In a Covid-19 free world, the Tokyo Olympics 2020 would have just come to a close, but the coronavirus pandemic means the event has been delayed until 2021. Ross Biddiscombe investigates what impact this is having on broadcasters across the world.
The 12-month postponement of the Tokyo Olympic and Paralympic Games to 2021 was an unprecedented but necessary step for the self-proclaimed greatest sports show on Earth. Yes, major sporting events have been delayed before - the 2001 Ryder Cup, for example, because of the 9/11 terrorist attack on New York - but the Olympics is a different animal. Its size and scope mean that the ripples of change that started this spring with the International Olympic Committee’s postponement announcement are still reverberating and it could mean a whole new attitude to sports rights and production as well as advertising at sporting events.
Until Covid-19’s emergence, almost 12,000 athletes from over 200 nations were about to be leaving Japan this month having featured in more than 6,000 hours of television action. Instead, the International Olympic Committee and the world’s top sports broadcasters are discussing rights re-payments and enormous logistical changes.
The financial negotiations are really just starting. This week, US Olympic broadcaster NBC, which pays the largest TV fee to the IOC, have found a clause in their contract to allow rights negotiations and, where NBC goes, others will probably follow.
Timo Lumme, the managing director of IOC Television and Marketing Services stated immediately after the announcement of the delay that he sought “an equitable solution… to make sure that we’re supporting (the broadcasters) as they continue to plan for coverage of the Games in 2021.”
Of course, NBC and the IOC want to settle any rights dispute without rancour because they have such a significant ongoing commitment to each other. The TV current contract between the two is worth $4.38 billion and should have ended this year with another agreement already signed and due to come into effect for $7.75 billion and lasting until 2032. The numbers involved are so enormous that the outcome of the talks are, therefore, fascinating.
TV sports consultant Stephen Nuttall says postponing costs are very complicated. “It will take months to sort out because everyone has a different situation. For instance, Discovery has a deal with the IOC, but then sub-licences to other networks. There have already been rights fee rebates in other sports – like by the English Premier League – so there will be some precedents and there will have to be individual negotiations with the IOC to see how they accommodate all the broadcasters.”
The Discovery example is intriguing to many Olympic broadcasters. The owners of Eurosport, Discovery juggled its recent quarterly figures to show shareholders their control of this delicate financial situation. The company’s second quarter 2020 report has pushed broadcasting rights costs for all cancelled or postponed events including the Olympics into next year which means costs of its International Division were down by almost 25% against last year. But, while that accounting move has given Discovery - which sub-leases Olympic coverage to channels around the European continent - some commercial breathing space, there are still some unanswerable questions like: will the Olympic advertising and sponsorship income the broadcaster expected in 2020 targets be the same next year and will there be the need for another round of broadcaster-advertiser negotiations.
Richard Broughton, research director at Ampere Analysis, says: “Rights buyers are in a far better position now to demand some recompense than in a typical recessionary scenario.
As it now stands, the big rights costs exposures such as the Olympics will be shifted into next year when we’re expecting the ad market to have recovered significantly and that represents the best of bad situation for Discovery/Eurosport.”
Also this week, the independent sports marketing agency Two Circles gave another perspective on future rights fees. Their forecast said Covid-19’s impact will mean sports media rights revenue this year will fall to $32.1 billion compared to a pre-virus forecast of $50.5 billion.
While these financial projections remain in question, Olympic broadcasters went straight to their archives to solve the issue of this summer’s empty schedules. For example, there was the re-run of the 2012 opening ceremony on BBC1, several Zoom-style interviews with past medal winners re-watching their achievements on Eurosport and a ‘Countdown To Tokyo’ show on NBC. The IOC even staged a televised special ceremony last month to mark the 2021 opening ceremony ‘one year to go’ date.
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The logistical costs of the delay are also still to be fully appreciated. Like her counterparts, BBC head of sport Barbara Slater is paying extra for a myriad of other things like re-fitting equipment for great staff safety; adopting Covid-19 cleaning protocols, adapting production areas for social distancing. She understands that enforced changes like more remote working and fewer staff on site will reduce costs, but it’s still too early to understand all the new areas of expenditure.
“There’s a willingness to compromise,” she says. “The tech solutions might well be invisible to the viewer, but they will facilitate production in new ways. However, it may be more expensive (to broadcast live sport). If there’s a collective will to do this, then the prices will be driven down and the new way will emerge.”
Slater says Olympic broadcasters are having to re-book everything from flights and hotels to satellite time and, while that is both costly and painful, she sees her main job as making next year’s Olympics appear as normal to the viewer. “The Olympics is always a huge investment and we need to do them well. Our ambition is to achieve the same standards next year (as we would have done this year).”
But despite heaps of Olympic optimism, there is no doubt that neither the IOC nor the Olympic broadcasters are out of the financial woods yet. IOC president Thomas Bach is preparing for multiple scenarios for next year’s Games and warned a couple of months ago that “sacrifices and compromises” would have to be made by various stakeholders within the Olympic movement and that includes broadcasters.
Sally Hancock, managing partner at the consultancy Y Sport, says the key for broadcasters may be whether advertisers and sponsors continue their support next year at the same level as was planned this summer.
“The largest Olympic and Paralympic sponsors all support their brands with TV ads,” says Hancock who notes that it is likely there will be much less spent by these companies on tickets and hospitality, so that this money can be spent elsewhere.
“In terms of commercial support for TV from the brands, those costs will have been rolled over to next year, but those companies will also have to look at their budgets and balance the costs of Covid-19 with what they plan to spend on broadcast advertising or sponsorship. It could mean a higher spend, it could mean a lower amount. So, there has to be some conversations between TV channels and advertisers (about spend). Who knows what the outcome will be,” she says.
Stephen Nuttall believes all TV advertisers, including those supporting the Olympics, will have the upper hand in next year’s negotiations for spots. “A lot of companies have yet to buy packages for next year. Some people will re-negotiate down, others will keep their hands in their pockets because who knows what the economy will look like and then there is also the factor of so much extra choice to advertise with so much sport being broadcast next year.”
The analysts are looking at who will take the financial hit for the Olympic postponement. Sally Hancock believes it will not be the broadcasters, but rather the host city of Tokyo which will likely host fewer people and face a much smaller commercial benefit all round. She sees positive signs for the Olympic broadcasters even though there is no certainty that Covid-19 will be sufficiently under control by next year to allow the Tokyo Games to take place even at the second attempt.
She says: “Watching the Olympics unites us and the broadcasters will want to reflect that in the summer of 2021. It’s a great opportunity for them.”
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