Study global sports_media nexus

Case Study
Global Sports-Media Nexus: Reflections
The Super-League Saga in Australia
By : Sunil K. Wadhwa

• Significance of Super League saga Case Study-S3
• Background: Super League
• Global Events of Sports League-Media:$$$
• The Nature of Sport League
• The Nature of Sport League-Media Nexus
• The key economic agent in the core system
• Lead Assets
• The Source of the Conflict & Strategic Alliances
• Summary
Topics
19-May-14 Global Sports Media Nexus Report: Super League saga in Australia 2

Significance of Super League saga Case Study
• There is an increased Commercial and Social
Significance of Sports, Media & Sporting
Bodies worldwide
• The economics, events, competitiveness and
management of local resources surrounding
the Sports Leagues Industry is under-
represented in Management Literature
• The general monopolistic tendencies of
professional sports leagues are driven by
sports-media nexus worldwide
• The holistic analysis of the Super League saga
in Australia affords lessons that extend beyond
the realm of sports and has many parallels
worldwide in US, Europe, etc.

Background: Super League
• With the advent of live broadcasting of on TV & radio, the
negotiation of television contract has become the most economically
rewarding and biggest issue in the game since Nineties
• The commodification of sport, propelled by the advent of television
and pay TV, has resulted in commercial battles
• As the most popular television & spectator sport in New South Wales
& Queensland, rugby league constituted a rich market in Australia.
• From 1982 to 1994, Sydney ratings for rugby league increased from
17.3 to 46.7, with rugby league competition becoming the most
watched programs in Australia.
• The inability of “News Limited” to gain the rights to televise the
Australian rugby league competition for its pay-television channel
Foxtel provided a key impetus for subsequent moves to establish
“Super League in Australia”.

Global Events of Sports League-Media:$$$
• FIFA sold the worldwide TV rights for 2002-2006 World
Cup to Leo Kirch & Sporis for US$2.2b
• Ruport Murdoch’s Fox Network paid US$1.6b for the
rights to telecast NFL for five years
• BSkyB purchased the right to televise English Premier
League Soccer for £304m in 1992
• Fox Network has agreed to pay Cablevision Systems
Corp. US$23-25m to sublicense 50 Yankees baseball
games in 1999
• Rugby Football League in Britain accepted £87 m offer
from BSkyB for a five year television deal in 1995
• Manchester United produce profits of £28m on a
turnover of £88m in 1998

The Nature of Sport League
• The use of sporting analogies as social
representation of competing businesses may,
however hold some dangers
• Key Resources include Players & Coaches,
Loyalty of Players towards the Game,
Psychological Contracts, etc.
• Effective management of resources is key to
production of ‘rugby league product’
• Careful handling of local resources is important
for the success of global strategies

The Nature of Sport League-Media Nexus
• Increasingly teams and clubs sell their rights to
broadcasters
• Direct ownership of sporting teams by media
moguls avoids the cost of paying for the rights to
broadcast their games
• The media sponsorship helps in many ways-
increased revenue, attract outstanding players,
fuels the explosion of interest in the game,
increase in their merchandise (T-Shirts, posters,
etc.)!
• The global television networks aids sporting teams
in developing their ‘brand’ globally and engage in
further lucrative deals with other corporate
entities (like PepsiCo, Reebok, Samsung, etc.)

The key economic agent in the core system
• Economic agent - The key economic agent in the
core system could be Media Tycoon Mr. Rupert
Murdoch the majority owner of ‘News Limited’ (
subsidiary of Fox). He formed the local pay-TV
channel Foxtel as 50-50 joint venture between News
Limited & teloc Telstra.
• ARL and NSWRL had limited experience with the
sport-television nexus when compared, for example
to Mr. Rupert Murdroch’s involvement in Europe
• He championed the creation of Super league and
had fought legal battles against the monopolistic
nature of broadcasting rights given to local Channel
Nine /Optus Vision by ARL/NSWRL
• He made several deals & alliances with players,
teams, other corporations to make it happen

