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UEFA Champions League on TV
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mlt11
28-10-2013
Originally Posted by hendero:
“Thanks for the explanation. Makes sense, but it seems to me that you might also get less with sealed bids, especially if there's just one round of bidding. Otherwise, why aren't all auctions conducted that way?”

I guess it depends on the practicalities - sealed bids may not be practical at say an antique auction where lots of people are gathered and deciding what to bid after viewing on the day.

But with something like sports rights I think you should usually get more with sealed bids. The only way you wouldn't is if the two strongest bidders both bid much less than they are really willing to pay - ie gambling in an attempt to win on the cheap. But of course if the rights holder suspects that has happened they can always order another round!

If one bidder is much, much stronger than anyone else you really have to use sealed bids - as there is no challenger to push them up. In this situation at least with sealed bids you create a bit of uncertainty which will lead them to bid at least somewhat higher than a weak challenger could push them in an open auction.
ariusuk
28-10-2013
Originally Posted by hendero:
“I suppose much depends on whether the rumours about the Premier League telling all the bidders, "Your bids are all close to one another, please bid again" are true. If they are true, then how would they all have been so close unless the PLgave them an indication of what they were expecting, or had somehow found out and tipped everyone else off?

What seems more likely is that the various bids came in, and they tipped off those who had bid the lowest that they needed to up their offer or they would lose out.”

The Premier League will know what it wants to achieve from each package, and also the minimum it will accept. It will base those figures on what the very clever analysts it employs calculate that the people it has invited to bid can afford to pay.

Sky, and other broadcasters, also employ very clever analysts. They work out how much revenue they would achieve by having the rights, in addition to the value of preventing a rival having the rights, and then work out how much it is going to bid. That figure being the lowest amount at which it can satisfy the EPL and beat the competition.

BT, as a newcomer to the market, doesn't have any real idea of how much it can make from the rights. But it can work out roughly what Sky would bid, because it has all the same data to work with about Sky's revenues and subscribers.

So its aim is to bid higher than Sky... but only by enough to win. They don't want to be overpaying.

And that is how all the bids were in the same range, and why they will be very close for the Champions League too.
popeye13
29-10-2013
Originally Posted by ariusuk:
“The Premier League will know what it wants to achieve from each package, and also the minimum it will accept. It will base those figures on what the very clever analysts it employs calculate that the people it has invited to bid can afford to pay.

Sky, and other broadcasters, also employ very clever analysts. They work out how much revenue they would achieve by having the rights, in addition to the value of preventing a rival having the rights, and then work out how much it is going to bid. That figure being the lowest amount at which it can satisfy the EPL and beat the competition.

BT, as a newcomer to the market, doesn't have any real idea of how much it can make from the rights. But it can work out roughly what Sky would bid, because it has all the same data to work with about Sky's revenues and subscribers.

So its aim is to bid higher than Sky... but only by enough to win. They don't want to be overpaying.

And that is how all the bids were in the same range, and why they will be very close for the Champions League too.”

Mouth watering all this is. Im excited
hendero
29-10-2013
Originally Posted by ariusuk:
“The Premier League will know what it wants to achieve from each package, and also the minimum it will accept. It will base those figures on what the very clever analysts it employs calculate that the people it has invited to bid can afford to pay.

Sky, and other broadcasters, also employ very clever analysts. They work out how much revenue they would achieve by having the rights, in addition to the value of preventing a rival having the rights, and then work out how much it is going to bid. That figure being the lowest amount at which it can satisfy the EPL and beat the competition.

BT, as a newcomer to the market, doesn't have any real idea of how much it can make from the rights. But it can work out roughly what Sky would bid, because it has all the same data to work with about Sky's revenues and subscribers.

So its aim is to bid higher than Sky... but only by enough to win. They don't want to be overpaying.

And that is how all the bids were in the same range, and why they will be very close for the Champions League too.”

Interesting, thanks. I still am of the view that there is plenty of discussion between the rights holders and at least some of the TV companies. The people involved will often times know one another, probably very well if a broadcaster has covered a competition for a number of years. There are egos involved - the TV companies want the rights, the rights holders want as much money, and the best ratings, possible, as do the companies that sponsor the events, especially in the Champions League.

