DAZN Group has negotiated a reduction in annual rights fee payments to Japan’s J.League in a two-year extension to its long-term agreement described by the global sports subscription service and media company as a “transformational” profit-sharing agreement that “redefines the traditional sports rights model”.
The two-year extension prolongs DAZN’s domestic rights to the top three J.League divisions up to and including the 2028 season.
DAZN launched in Japan on the back of its 10-year ¥210bn ($1.97bn/€1.67bn) deal for the rights from 2017 to 2026.
However, the Access Industries-owned OTT broadcaster has now renegotiated one of its flagship rights deals on the back of the impact to its business caused by the Covid-19 pandemic, which has also led to the suspension of matches in Japan.
The revised 12-year contract from 2017 to 2028 is worth ¥223.9bn, or an average of ¥18.7bn per year. This reflects an 11.1-per-cent drop on the average of ¥21bn per year paid under the terms of the original deal.
The revamped contract includes a profit-sharing element that DAZN said is “inspired by the maturation of the commercial model between music labels and online music streaming services and, as seen for a number of years in the music industry, benefits all parties involved”.
In a nod to its intention to look to replicate the model in other deals with rights-holders, the broadcaster said: “DAZN believes this partnership-led structure is the key model for future rights and content relationships, as it rewards mutual growth and innovation, whilst encouraging both parties to continue investing in Japanese domestic football. The new partnership is an evolution from traditional, legacy models that are based solely on fixed license fees.
Acting DAZN Group chief executive James Rushton, who was in ‘virtual’ attendance at today’s press conference, remarked: “This new agreement with the J.League brings us closer together through an innovative and deeper partnership that re-imagines what a modern, fit-for-purpose rights deal should look like.
“We are proud to pioneer this new risk-reward proposition with the J.League that extends our partnership, supports mutual prosperity and marks a new industry standard for the sports rights business.”
J.League chairman Mitsuru Murai added: “J.League and DAZN have been working closely to overcome the challenge that Covid-19 has imposed. And today, with our confidence that we will grow together, we have strengthened this partnership. J.League is committed to further promote our new initiatives and deliver an even more engaging J.League to our fans and supporters.”
DAZN did implement a revenue-share model in many of its rights deals as it entered the market with its 2016 launches in Japan and German-speaking countries.
Speaking to SportBusiness at the time, John Gleasure, then-DAZN chief commercial officer, said: “The rights-holder pot mechanism is still absolutely core to the service. There’s 140 properties that we outline in our press release in Japan. A number of those we’ll have had to acquire – the NFL and NBA for example. There will be some others we have paid advances for.
“Every deal can be different. The rights-holder pot will be 60 per cent of the revenues in each market.”
DAZN recently announced an executive reshuffle amid an increased Access Industries involvement and also outlined a push into more non-live content. The OTT operator was left exposed during the Covid-19 shutdown, with the paucity of live sports coverage prompting customers to terminate their subscriptions, while OTT operators such as Amazon Prime and Netflix were buoyed by interest in their non-live sports offerings.
DAZN, which will soon launch its boxing-led global OTT platform, is now be looking to non-live programming, including documentaries, to reduce the churn rate and also attract new subscribers.
Rushton said earlier this month that DAZN’s paying subscriber base is on track to be “fully recovered to pre-Covid levels” by the fourth quarter of this year. That customer base would also include the new subscribers who sign up to the global platform. DAZN had reached close to 8 million subscribers globally by the end of 2019.