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European Tour strikes new Sky deals as wide-ranging Discovery agreement draws near

The European Tour agreed new deals with Sky in the UK and Ireland as well as in Germany, Austria and Switzerland last month, as a multi-territory agreement with Discovery nears completion.

PARIS, FRANCE - SEPTEMBER 30: Francesco Molinari of Europe is showered with beer as he celebrates winning The Ryder Cup during singles matches of the 2018 Ryder Cup at Le Golf National on September 30, 2018 in Paris, France. (Photo by Ross Kinnaird/Getty Images)

  • Sky to pay about £40m per year for European Tour and Ryder Cup renewal in UK and Ireland
  • Sky Deutschland to pay about €1.8m per year for European Tour package after losing exclusivity
  • Discovery set to complete wide-ranging deal covering multiple territories in Europe and Asia

The European Tour agreed new deals with Sky in the UK and Ireland as well as in Germany, Austria and Switzerland last month, as a multi-territory agreement with Discovery nears completion.

Pay-television broadcaster Sky renewed its rights in the UK and Ireland for four years, from 2019 to 2022. The deal is understood to be worth about £40m (€45.6m/$52.9m) per year. This is an increase of about 11 per cent on the value of Sky’s previous six-year deal, from 2013 to 2018 – about £36m per year.

Meanwhile, Sky Deutschland will pay less in a new cycle covering Germany, Austria and Switzerland, as it will have less exclusivity. Sky will continue to hold exclusive linear rights to European Tour events, although its digital rights will be non-exclusive. It has retained exclusive linear and digital rights to the Ryder Cup.

The broadcaster will pay about €1.8m per year over a four-year deal, from 2019 to 2022. From 2015 to 2018, when it held fully exclusive European Tour and Ryder Cup rights, Sky paid close to €3m per year as part of a deal that also included rights to the Asian Tour, the Sunshine Tour, and highlights of the European Seniors Tour and Challenge Tour.

TV Sports Markets understands non-exclusive digital rights to European Tour events in Germany, Austria and Switzerland will be acquired by Discovery. The media company is in advanced talks with the European Tour over a deal for European Tour and Ryder Cup media rights in multiple territories. The Financial Times reported that Discovery is set to acquire rights in Italy. The deal is expected to cover selected territories in Europe and Asia. It will be announced in the next two to three weeks.

The European Tour is advised on the sale of its media rights by the IMG agency. The European Tour and IMG previously had a joint venture – European Tour Productions – which was responsible for producing and distributing coverage of the Ryder Cup, the Open and all European Tour, Senior Tour and Challenge Tour events. Following the ending of the joint venture, the European Tour is responsible for production and distribution, although IMG has been retained as an advisor.

Rights to the European Tour and the Ryder Cup are generally sold together. The lure of the Ryder Cup provides leverage in media-rights negotiations to guarantee coverage of less glamorous European Tour events. When striking deals, broadcasters are not thought to have to provide a split in value between the two properties.

Sky pays small uplift to guarantee UK and Ireland renewal

The new Sky deal in the UK and Ireland is shorter so it falls into a four-year cycle, covering one Ryder Cup in the US and one in Europe. The six-year length of the current deal is unusual.

When the current deal was agreed – in April 2012 – the European Tour struck a longer-term agreement with Sky for fully exclusive European Tour and Ryder Cup rights in the UK and Ireland to maintain their value at a time when Sky was faced with little competition. Its then pay-television rival ESPN did not bid, while public-service broadcaster the BBC was facing cuts to its sports-rights budget.

Sky is a long-time partner of the European Tour, having broadcast its events in the UK and Ireland since 1992, and was always likely to renew its rights.

Rufus Hack, the European Tour’s chief content officer, told TV Sports Markets the UK and Ireland rights had been awarded to Sky because “they invest in golf, make it an important part of their coverage, and do an impressive job of presenting the sport and the players, which we feel is a great asset to the European Tour”.

PARIS, FRANCE – SEPTEMBER 30: Justin Thomas of the United States celebrates on the green during singles matches of the 2018 Ryder Cup at Le Golf National on September 30, 2018 in Paris, France. (Photo by Richard Heathcote/Getty Images)

There was no formal tender process for rights in the new cycle – the European Tour held talks directly with interested broadcasters.

Most UK rights experts spoken to earlier this year expected the value of European Tour and Ryder Cup rights to decrease in a new cycle as little competition for the rights was anticipated.

Sky’s pay-television rival BT Sport has shown relatively little interest in acquiring golf content, mainly because of the number of deals it would have to agree to become a serious golf broadcaster. OTT service Eleven Sports is not thought to have been interested following large investments in rights to Spain’s LaLiga, Italy’s Serie A and the Ultimate Fighting Championship.

One golf rights expert said: “Eleven is a new channel. It’s not reasonable to suggest they would be in the market for a package the size of the European Tour. Sky is a very significant channel and it would have been a huge switch to move to someone like Eleven.”

As a barometer of interest in golf rights in the UK and Ireland, the PGA Championship has struggled to agree deals at what it considered to be market value for the last two years. Sky refused to match the asking price for rights to the 2017 event, which is said to have been as high as $10m per year. Sky had paid about $5m per year for PGA Championship rights in a 10-year deal from 2007 to 2016.

