Heineken Cup talks "have now ended"

[St George]

Quote from BBC:

Only last week, it said more than two million people had subscribed to its
television sports channels since August and reported six month pre-tax profits of
£948 million.


Still early days, but i see similarities to when Sky started. I doubt very much BT are worried yet about their investment.

 

[Prestwick]

I see BT are now shelling out more than 300 million a year for Champions League.


I can see already this is gonna end in tears. That is far too much money already on two sports competitions (Champions League and Premiership Rugby) than they are ever going to make back in additional subscribers or incremental increases on the subscription fee.


ITV Digital here we come.

Hardly. BT made nearly £1 billion pre-tax in the first six months alone. The strategy is deliberate: outspend Sky and their owners and force them into increasingly high stakes bidding wars which BT know Sky can't win.

I say with more than a dash of schadenfreude that I find it very ironic that Sky are putting out the same "well we bid the amount we thought it was worth" press releases that the BBC used to put out when Sky was ruthlessly denuding then of all their sports coverage back in the 1990s.

Karma is a ***** and so is BT it seems. I'm looking forward to seeing BT offer Bernie Ecclestone gold plated diamond studded yachts in exchange for F1 TV rights...

 

[Tony Manx]

Hardly. BT made nearly £1 billion pre-tax in the first six months alone. The strategy is deliberate: outspend Sky and their owners and force them into increasingly high stakes bidding wars which BT know Sky can't win.

I say with more than a dash of schadenfreude that I find it very ironic that Sky are putting out the same "well we bid the amount we thought it was worth" press releases that the BBC used to put out when Sky was ruthlessly denuding then of all their sports coverage back in the 1990s.

Karma is a ***** and so is BT it seems. I'm looking forward to seeing BT offer Bernie Ecclestone gold plated diamond studded yachts in exchange for F1 TV rights...

What goes around...comes around
The wheel turns full circle..
You reap what you sew.................
He who laughs last............etc etc

 

[Prestwick]

What goes around...comes around
The wheel turns full circle..
You reap what you sew.................
He who laughs last............etc etc

What you'll see are more and more disruptive players entering the market across the world especially telecoms who are desperate to protect their investment in infrastructure. You're already seeing this in America with AT&T and Verizon.

The big change is when the likes of Google and Microsoft decide to make a play for sports rights. That'll be huge when that happens...

 

[Amiga500]

Hardly. BT made nearly £1 billion pre-tax in the first six months alone. The strategy is deliberate: outspend Sky and their owners and force them into increasingly high stakes bidding wars which BT know Sky can't win.

Read it again. It is not a question of BT going bust, it is a question of value for money.

That is far too much money already on two sports competitions (Champions League and Premiership Rugby) than they are ever going to make back in additional subscribers or incremental increases on the subscription fee.

If they don't make their money back; they'll be gone.

The shareholders simply wouldn't stand for it.

 

[Amiga500]

FFR throw in a few sticks of dynamite!

http://www.rte.ie/sport/rugby/heineken-cup/2013/1111/485986-heineken-cup-france-offer/

French clubs have been offered €2 million each by the FFR to commit to playing in the Heineken Cup next season, according to reports in French media.
Pierre Camou, the Federation Francaise de Rugby president, is reported to have chaired a secret meeting at Paris's Charles-de-Gaulle airport last week which was attended by representatives of the Top 14 clubs, as well as several of their English counterparts.

The claims were reported in French newspaper Midi Olympique.

The FFR chief is insistent that any European competition next season will continue to be governed by the European Rugby Cup.

Camou has been strongly opposed from outset of the announcement of plans for the Rugby Champions Cup.

According to Midi Olympique, the FFR is now ready to ensure that the ERC remains the only show in town by delivering a payment of up to €2 million to each of the French clubs.

Camou has reportedly also proposed the idea of signing any individual players who wish to continue playing in the Heineken Cup onto central federal contracts with the FFR, similar to what the IRFU does with its star players.