Sky will be saying to UEFA, "We have been great partners for the past ten or so years, we now show every single match we have the rights to, live, we promote the heck out of the CL on our various channels, and we co-exist fairly happily with ITV. Do you really want to put all that at risk by going with BT, who have been around ten minutes, whose ratings aren't great, who have virtually no experience covering football? Give us an idea what it's going to take for us to keep the rights, we'll run those numbers past our bosses, let's find a deal that works for everyone."

Which is why I remain convinced it is very likely the primary CL rights will stay with Sky, it's not going to be about which company happens to write the highest number on a bit of paper that is handed to UEFA.
arunan22
29-10-2013
Originally Posted by hendero:
“Interesting, thanks. I still am of the view that there is plenty of discussion between the rights holders and at least some of the TV companies. The people involved will often times know one another, probably very well if a broadcaster has covered a competition for a number of years. There are egos involved - the TV companies want the rights, the rights holders want as much money, and the best ratings, possible, as do the companies that sponsor the events, especially in the Champions League.

Sky will be saying to UEFA, "We have been great partners for the past ten or so years, we now show every single match we have the rights to, live, we promote the heck out of the CL on our various channels, and we co-exist fairly happily with ITV. Do you really want to put all that at risk by going with BT, who have been around ten minutes, whose ratings aren't great, who have virtually no experience covering football? Give us an idea what it's going to take for us to keep the rights, we'll run those numbers past our bosses, let's find a deal that works for everyone."

Which is why I remain convinced it is very likely the primary CL rights will stay with Sky, it's not going to be about which company happens to write the highest number on a bit of paper that is handed to UEFA.”


Agreed.

Plus throw in the fact Sky have been host broadcaster at a number of CL finals over the past 5-10 years - which probably wouldnt hurt either.
mlt11
29-10-2013
Originally Posted by ariusuk:
“The Premier League will know what it wants to achieve from each package, and also the minimum it will accept. It will base those figures on what the very clever analysts it employs calculate that the people it has invited to bid can afford to pay.

Sky, and other broadcasters, also employ very clever analysts. They work out how much revenue they would achieve by having the rights, in addition to the value of preventing a rival having the rights, and then work out how much it is going to bid. That figure being the lowest amount at which it can satisfy the EPL and beat the competition.

BT, as a newcomer to the market, doesn't have any real idea of how much it can make from the rights. But it can work out roughly what Sky would bid, because it has all the same data to work with about Sky's revenues and subscribers.

So its aim is to bid higher than Sky... but only by enough to win. They don't want to be overpaying.

And that is how all the bids were in the same range, and why they will be very close for the Champions League too.”

I agree entirely that doing lots of analysis re how much everyone else is likely to bid is a key part of bidding strategy. But I don't agree that it necessarily means that the bids ultimately submitted will be close. I'll use some numbers to illustrate the point:

Suppose Bidder A thinks the rights are worth 100 to itself - ie the most A is willing to pay for the rights is 100.

A's analysis shows that B should be willing to pay a maximum of 70 for the rights (and nobody else is willing to pay more than 70).

So what does A bid? 71? 72? 75? 80? Or even 90? Or even 100?

The answer is that it depends on A's appetite for risk on the particular auction. If the rights are very, very important to A then A will be less willing to take risk on it and A will therefore move up the spectrum towards 100 (and away from 70).

However if A thinks the auction isn't that crucial - say the rights aren't that important - eg this is one of many auctions for rights of similar importance and A really doesn't need to win them all - then A will be willing to take much more risk and bid much more towards the 70 area (and even just bidding 71 if they are very relaxed).

Taking the PL - they are Sky's most important rights by miles so Sky's appetite for risk will be very, very low. So they'll play it very safe - the fact they have won 7 out of 7 PL auctions (for best package and most of rights) indicates they aren't cutting it fine - if they were they would have been caught out by now - you don't get lucky and win close calls every time.

Of course that doesn't mean Sky is bound to win the PL rights - they could be taken by surprise - as BT did - they might think they are playing it very safe when actually it is very tight. And of course someone could bid over Sky's maximum. But the point is they won't think they are cutting it very fine.