The 2017 rights were sold for a nominal fee to the BBC, while additional coverage was available on social platforms Facebook and Twitter. Eleven launched in the UK and Ireland with rights to the 2018 tournament, for which it is thought to have paid a low fee.

However, Discovery is understood to have expressed an interest in the European Tour and Ryder Cup rights in the UK and Ireland from 2019 – Discovery has plans to launch a global golf OTT service via its $2bn joint venture with the PGA Tour, which will manage the Tour’s media rights outside the US.

Sky is thought to have paid a small increase to stave off the threat of losing the rights to Discovery. It also greatly values the Ryder Cup as it provides an excellent marketing platform and good viewing figures for a pay-television broadcaster despite the fact it only takes place for three days every two years. Golf is one of the central pillars of Sky’s rights portfolio.

Although he declined to comment on the value of the agreement, Hack said the European Tour is “happy with how our negotiations have gone and believe that is a testament to where the European Tour product is now, particularly with the introduction of the Rolex Series and innovative new formats like GolfSixes”.

One expert said: “There needed to be a very, very serious bid from a competitor to knock Sky off their perch. They are the home of golf, apart from the PGA Tour which Discovery will take over in a few years. Sky have most top golf wrapped up. For the European Tour it made sense to stay with Sky, as long as they made a good offer.”

Sky pays slightly more than £20m per year for PGA Tour golf rights in the UK and Ireland in a seven-year deal, from 2015 to 2021. Sky is yet to begin discussions with Discovery or the PGA Tour about the destination of the rights from 2022 onward.

A renewed deal with the BBC for Ryder Cup highlights rights from 2019 onward is highly likely. Hack said: “We’re currently in discussions with the BBC which we hope to conclude by the end of the year.”

The BBC currently holds Ryder Cup highlights in a six-year deal, from 2013 to 2018, worth an average of about £1m per year – its rights fee is slightly higher when the event is held in Europe as the content sits in a better time slot.

PARIS, FRANCE – JULY 01: Alex Noren of Sweden celebrates with the trophy after winning the HNA Open de France at Le Golf National on July 1, 2018 in Paris, France. (Photo by Warren Little/Getty Images)

Sky loses exclusivity in DACH region

Like the sales process in the UK and Ireland, the European Tour held direct negotiations with potential broadcasters in Germany, Austria and Switzerland, rather than issuing a formal tender.

Sky Deutschland is the predominant broadcaster of golf rights in the three territories, currently holding rights to each of the four majors as well as the European Tour (and Ryder Cup) and the PGA Tour.

However, it will lose its hold on PGA Tour rights from 2019 – these rights have been rolled into Discovery’s joint venture with the Tour. Sky pays about $3m per year for PGA Tour rights in Germany, Austria and Switzerland in a three-year deal, from 2016 to 2018.

Sky is not thought to be too concerned about losing exclusivity over digital rights to European Tour events as it will retain exclusivity over the linear rights, as well as retaining fully exclusive Ryder Cup rights. Golf has an older audience which is more used to watching linear rather than digital coverage. Sky was keen to renew its rights as golf appeals to a wealthy demographic.

Although Sky’s fee in its new deal for European Tour and Ryder Cup rights will be lower, rights across the three territories in the new cycle will be more valuable overall once Discovery’s deal has been factored in. Discovery is not thought to have provided an allocation for the non-exclusive digital European Tour rights it will acquire. However, the eventual overall fee for rights in the three countries is expected to be somewhere between €3.5m and €4m per year.

One local expert said having coverage on Discovery’s yet-to-launch OTT platform as well as Sky would be good for the consumer as it will provide more people with exposure to European Tour events.

Discovery’s golf ambitions

Discovery’s impending acquisition of non-exclusive digital rights to European Tour events in Germany, Austria and Switzerland, as well as its interest in European Tour and Ryder Cup rights in the UK and Ireland, is a continuation of the media company’s interest in golf rights.

In June, Discovery confirmed a 12-year, $2bn joint venture for PGA Tour media rights outside the US, from 2019 to 2030. Discovery’s annual fee will vary dramatically as and when territories are rolled into its agreement: the venture will not control rights in all markets next year as existing deals will be honoured. The deal came as a surprise as Discovery had until then shown little interest in golf. Discovery is set to create a streaming platform which will begin operation in January 2019.

At the announcement of the PGA Tour deal, Discovery’s Alex Kaplan – president and general manager of the joint venture – told a press briefing that Discovery and the PGA Tour would look to add other golf content to the service. He said: “The PGA Tour is a great place to start. We think it can stand on its own. But we will look at adding content on a case-by-case basis where it makes sense. We are trying to establish a golf product. We will absolutely talk to other golf properties out there.”

With the golf rights it owns, the venture will act as a gatekeeper, sublicensing linear rights on a simulcast basis where it makes sense, and even selling on fully exclusive rights if it receives a strong offer. Some coverage could also be shown via sports broadcaster Eurosport, owned by Discovery.