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Free-to-air clause ‘stymies’ Foxtel-AFL extension, FFA deal ‘terminated’

Pay-television operator Foxtel declined to extend its rights deal with Australian rules football league the AFL due to long-running concerns over a clause in the contract concerning free-to-air exposure, it has been reported.

The AFL last week marked its return to action by revising and extending its rights contract with free-to-air commercial broadcaster Seven, and amending its deal with Foxtel. Seven agreed a deal which revised the current contract for the remainder of the 2020 season, and the 2021 and 2022 campaigns, as well as adding a two-year extension taking in 2023 and 2024.

Foxtel will save almost A$30m ($20.6m/€18.3m) per year under the amended deal over the existing contract period (from 2020 to 2022), according to Australian reports, but elected not to extend its contract. It has now been reported that Foxtel’s decision was driven by the AFL’s refusal to end a long-standing clause in its rights contract that allows certain matches outside the state of Victoria to be shown on free-to-air television.

The ‘flip-flop’ clause, which allows a free-to-air broadcaster to air local team matches in all states except Victoria, eroded the value of the rights for Foxtel meaning that it could not agree on extended terms with the League, according to a report in The Age newspaper.

The clause was first activated through a broadcast deal signed in the early 2000s. It means Foxtel loses exclusivity on match coverage in major cities such as Adelaide and Perth. The clause is said to have been retained in the AFL’s recent extension with Seven.

In August 2015, the AFL awarded its next cycle of domestic rights to Seven, Foxtel and telco Telstra. The rights covered six seasons, from 2017 to 2022, and were worth a total of A$2.51bn, or A$418m per year. That represented a 67-per-cent increase on the previous five-year cycle, from 2012 to 2016, which was worth A$250m per year.

Under last week’s agreement, Seven is set to receive a 19-per-cent saving and a net benefit of A$87m over the remainder of the current deal through to the end of 2022, before the extended contract commences.

The AFL’s deals came after the National Rugby League (NRL) last month marked the resumption of its 2020 season by agreeing fresh rights deals with Foxtel and commercial free-to-air broadcaster Nine.

The Australian Rugby League Commission (ARLC), Foxtel and Nine agreed to deals that recommit both broadcasters to the current rights period until the end of 2022, but Foxtel also extended its contract for a further five years until the end of the 2027 campaign.

Football Federation Australia rights

Meanwhile, Foxtel is reported to have terminated its existing rights contract with Football Federation Australia amid ongoing talks over a revised deal. The Sydney Morning Herald reports Foxtel subsidiary, Fox Sports, has used a force majeure clause to end its A$57m-per-year deal with FFA, which had another three seasons remaining.

It was reported last month that Fox was seeking a reduction of between 50 and 70 per cent to its rights deal for the remaining three years of the contract.

Agreed in December 2016, Fox holds a six-year rights agreement covering the 2017-18 to 2022-23 seasons. The deal allows Fox Sports to broadcast the A-League, the women’s W-League, and Australian men’s and women’s national team matches on Foxtel’s linear television and streaming platforms.

Fox removed all A-League, W-League and national team content from its platforms on Wednesday night and confirmed it was “reviewing” its football offering.

Foxtel’s head of Fox Sports, Peter Campbell, told The Sydney Morning Herald: “We’ve got no live football at the moment and we’re currently reviewing all our football offering, and that’s the reason why it’s not there at the moment.

“We’re having a good look at it. There’s still plenty of content on there from the beIN [Sports] properties, some [Spanish] LaLiga and stuff like that from memory.”

Fox is said to be continuing talks over a deal that will see it broadcast the remaining 27 games of the 2019-20 A-League season and the finals series. It is also said to be still open to a longer-term arrangement, but only at a significantly-reduced cost.

Earlier this week, FFA revealed details of the re-start of the A-League. The 2019-20 A-League season is set to resume on July 16 with Melbourne Victory taking on Western United at AAMI Park in Melbourne.