Another good example is BBC MOTD. BBC regards MOTD as very, very important so they bid very high. Many people on here have often said BBC overpays for MOTD but what is happening is that they are bidding right up to their "100" point even if they think the most anyone else will bid is "70" (or even "50") - because they are not willing to take any risk on it.

I will cut this post here and continue below (to avoid this post becoming too long!).
mlt11
29-10-2013
Another key factor for A to consider is how accurately it thinks it can estimate how much B is willing to pay.

In the above example I said A estimates B's maximum to be 70. But that's only a central estimate. So how much variability does A think there is in that estimate - eg what is the 95% confidence interval?

A may feel 95% confident that B's maximum is between 60 and 80 (with central estimate 70).

On the other hand A may feel much less sure - ie A may only feel 95% confident that B's maximum is between 50 and 90 (central estimate still 70).

This variability in A's estimate of B's maximum will have to be factored into A's assessment of its own risk - ie how important the rights are to A - as set out in the above post.

In general, I think it should usually be easier to estimate what ITV is willing to pay than what Sky or BT is willing to pay - because with ITV (or any ad funded broadcaster) the revenues attach much more specifically to the individual piece of content - audiences are (broadly) known and ad rates are (broadly) known - though obviously the market can change during the contract and estimates have to be made re alternative programming etc.

However with Sky/BT it's much harder as you can't identify subscriptions to specific content in the same way - ie if content is lost (or gained) the impact on subs is much harder to estimate.

With BT Sport the position is even more difficult to estimate as it is in start-up mode so is bound to be loss-making initially so you can't do a break-even analysis as that's not relevant. If BT Sport is to be a success it will be in the long term and at this point estimating how much BT is willing to invest in particular sports rights isn't really a science at all - it's a subjective judgement call re the thinking of BT management.
hendero
29-10-2013
Originally Posted by mlt11:
“Another key factor for A to consider is how accurately it thinks it can estimate how much B is willing to pay.

In the above example I said A estimates B's maximum to be 70. But that's only a central estimate. So how much variability does A think there is in that estimate - eg what is the 95% confidence interval?

A may feel 95% confident that B's maximum is between 60 and 80 (with central estimate 70).

On the other hand A may feel much less sure - ie A may only feel 95% confident that B's maximum is between 50 and 90 (central estimate still 70).

This variability in A's estimate of B's maximum will have to be factored into A's assessment of its own risk - ie how important the rights are to A - as set out in the above post.

In general, I think it should usually be easier to estimate what ITV is willing to pay than what Sky or BT is willing to pay - because with ITV (or any ad funded broadcaster) the revenues attach much more specifically to the individual piece of content - audiences are (broadly) known and ad rates are (broadly) known - though obviously the market can change during the contract and estimates have to be made re alternative programming etc.

However with Sky/BT it's much harder as you can't identify subscriptions to specific content in the same way - ie if content is lost (or gained) the impact on subs is much harder to estimate.

With BT the position is even more difficult to estimate as it is in start-up mode so is bound to be loss-making initially so you can't do a break-even analysis as that's not relevant. If BT Sport is to be a success it will be in the long term and at this point estimating how much BT is willing to invest in particular sports rights isn't really a science at all - it's a subjective judgement call re the thinking of BT management.”

Interesting analysis. I wonder how all of it would apply to ESPN's experience as a UK sports broadcaster. Did they miscalculate what BT would bid (if they expected them to bid at all), were they overconfident that they would be the obvious junior partner to Sky, or did they just not have pockets deep enough to compete? I was very surprised that a globally relevant sports network like ESPN would a) lose out on the PL rights after the investment they had made to get involved in the first place, even if they got them at a bargain price when Setanta folded and b) so quickly give up on the UK market completely once they lost out on the Premiership rights. If their whole UK existence was based on keeping those rights, then it would appear they should have moved some money around and found a way to beat out BT.
mlt11
29-10-2013
Originally Posted by hendero:
“Interesting analysis. I wonder how all of it would apply to ESPN's experience as a UK sports broadcaster. Did they miscalculate what BT would bid (if they expected them to bid at all), were they overconfident that they would be the obvious junior partner to Sky, or did they just not have pockets deep enough to compete? I was very surprised that a globally relevant sports network like ESPN would a) lose out on the PL rights after the investment they had made to get involved in the first place, even if they got them at a bargain price when Setanta folded and b) so quickly give up on the UK market completely once they lost out on the Premiership rights. If their whole UK existence was based on keeping those rights, then it would appear they should have moved some money around and found a way to beat out BT.”

