

Darts William Hill World Darts Championship

London, United Kingdom

Matchroom Sport PDC

5 Jan – 1 Feb

Soccer AFC Asian Cup Various, UAE Lagardère Sports AFC

10 – 27 Handball Men’s World Handball Championship

Various, Denmark & Germany

Lagardère Sports Danish Handball Federation & German Handball Federation

14 – 27 Tennis Australian Open Melbourne, Australia

Tennis Australia Tennis Australia

1 Feb – 16 Mar

Rugby union Six Nations Championship Various, Europe Pitch International Six Nations Rugby

5 – 17 Skiing FIS Alpine Ski World Championship

Are, Sweden Infront Are 2019

19 Feb – 3 Mar

Skiing FIS Nordic World Ski Championships

Seefeld, Austria Infront Seefeld 2019

25 Feb – 10 Mar

Bobsleigh & Skeleton

BMW Bobsleigh & Skeleton World Championships

Whistler, Canada Infront IBSF

STAY UPDATED. DAILY CALENDAR UPDATES www.sportcal.com/calendar.

OCT

OBE

RD

ECEM

BER

29www.sportcal.com Sportcal InsightWINTER 2018

MA

RJU

NN

OV

DEC

MAY

OCT

MA

R

Conferences

ONLINE: Free-to-access database of all major congresses, conferences, exhibitions and forums at www.sportcal.com/conferences

DATE CONFERENCE WEBSITE CITY COUNTRY22 - 24 SPORTEL Monaco www.sportelmonaco.com Monte Carlo Monaco

29 - 31 Smart Cities & Sport Summit www.smartcitiesandsport.org Lausanne Switzerland

02 - 11 World Sailing Annual Conference www.sailing.org Sarasota USA

05 - 07 International Federation (IF) Forum 2018 www.sportaccord.com Lausanne Switzerland

09 - 10 EOC General Assembly www.eurolympic.org Marbella Spain

15 - 16 Soccerex USA www.soccerex.com Miami USA

20 - 21 Host City www.hostcity.com Glasgow United Kingdom

28 - 29 ANOC General Assembly www.anocolympic.org Tokyo Japan

30 Nov - 02 Dec

IOC Executive Board Meeting www.olympic.org Tokyo Japan

05 - 06 International Sports Convention iscgeneva.com Geneva Switzerland

08 - 10 FINA World Aquatics Convention worldaquaticsconvention.com Hangzhou China

10 - 11 Mass Participation Asia Conference massparticipationasia.com Singapore Singapore

30 - 31 SpoBiS www.spobis.de Düsseldorf Germany

01 - 09 OCA General Assembly ocasia.org Bangkok Thailand

19 - 21 CSTA Sports Events Congress www.canadiansporttourism.com Ottawa Canada

5 - 10 SportAccord Convention 2019 www.sportaccord.com Gold Coast Australia

28 - 29 The Spot www.thinksport.org Lausanne Switzerland

05 FIFA Congress www.fifa.com Paris France

24 - 26 Hashtag Sports hashtagsports.com New York USA

HIG

HLIG

HTS

HIG

HLIG

HTS

© Sportcal Global Communications Ltd. All rights reserved. The views expressed herein are not necessarily shared by Sportcal Global Communications Ltd (Sportcal). If you want to reproduce or redistribute any of the material in this publication, you should first get the written permission of Sportcal. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by Sportcal or the author(s). While every care is taken to ensure accuracy, Sportcal and the author(s), cannot accept liability for the errors or omissions. Data included herein is published in good faith and is the best information possessed by Sportcal or the author(s), at the stated time of publication. The published data does not constitute advice and should not be relied upon by any person in making (or refraining from making) any decision.

Jonathan Rest Editor

Mark McClintock Art Director

Ben Hennessy Designer

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The International Federation (IF) Forum will offer three days of thematic sessions designed to be of specific value to the Members from GAISF, the Global Association of International Sports Federations and associates in attendance. The IF Forum targets the specific needs of Olympic and non-Olympic international sports federations with a focus on sharing best practices and knowledge. The event is open to international sports federation members from GAISF, ASOIF, AIOWF, ARISF, AIMS, Associate Members, and Official Partners by invitation only. The IF Forum 2018 receives the full support of the International Olympic Committee.

The Smart Cities and Sport Summit is a prestigious conference focused on smart strategies that effectively connect sport and cities. After four years of successful editions, 2018 will be uplifted with a brand-new format, including shorter sessions and more topics to be discussed, with a live questions forum, debates and interviews to enhance the interaction with the audience.

More than 300 representatives from cities, regions and countries of all sizes are expected to attend the Summit. They will have the unique opportunity to meet with 40+ International Federations and grow their network, share their experiences and learn from world-class experts from the wider sports industry

31www.sportcal.com Sportcal InsightWINTER 2018Index30 Market moves

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