The Lead Assets
• It was difficult to identify key resources & assets due
the complex nature of relationship of individual players,
coaches, etc.
• The complexity that makes them difficult to duplicate is
amplified in circumstances where no one individual
understands the ‘whole’.
• The key Assets as identified by News and NSWRL/ARL
were the players.
• The co-operation of some Clubs was also essential and
can be seen as asset, the co-operation of players needed
by new competition was equally important.
• Coaches were also deemed a key asset & instrument in
signing up players

The Source of the Conflict & Strategic Alliances
The source of the conflict and how is the new media house
carrying out the strategic alliance
• It was a battle between Foxtel and Optus Vision for the
international free-to-air and pay-TV rights to the sport in
Australia
• The inability of “News Limited” to gain the rights to televise
the Australian rugby league competition for its pay-
television channel Foxtel provided a key impetus for
subsequent moves to establish “Super League in Australia”.
• Foxtel is the pay-television channel 50 per cent owned by
News Limited, a subsidiary of Ruport Murdoch’s News
Corporation, in a co-venture with public telco Telstra.
• Optus Vision is the pay-TV channel comprising a co-venture
between telco Optus, Continental Cablevision and Kerry
Packers’s Publishing & Broadcasting Ltd, which is also
involved in the operations of terrestrial Channel Nine.

The Source of the Conflict & Strategic Alliances
• Later News and a subsidiary of Star league Pty Ltd (Star)
entered into separate heads of agreements with seven
newly established entities
• In this agreement Star was to set up and promote a
Super league competition involving Australian and New
Zealand teams.
• News was entitled to all shares in Star until start-up
costs and accumulated losses were recouped, after
which the capital of Star was to be restructured so that
licensees could obtain shares entitling them to 50 per
cent of the vote at a general meeting.

The source of the conflict & Strategic Alliances
• Star was to own all intellectual property rights , and was
to pay News a 15 per cent management fee.
• The licensee was required to maintain a team that was
to participate in the Super League competition, and
each current club forming part of a syndicate owning a
particular licensee was to release existing players’
contract to enable the best possible team to be fielded.
• In parallel, separate deeds were signed between News
and Star, the relevant licensee and the corresponding
clubs. As part of deeds, News agreed to indemnify the
club inter-alia from any liability that it may incur to ARL
and or NSWRL under the Commitment Agreement or
the Liability Agreement.

The source of the conflict & Strategic Alliances
The source of the conflict and how is the new media
house carrying out the strategic alliance
• Same was signed with Club’s Directors and officers.
Eight clubs had entered such deals for Super League.
• A deal was reached in Dec 1997 between ASL & ARL to
form a merged 20 team competition from 1998.
Comprising 8ASL teams, 11 ARL teams and a newly
formed Melbourne team.
• The arrangement was made against a backdrop of
massive losses both by Optus Vision and Foxtel.
• Through StarTV in Asia, BSkyB in Europe and Fox
Broadcasting in US, Murdoch has the ability to give a
chosen sport global coverage!

Summary
• Sports are no longer simply a useful analogy for business –
they are Big Business
• The Super League saga in Australia adds to the pre-existing
Sports-Media Nexus in professional Team sports market for
competition
• The commercial value of these markets for competition incites
extreme rivalries behaviors that can promote Monopolistic
Positioning
• Monopolistic tendencies of sports leagues developed from the
network effect that enhances the ‘rugby league product’ value
increases the number of persons (spectators) consume it
• A cycle of increasing returns thus eventuates, in which the
appeal of increased spectatorship to sponsors, merchandisers
and broadcaster leads to an array of complementary products
and services that further fuels spectatorship

Summary
• The increased revenue ensures higher payments to
Players
• The Super League saga in Australia may well serve as a
cautionary tale to dominant firms (ARL & NSWRL) in
seemingly stable markets not yet exposed to some of the
newer technologies and the competitive opportunities
and risks these technologies afford

Thank you
&
Wish A Very Happy New Year 2015!
© Jan 2015. All trademarks, logos and products mentioned in this presentation are properties of their respective owners.
By : Sunil Wadhwa
Note: The presentation is only for self study, discussions & review of course material. This is based on data collected from secondary
sources and is indicative in nature. Without any responsibility of correctness. The views expressed in the presentation are only
individuals perception and should not be used for any legal or commercial purpose. For further details or your suggestions, please
contact at sunil_wadhwa@hotmail.com

Study global sports_media nexus

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