I think what it boils down is that the PL rights were worth far, far more to BT (and of course Sky) than ESPN.

BT wanted to use PL rights to drive its overall triple-play business.

For ESPN, the UK was a very small market in which they were making substantial losses even when only paying a comparatively small amount for PL rights. They had no desire to invest a huge amount more when the likelihood of any return was very small.
hendero
29-10-2013
Originally Posted by mlt11:
“I think what it boils down is that the PL rights were worth far, far more to BT (and of course Sky) than ESPN.

BT wanted to use PL rights to drive its overall triple-play business.

For ESPN, the UK was a very small market in which they were making substantial losses even when only paying a comparatively small amount for PL rights. They had no desire to invest a huge amount more when the likelihood of any return was very small.”

And BT also has far more cash reserves after dominating the UK phone industry for the past hundred years or so. I suppose they are taking a (much) longer-term view of the market than did ESPN. The football clubs and the likes of the PL and UEFA must love BT and their deep pockets. Not so sure how good for the overall health of the sport they are. Unless one is an ex-LFC Spice Boy, then they're the greatest thing ever.
mlt11
29-10-2013
Coming back to the CL - how does the CL fit into the thinking set out in posts 456 and 457?

Taking Sky first - the CL is Sky's 2nd most important rights contract after the PL. So whilst Sky may be willing to take a bit more risk than it would with the PL its appetite for risk will still be very low.

Estimating what BT will be willing to pay will be very difficult for the reason set out in the final paragraph of post 457. It's possible BT may decide it doesn't want to invest a substantial amount more until the next PL auction - if so it may only bid comparatively low or not at all. On the other hand BT may feel BTS hasn't yet made as much impact as it would like and therefore regard the CL as very important and bid high - it easily has the resources to do so if it wishes.

So I think Sky (and indeed ITV) will have very little confidence in the accuracy of their estimates of how much BT will bid.

So in summary:

- Sky will be low risk - they won't cut it fine - at least as far as one 1st pick pack is concerned - ie they'll bid pretty close up to their "100" point.

- BT is almost impossible to predict - completely depends on the thinking of BT management.

- ITV will have a very good idea of what its current rights are worth to itself. It'll know it can easily be outbid by Sky / BT so should bid close up to its own "100" point - though there is the other factor of how much UEFA will want to retain FTA and if ITV is confident the answer to that is "yes" then it may be able to move downwards a bit. However I suspect UEFA will make it clear that they won't accept much less than ITV can really afford - ie UEFA will assess ITV's "100" point and only accept an ITV offer below BT / Sky if it feels ITV really has gone as far as it can.
loyalsince
29-10-2013
Article here on prize money increasing, with speculation on TV monies increase.

http://www.naharnet.com/stories/en/1...ise-in-2015-18
BenFranklin
29-10-2013
Reading that I'd say it's highly likely CL will be going to Sky and BT.
loyalsince
29-10-2013
A website that looks pretty good for analysis is http://www.danielgeey.com/blog/

Just stumbled upon it, there is a blog and podcasts etc with a strong focus on TV rights
casinoman13
29-10-2013
Originally Posted by BenFranklin:
“Reading that I'd say it's highly likely CL will be going to Sky and BT.”

Funny that I was thinking the same, seems more and more likely that UEFA will go for money than loyalty and lets not forget as MLT11 has mentioned, BT have the mega money.
BenFranklin
29-10-2013
Should add, likely it will go to Sky and BT if BT decide they want it. Reading this thread, that isn't certain at this stage.
hendero
29-10-2013
Originally Posted by casinoman13:
“Funny that I was thinking the same, seems more and more likely that UEFA will go for money than loyalty and lets not forget as MLT11 has mentioned, BT have the mega money.”