Camou is insistent that what the French clubs are planning to do in breaking away to form the Rugby Champions Cup is in contravention of existing French rugby laws.
When the plans for the RCC were first announced, the FFR were quick to warn the Ligue National de Rugby that they had no right to organise a competition without the direct consent of both the FFR and the International Rugby Board.
It is understood that Camou has support from several of the individual French clubs, including Toulon and Biarritz.

 

[smartcooky]

"less squad rotation" and "who won't be shortchanged like they were with Dragons v Leinster last night".

Hmm. There will be people who agree with you. Equally, if you go to the fans forums before and after matches (esp during the internationals), it is clear that "many" people are *completely fascinated* by the challenge of squad rotation caused by injury and international calls and the resulting opportunities to choose between blooding promising youngsters and/or using more established squad players. These people would, I guess, far prefer to see their club use closer to 46 players a year than 23; they want variety to the extent that they can get whatever points they deem to be necessary.

I have no idea what % of fans enjoy or hate rotation but the two camps definitely exist. It would be nice if the "legislators" knew but ....

One of the reasons why I love the ITM Cup is for the very reason that there are generally no All Blacks involved, and that the remaining 120 fully pro Super Rugby players are spread over 14 teams. This means heaps of new talent on display every week, and some of that talent will go on to greater things, In the last few years it has dragged up players like Aaron Cruden, T J Perenera, Aaron Smith, Sam Kane, Charles Piutau, Stephen Luatua, Beauden Barrett and Ryan Crotty. This year has been no exception, with Ihaia West, Marty Banks, Liam Squire and Milford Keresoma showing enough to indicate they could have a big future in the game.

The competititon has its critics, but it doesn't bother me. I have enjoyed it this year, and I can fully understand why there will be people who will be happy to see squad rotation as part of a long term strategy. Rugby is such a brutal collision sport these days, that you simply cannot expect to trot out the same 23 players week after week after for 10 months, and have them playing at their peak at the business end of the season.

 

[Prestwick]

Read it again. It is not a question of BT going bust, it is a question of value for money.



If they don't make their money back; they'll be gone.

The shareholders simply wouldn't stand for it.

Read my post again because you didn't get my point.

BT aren't going to keep up this rate of bid inflation but they are pursuing a very deliberate policy of going after Sky's most prized big ticket items and deliberately out bidding them. They have the cash reserves and the disposable income to challenge Sky and make them yield the events they want.

Apparently word is that BT are already mulling bids on TV rights on events at least four or five years in the future. This is a very aggressive policy which to be fair was the same policy Sky pursued when they stormed into the scene in the 1990s.

Things will settle down again once BT and Sky work out who wants what and the amount of money offered in these deals will slow. That is until the next set of disruptive players come along.

But BT are not going away. That much is certain.

 

[Tony Manx]

Read my post again because you didn't get my point.

BT aren't going to keep up this rate of bid inflation but they are pursuing a very deliberate policy of going after Sky's most prized big ticket items and deliberately out bidding them. They have the cash reserves and the disposable income to challenge Sky and make them yield the events they want.

Apparently word is that BT are already mulling bids on TV rights on events at least four or five years in the future. This is a very aggressive policy which to be fair was the same policy Sky pursued when they stormed into the scene in the 1990s.

Things will settle down again once BT and Sky work out who wants what and the amount of money offered in these deals will slow. That is until the next set of disruptive players come along.

But BT are not going away. That much is certain.

I think you are right in all respcts but would add that this will end when each party comes to agreement with the other in terms of sharing what rights they have across the others platform.

I do not envisage many people will want to/can pay for both Sky and BT Sport, which is where this battle is going, and both sides will realise that it is better to keep the inflation in fees paid now to the sporting organisations in their own pockets.

Indeed, I do believe that this bidding battle sytarted when Sky under estimated the oppositioon and would not do a deal to share............

 

[Prestwick]

I think you are right in all respcts but would add that this will end when each party comes to agreement with the other in terms of sharing what rights they have across the others platform.

