Wednesday February 24, 2010

That expensive game called football, part 2

Raison D'etre - By Risen Jayaseelan

THAT Singaporeans are facing the prospect of not having the World Cup telecast live on TV is further proof of the cutthroat nature of the football business, or to be more specific, the rights of airing those games.

When we highlighted a bidding war for the 2010–2013 Barclays Premier League (BPL) rights last October, it seemed hard to accept that prices had soared to the hundreds of millions. Astro is said to have outbid the likes of Telekom Malaysia Bhd for those rights, paying in excess of US$235mil. At about the same time, Singapore Telecommunications (SingTel) had outbid StarHub in Singapore to pay a whopping estimated S$400mil for the rights for the same three seasons of BPL.

Enter the World Cup 2010. FIFA has yet to award the rights to any company in Singapore for the showing of live matches of the tournament. SingTel and Starhub, the two that had fought for BPL rights, had decided to put in a joint bid for the World Cup but they failed to secure the rights.

According to some reliable sources, FIFA, having knowledge of the figure that SingTel had forked out for BPL, had wanted an even higher price for the World Cup 2010 rights, on a per-match basis.

It is that “base price” that the Singapore bid did not meet, which explains the island republic’s current predicament. The fact remains bodies like FIFA and England’s football association are in a very strong bargaining power and have the ability to dictate pricing in an arbitrary manner.

The growing cost of football viewing rights, however, should not be surprising. Where do we think the astronomical salaries of the football stars are coming from? According to some estimates, about 40% of the revenue from the top 20 football clubs comes from viewing rights sold to pay-TV companies. The question is, how much higher will these figures go?

If this were happening in the property market, surely experts would be warning of fears of a bubble in the making. The next question to ask is: If Singaporeans have to pay so much, how much does Astro have to pay to air the 2010 World Cup?

The good news is Astro had already secured the rights to the 2010 World Cup early last year. It had done so before the BPL bidding in Singapore and Malaysia had taken place, so the benchmark pricing was not too high.

Even then, Astro is believed to have paid three times more than the amount it paid to broadcast the previous World Cup matches. And by the looks of things, the cost of live coverage of football matches can only get higher.

Going back to the Singapore situation, it is almost unthinkable that a developed nation like Singapore will not be showing the World Cup live on its TV networks. Streaming it via the Internet, as one company is seeking to do, just won’t do it for the average Singaporean football fan.

My bet is that some how Singapore is going to pay whatever FIFA wants. It is also unlikely to get a discount over what FIFA wants as the world football body has much more to gain from making Singapore as a good example for rest of the world that if you can’t pay, you don’t watch.

Deputy news editor Risen Jayaseelan wishes he was good enough to play in the BPL.

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