I'll go with Sky and ITV, BT to get improved Europa Cup rights, and they earn their stripes with that for three years before stepping up to the big boys' table. Unless they figure they are losing so much money with BT Sports they have to throw in the towel.
fodg09
29-10-2013
Can't read too much into it and obviously not going to be up to him but Barney Francis' scepticism about two pay-TV broadcasters holding the Champions League rights is interesting.
Quote:
“There is a possibility, perhaps, that rather than sharing the rights between a terrestrial broadcaster and a pay television broadcaster, the European footballing authorities might choose two pay operators, so maybe BT Sport might share the spoils with Sky.

But Francis says that where this has happened in France, where the Qatari-based BeIn Sports and Canal Plus share rights, there has been a problem with the competition losing some of its reach, which has affected its saleability for advertisers and sponsors.

Francis admits that Sky is “in the market,” for the new contract for the European Champions’ League. “We know what we want to achieve out of the process,” he adds.”

http://www.cityam.com/article/138293...grids_homepage
BenFranklin
29-10-2013
haha, the cheek of Sky talking about reach !
casinoman13
29-10-2013
Originally Posted by fodg09:
“Can't read too much into it and obviously not going to be up to him but Barney Francis' scepticism about two pay-TV broadcasters holding the Champions League rights is interesting.


http://www.cityam.com/article/138293...grids_homepage”

A concerned man I think springs to mind there, he knows full well BT could sneak something and will make a challenge.

I don't think it will happen but I will say it again it would be a huge blow if they were to lose the majority of the Champion's league to BT.

I still think however ITV are the most vulnerable.
hendero
29-10-2013
Originally Posted by BenFranklin:
“haha, the cheek of Sky talking about reach !”

I read it as him comparing BT vs. ITV. I suppose it's possible UEFA could go with BT and ITV, but that seems the least likely outcome.

Sky's reach is actually pretty decent when one considers the cost, and the fact that for non-sports fans it doesn't have the same appeal. They're never going to have a 100% market share like the FTA channels.
mlt11
29-10-2013
Originally Posted by hendero:
“I read it as him comparing BT vs. ITV. I suppose it's possible UEFA could go with BT and ITV, but that seems the least likely outcome.”

The comparison is really ITV vs all Pay.

If UEFA goes all Pay (whether Sky/BT, Sky/Sky or BT/BT) they lose very substantial reach.

If UEFA does consider all Pay then it comes down to how big the premium is - ie is the premium over the highest ITV option large enough to offset any sponsorship loss (+ any other perceived image / status loss etc).
casinoman13
29-10-2013
Originally Posted by mlt11:
“The comparison is really ITV vs all Pay.

If UEFA goes all Pay (whether Sky/BT, Sky/Sky or BT/BT) they lose very substantial reach.

If UEFA does consider all Pay then it comes down to how big the premium is - ie is the premium over the highest ITV option large enough to offset any sponsorship loss (+ any other perceived image / status loss etc).”

That's the big issue and I think you and I both know if BT really want it they will bid high and give UEFA that option.
hendero
29-10-2013
Originally Posted by mlt11:
“The comparison is really ITV vs all Pay.

If UEFA goes all Pay (whether Sky/BT, Sky/Sky or BT/BT) they lose very substantial reach.

If UEFA does consider all Pay then it comes down to how big the premium is - ie is the premium over the highest ITV option large enough to offset any sponsorship loss (+ any other perceived image / status loss etc).”

Agreed, that's what I meant. Barney Francis is assuming Sky will retain some of the rights, and that UEFA may not want the rest to go to BT (even if they bid more than ITV), because that's what happened in France and the competition has lost some of its profile. The event sponsors (Heineken, Ford, etc) are not to be forgotten about, they will not want a second of the Big 5 European TV markets to go with only pay channels for the tournament. I would imagine ITV are geeing the sponsors up to make that case to UEFA, if that hasn't happened already.
mlt11
29-10-2013
Originally Posted by hendero:
“ Barney Francis is assuming Sky will retain some of the rights”

Is he?

I don't see any such comment in any of the quotes.

He would be very, very stupid to assume that and I don't think he is that stupid.
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