I do not envisage many people will want to/can pay for both Sky and BT Sport, which is where this battle is going, and both sides will realise that it is better to keep the inflation in fees paid now to the sporting organisations in their own pockets.

Indeed, I do believe that this bidding battle sytarted when Sky under estimated the oppositioon and would not do a deal to share............

Exactly. Sky aren't going to go bust but neither are BT going to throw in the towel.

There will be some form of détente perhaps with shared pay per view perhaps or a similar model to what ITV and sky operated with the champions league?

Until then the war goes on and so far the city has been fairly clear on who it's backing at the moment -

http://www.telegraph.co.uk/finance/...after-BT-poaches-Champions-League-rights.html

 

[McTallshort]

Sky are moving more to regular TV with Dramas etc and would rather spend the money on that and not sport. I was concerned about BT but things seem to be part of a bigger plan to take sport from Sky while Sky want to take normal everyday veiwers from ITV and the BBC.

If English clubs are playing in a European cup next season it will be on BT.

 

[St George]

Exactly. Sky aren't going to go bust but neither are BT going to throw in the towel.

There will be some form of détente perhaps with shared pay per view perhaps or a similar model to what ITV and sky operated with the champions league?

Until then the war goes on and so far the city has been fairly clear on who it's backing at the moment -

http://www.telegraph.co.uk/finance/...after-BT-poaches-Champions-League-rights.html

Wow, i think that if i had shares in Sky, i'd be getting out pretty soon.

As for Sky taking on ITV & BBC.... i think that the state of peoples personal finances will ensure free-to-air TV will remain for the forseeable future. Sky has got where it is on the back of its sports packages, and if it loses that..... well i personally would not be interested in a subscription channel that shows soaps & dramas.

 

[Amiga500]

BT aren't going to keep up this rate of bid inflation but they are pursuing a very deliberate policy of going after Sky's most prized big ticket items and deliberately out bidding them.

I don't think your fully wrapping your head around the £300 million a year figure for a single competition - which is not that highly viewed.


There are ~26 million households in the UK.

Even if you make the ludicrous assumption that you get a subscription from each and every household, that is still nearly a pound a month on the annual fee... just for the champions league rights.

Sky has around 10 million TV subscribers; using that figure its 30 quid a year (2.50 a month) on the annual fee... just for the champions league rights.

Those numbers above are completely unsustainable. You cannot devote ~5% of your entire fee to one competition in one sport.


BT currently has around 1 million subscribers to BT Sport... thats 25 quid a month per subscriber. They need to increase their subscription numbers very fast for the books to balance.

 

[j'nuh]

You haven't factored in the sh*t ton of money that BT will get from advertising.

 

[Amiga500]

You haven't factored in the sh*t ton of money that BT will get from advertising.

True; but that is proportional to their subscription base and viewing figures...

Which brings us back to the original issue.

300 million is far too much for one competition in one sport. Not "too much for sky to match", but too much full stop! If you can't make your money back on it, its bad business.

BT won't make 300 million back on account of the champions league... the head honchos will look at that realise it, then either pull out, or not offer near the same in the next round of contracts.

 

[Prestwick]

I don't think your fully wrapping your head around the £300 million a year figure for a single competition - which is not that highly viewed.

Oh I did. I don't think you're still not fully aware of how BT are playing this game which is much like how Sky played it in the 1990s when they broke onto the scene.

There are ~26 million households in the UK.

And you left out pubs, clubs and other hospitality establishments (who all pay £70 for the privilege of BT Sport) because...?

Those numbers above are completely unsustainable. You cannot devote ~5% of your entire fee to one competition in one sport.

I think BT are fully aware of what they were getting themselves into and have the cash reserves and income to cover the expenditure on these items. They can afford this and far from cutting and running they've got the confidence to push even further in the short term.

They've beaten City expectations on profits and revenue, boosting both with rigorous cost cutting in their other operations and the boost in their share price in the past couple of days reflects that confidence. They've also added more broadband customers to their collection and boosted sales by other 4% which is the highest in a decade. They've also shed less customers in five years. Most importantly, they're adding more TV customers each quarter than Sky.

