Sky ‘paid $500m for rugby’
Sky Television agreed to pay $500 million to retain the rights to broadcast domestic rugby and All Blacks matches for a further five years, according to a specialist service that monitors sports media rights.
Last month, Sky said it had struck a deal with Sanzaar to retain the rights to major rugby competitions including Super Rugby and the Rugby Championship, but the price was not disclosed.
British-based Sportsbusiness Media has now reported Sky agreed to pay $100m a year for the rights between 2021 and 2025, replacing a previous agreement that cost Sky US$32M ($50m) a year. The new arrangement meant Sky’s rugby-rights costs would effectively double from 2021, based on the current exchange rate, it said.
The report did not make it clear whether the 5 per cent shareholding in Sky that was granted to NZ Rugby – now worth about $18m – was an extra cost to Sky, or included as a part payment within the $500m package.
Some previous reports have suggested Sky offered to pay $400m for the rugby rights in early September, about five weeks before the deal was finalised. But Sky chief executive Martin Stewart has said that number should be ‘‘ignored’’ and other sources suggested it was not the sum that was ultimately agreed.
Soundings received by Stuff suggested the final figure was significantly higher than $400m, and consistent with the numbers reported by Sportsbusiness Media.
Sky and NZ Rugby declined to comment.
However, Stewart has made it clear Sky needed to dig deeper to retain the rugby.
He said in October that the cost of the rights had increased ‘‘materially’’ and represented a record investment by Sky in New Zealand and Sanzaar rugby.
The deal was finalised just a day before negotiations were to be opened up to other parties, including streaming rival Spark
Sport, which outbid Sky for the rights to the 2019 Rugby World Cup.
Jarden head of research Arie Dekker said it expected the threat of competition from Spark did influence the price Sky paid for the rugby rights ‘‘with it reasonably clear that Sky paid substantially more than last time to get a deal done well ahead of renewal’’.
‘‘We do not know if the sportbusiness.com figures are exactly right or not, but we certainly believe the increase in cost was substantial from what Sky paid five years ago,’’ Dekker said.
Sky’s challenge would be to rebuild a sustainably profitable business around those rights and arrest the decline in earnings experienced over the last five or so years, Dekker said. ‘‘It will be challenging.’’
A $500m deal should deliver a big boost to NZ Rugby’s coffers.
Sportsbusiness Media reported that under Sanzaar’s revenuesharing model, revenues from Super Rugby and the Rugby Championship are pooled and divided between the respective rugby unions.
Although the formula for the split was under review, it usually reflected the contributions made by each national market, it said.
That would mean that, depending on the formula that is agreed, it is possible NZ Rugby could receive even more than $100m a year, and more than a $50m annual boost, as a result of the new agreement.
Rights income from NZ Rugby’s own competitions, such as the Mitre 10 Cup and domestic All Blacks matches outside the Rugby Championship, are understood to go straight to the New Zealand union. Revenues from media rights typically make up close to half of NZ Rugby’s annual income and contributed $73m to its total revenues of $190m last year.
Those numbers dwarf the income received by other sports bodies. NZ Cricket reported total revenues of $59m in the year to July, for example, while Netball NZ had revenues of just under $19m in the year to last November.
NZ Rugby nevertheless posted a loss of just under $2m last year because of its much higher costs.