The internet offers sports rights holders numerous opportunities to supplement their existing sponsorship and other commercial programmes, as well as seemingly endless new commercial opportunities.
If a rights holder launches its own web site, either itself or through a consolidator, it may add to its traditional sponsorship programme (and potentially leverage a higher rights fee for an enhanced package) by granting sponsors the right to display their logos and possibly some sponsor-created content on that site. The sponsor can also be given the opportunity to brand discrete elements of the rights holder's web site, such as its online shop and, possibly, the right to add its goods to the inventory on sale in that shop.
The rights holder will also be able to grant sponsors the right to maintain valuable hypertext links from the rights holder's site to that of the sponsor.
The internet gives rights holders who have major licensing programmes, but who do not maintain their own brick and mortar retail outlets, the ability to establish virtual retail outlets online. They are then able to make all of their merchandise available in one place for the first time.
The beauty is global accessibility. Clubs and teams are able to reach their fans, wherever they may, and offer them commercial opportunities which would not be cost effective if offered through traditional channels.
The second principle benefit also rests on the global reach and ease of accessibility of the internet. Rights holders are able to maintain increasingly immediate contact with sports fans. The internet can be used to provide information such as fixture dates and travel news. It can break stories such as transfers and management changes, and it can also provide the wealth of historical information and statistics that sports fans crave.
Potentially the most significant aspect of the internet for sports rights holders is internet TV. For many, everything else is a side show. They hope that, in time, fans will log on to watch a game, select their seat, their camera angles and commentators, visit the club shop and sponsor's tent and even order their half time snack online -all from the comfort of their couch.
While technical limitations may currently make the internet the third choice (after the television and radio) for monitoring sports events, the technology industry does not stand still. Around the world telecommunications networks are being upgraded to the broadband capability required to transmit video and other high-volume data.
When that happens, sports programming will be the "must have" or "killer" content that will be used to drive the rollout of new broadcast web sites, in the same way that it has been the driver for selling subscription to the pay-TV and for set-top box sales. This will put rights holders (of sports with a proven record with audiences at least) in a very strong position. That's assuming that the rights holder has not already sold its valuable internet rights to a broadcaster who had already seen the future.
The potential of internet broadcasting is already influencing the marketing strategies of sports rights holders and the negotiation of rights deals. Much analysis is being carried out by rights holders and broadcasters alike to see whether internet broadcasting rights have been pre-sold or pre-acquired under previous broadcast agreements. There is likely, therefore, to be some complex technical and legal analysis of the definition of terms seemingly as mundane as "broadcast" and "television", which may ultimately give rise to some expensive litigation.
The Inevitable Risk Factor
While rights holders nervously trawl through lengthy legal agreements, hoping valuable rights haven't been given away, full exploitation of the commercial potential of the internet continues to be delayed. That is due to the difficulty of applying traditional legal principles concerning the creation of contracts and legal obligations and the allocation of responsibility for published material on the internet. This has resulted in much uncertainty about the scope of legal liabilities imposed on those doing business on the net, and that has discouraged some companies from getting online. Unfortunately, there is no easy answer to this problem at the present time. The European Commission will eventually implement the electronic commerce directive to harmonise the legal position throughout the European Union. That may bring a degree of clarification to the legal situation. For the time being however, each rights holder needs to factor the inherent risk of doing business in an uncertain legal environment into its decision to go online, and to consider the best way for it to manage this risk in light of its commercial objectives. Luckily these inherent risks can be managed through the correct technical infrastructure and proper contractual arrangements with the internet marketing agency, web site designer, host or ISP, as the case may be, thus making the possibilities of the internet available even to faint-hearted technophobes.
Written by Felicity Reeve and Sam Rush. First published in Sport Business in May 2000.