BT currently has around 1 million subscribers to BT Sport... thats 25 quid a month per subscriber. They need to increase their subscription numbers very fast for the books to balance.

Actually, the current figure is more double what you're quoting... www.theguardian.com/business/2013/oct/31/bt-sport-channels-attract-2-million-customers .

At the end of the day the ever expanding arms race can't continue forever and there will be some sort of agreement between the two sides eventually but until then BT have an aggressive policy in place to out bid Sky to steal key parts of their sporting empire from them funded by increased sales and aggressive cost cutting in their core businesses. Expect BT to start opening discreet back-channels to both the ECB and the Home Unions to discuss terms for nicking England Cricket and Lions coverage in the latter half of this decade.

EDIT: The Guardian also have this excellent article with an excerpt which perfectly sums up what I'm saying about BT's strategy (and who's been advising them...):

One question is how far Patterson has been influenced by Tony Ball, the former Murdoch lieutenant who ran BSkyB in the early part of the last decade. It is understood that Ball advised BT that the Champions League rights were essential and that it should "go big and go early", with a knockout bid. It was a strategy minted in Osterley during the years when Sky was regularly criticised for hugely outbidding the competition.

BT are ripping the primary page out of Sky's playbook. This isn't anything new and to be honest I'm only surprised it took this long for a bigger fish to swim into the Sports broadcasting pool and do what Sky have been doing for ages.

 

[McTallshort]

You haven't factored in the sh*t ton of money that BT will get from advertising.

And the Sh*t ton of money it will get from other TV networks mainly in the far east for the right to show Champions league football games and highlights.

 

[Tony Manx]

Sky are moving more to regular TV with Dramas etc and would rather spend the money on that and not sport. I was concerned about BT but things seem to be part of a bigger plan to take sport from Sky while Sky want to take normal everyday veiwers from ITV and the BBC.

If English clubs are playing in a European cup next season it will be on BT.

That would surely finish my subscription as they are done so badly and I only have Sky for rugby, F1 and occasional golf.....................like many others, No Sky Sports...No sub!

And the Sh*t ton of money it will get from other TV networks mainly in the far east for the right to show Champions league football games and highlights.

I think you will find that they are sold seperately and BT only has rights to the UK market?

Great minds..............Telegraph today

Credit Suisse analysts downgraded BSkyB in the wake of BT's Champions League rights victory last week.
We think BT's ultimate aim is to force Sky to provide wholesale access to Sky's content at a lower price –if so, the logical way to do that is to add all the FA Premier League rights packages when the next contract comes up for renewal in 2015. This poses the most significant risk to Sky's value proposition to its customers for many years, in our view.

 

[McTallshort]

That would surely finish my subscription as they are done so badly and I only have Sky for rugby, F1 and occasional golf.....................like many others, No Sky Sports...No sub!


I think you will find that they are sold seperately and BT only has rights to the UK market?

Great minds..............Telegraph today

Credit Suisse analysts downgraded BSkyB in the wake of BT's Champions League rights victory last week.
We think BT's ultimate aim is to force Sky to provide wholesale access to Sky's content at a lower price –if so, the logical way to do that is to add all the FA Premier League rights packages when the next contract comes up for renewal in 2015. This poses the most significant risk to Sky's value proposition to its customers for many years, in our view.

Same here, they are moving more into drama and comedy they produce themselves and are trying to push into the mainstream market. Whoever is at the top obviously does not like the image of the beer bellied footy fan with his sports package and would much prefer the thought of middle class types tuning in to some "cutting edge" comedy. They seem to forget it was beer bellied middle aged blokes watching football on sky sports that underpinned its rise to the top.

 

[Prestwick]

Looks like French dynamite doesn't have the effect it used to have...

http://www.telegraph.co.uk/sport/ru...-securing-a-deal-for-European-club-rugby.html

PRL have secured the backing of the home unions including the RFU. So that's the FFR now left on their own in the h-cup next season?