12 Days of Christmas Date published by Sportcal: 5 March 2015 Listed events: pay-TV revenues and sporting success influence lists while soccer remains prominent By Sam Limbert, Tom Padmore and Daniel Smith Almost unlike any other content on television, sport is able to command huge audiences and bring viewers together to create moments of national importance. With the growth of pay-TV services, steps have been taken over the past two decades to ensure these moments can be seen by a large audience, with a number of countries drawing up a list of events that have to be shown on free-to-air television. In Europe, the EU’s Television Without Frontiers Directive, which was amended by the Audio Visual Media Service Directive, is the basis for members of the European Union to decide on listed events that are deemed to have major importance to citizens of the country. No EU member is obliged to have such a list, but all the major Western European nations have lists that are designed to protect the main sporting events from being exclusive to pay-TV. Similar criteria for listed events are used in other countries outside of Europe. In this Insight, we will look at the key issues of potential pay-TV revenue for sports events measured against the exposure of free-to-air television and the changing of listed events due to sporting success, along with exploring the differences in soccer’s inclusion in protected lists. Revenue vs exposure The benefit of increased revenue versus increased exposure is a key argument that crops up whenever discussing listed events. It is important to consider and address different stakeholders’ views, namely governing bodies and spectators/potential participants. Generally, placing events behind a paywall typically incurs greater media revenues while significantly reducing its exposure due to the smaller number of pay-TV subscribers. By comparison, remaining on free-to-air television allows a much greater audience, but lower media revenues, in line with free-to-air broadcasters’ funding models, coupled with fewer competitors for the rights. The case of the England and Wales Cricket Board (ECB) and Cricket Australia, England and Australia’s national governing bodies for cricket respectively, provides an interesting comparison. English cricket experienced a renaissance in 2005, claiming its first ‘Ashes’ series victory over Australia since 1987. Cricket fever swept the nation with a huge upsurge in cricket interest and participation. But the 2005 series was the last to be broadcast live on free-to-air television following the removal of England cricket’s national team home test matches from Ofcom’s ‘A list’ of listed events. Sky, the 12 Days of Christmas Date published by Sportcal: 5 March 2015 British pay-TV broadcaster, purchased exclusive live rights initially from 2006 to 2009 for £220 million, an increase of £185 million over the previous package acquired by Channel 4, the commercial free-to-air broadcaster, albeit for one year less between 2003-2005. In contrast, Australia’s home test matches were cemented on free-to-air television in January 2006 with the introduction of the revised Anti-Siphoning list by the Australian government. The ECB and Sky have continued their exclusive broadcasting arrangements for live rights with the current package, worth £65 million a year, running from 2014-2019. England’s national teams, both men’s and women’s, have also enjoyed unparalleled success during this time with World Cup victories, significant wins over Australia and the men’s team reaching number 1 in the test world rankings in 2011. Despite the increased money in cricket and on-field successes, participation has been on a downwards trend – there were 46,900 fewer people participating in cricket at least once a week in 2013, compared to the 2005 figures. Cricket Australia entered into a seven-year deal with Nine Network, the Australian commercial free- to-air network, in 2005, that has since been extended for an additional five years through to 2018, with the extension worth a reported A$450m. During this period, both the men’s and women’s teams have had mixed success, certainly not to the level dominant Australians had become accustomed to. However participation figures for cricket in Australia are continuing to rise with 12 Days of Christmas Date published by Sportcal: 5 March 2015 figures from the 2013-14 National Cricket Census registering 1,106,000 participants in cricket, an increase of 30 per cent over four years. The drop-off and rise in participation for each nation could potentially be explained by a number of factors, including the host nation’s broadcaster reach and the money received by the national governing bodies through their broadcasting agreements. Removing England’s home international cricket matches from Ofcom’s ‘A list’ had the effect of shrinking the potential audience by nearly 20 million television households. Channel 4 has near universal coverage across the United Kingdom, covering a total of 26 million television households. By comparison, in June 2014, Sky registered 6.5 million subscribers to its seven-channel premium Sky Sports package. During the 2005 ‘Ashes’ series on Channel 4, a peak of 7.4 million viewers witnessed England regain the Ashes. In the current era of Sky Sports exclusivity, that figure shrank to a peak of 1.92 million viewers for the 2009 series, and just 1.3 million for the 2013 series. These figures outline the dramatic impact that removing sporting content from free-to-air television can have, and certainly suggest a viable explanation for the significant drop-off in participation numbers witnessed. In contrast, Australia’s Nine Network enjoyed peak audiences of 2.3 million for the 2010 home ‘Ashes’ series and 3 million for the 2013 series, in a nation with only 8.5 million television households. However, the link between participation and free-to-air television exposure is not straightforward. In February 2015 the R&A, the organiser of golf’s British Open, agreed a deal with Sky in the UK for the pay-TV broadcaster to acquire the exclusive live rights to the Open in a five-year deal from 2017 onwards thought to be worth more than £15 million per year. The deal led to criticism of the R&A and fears about a decline in participation with a move away from free-to-air, but the outgoing chief executive Peter Dawson addressed these concerns, stating that it was not possible to make a case that participation is directly linked to television coverage. Dawson added: “On the contrary, golf’s reported recent decline in participation coincides with The Open, Women’s British Open and the Masters Tournament being shown on free-to-air television.” When the ECB received a £185-million increase from Sky for its first exclusive contract, it would be difficult to suggest that the extra money would negatively impact the participation rate of cricket across the UK. The extra funds would allow greater investment and opportunities throughout the cricketing pyramid to build a stronger national structure. However, pressure now lies with the 12 Days of Christmas Date published by Sportcal: 5 March 2015 national teams to perform, to ensure that they are still providing a premium product that warrants pay-TV broadcasters such as Sky paying the large sums of money for exclusive broadcast agreements. This creates incentives to gear funding distribution towards elite success. The ECB’s concerns over losing pay-TV revenue were outlined in March 2009 when there were suggestions that England’s home international tests would return to the Ofcom-protected events ‘A list’. An independent economic impact assessment demonstrated a probable loss of £137.4 million in revenue for the 2014-17 broadcasting contract, translating to a loss of 48 per cent of expected revenues. The issue came to the fore again in January 2015 with Labour announcing plans to review the listed events legislation should it win the general election in May. In contrast, Cricket Australia have the reassurance of home international test matches being broadcast free-to-air, removing the threat of a withdrawal of pay-TV revenues that governing bodies such as the ECB rely upon so heavily. The examples of English and Australian cricket demonstrate that there is a relationship between the exposure of a sport and participation in the sport. The revenue stemming from pay-TV broadcasting agreements has appeared to drive up the quality of the product, but led to an inverse relationship at the lower levels of sport, with investment still predominantly distributed to the elite level. It is the combination of these two driving factors that causes problems for sports that are exclusive to pay- TV. The continuation of the trend in English cricket could reach a point where the next generation of elite-level athletes needed for the premium pay-TV products doesn’t exist as the lower levels haven’t been funded sufficiently enough to progress the new talent. This issue highlights the importance of having listed events so sports do not become engulfed in the ‘short-termism’ of pay- TV revenues. Changing listed events as a result of sporting success While it is generally accepted that the definition of a listed event is an event of national significance or interest, and therefore traditionally applies to widely popular sports, there have also been examples where sporting success has seen less popular events promoted to the list – generally 12 Days of Christmas Date published by Sportcal: 5 March 2015 because, as a nation becomes internationally successful at an event, it takes on greater significance, through increased coverage, viewership and participation at a grassroots level.