A group of advertising agencies in Australia have criticised the “aggression” adopted in efforts by some of the country’s top domestic sports properties to drive increases in rights fees.
The NRL, which operates the top division of rugby league in the country, as well as the AFL Aussie rules competition are reportedly considering splitting up their rights in order to maximise rights income.
Henry Tajer, global chief executive officer of the IPG Mediabrands agency, told the Australian Financial Review newspaper: “The AFL, NRL and Cricket Australia are getting to the point that if they don't moderate their aggression for increased valuation on their rights they are going to implode. There is a serious misalignment in the comparative costs of sports in other markets around the world and Australia. Australia is way overpriced given its population of just over 22 million people.”
Simon Ryan, chief executive of Carat, an agency that spends approximately Aus$600m (€425.1m/US$473.8m) on television each year, also spoke out against the plans, stating media rights deals are “getting out of control”.
Ryan said: “The sports rights are simply getting out of control and becoming increasingly difficult for media and advertisers to afford while supporting other business initiatives. The free-to-air networks are under cost pressures as it is and to add to it, the increasing costs of broadcasting rights to lift overall ratings is getting beyond what they can afford. There is a rebalance due.”
Elsewhere, Anthony Fitzgerald, who serves as chief executive of the advertising unit of Australian pay-television provider Foxtel, said that the system would become “unviable” if changes are not made.
Fitzgerald added: “There comes a point where the price of sport rights becomes unviable even with the halo effect. You'd have to say that as a standalone, these major sporting codes are probably unprofitable as they are for the networks and advertisers are starting to push back on further price inflation. There does come a point in which it becomes unviable.”