Record AFL broadcast deal went down to the wire, says chairman Goyder

AFL chairman Richard Goyder says the record $4.5 billion broadcast rights deal secured by the code went down to the wire, with all three bidders in the game right until the final whistle.

“Foxtel/Seven was not a knockout bid, all three of the final contenders were close in price,” he told The Age and the Sydney Morning Herald. “The last 48 hours of negotiations was about terms and conditions.”

AFL chief executive officer Gillon McLachlan and chairman Richard Goyder. Credit: Chris Hopkins

The tight contest ensured that the seven-year broadcast deal, easily the largest in Australian history, exceeded even the AFL’s hopes for $600 million per year. The code will receive $642 million a year when the deal commences with the 2025 football season.

“It [AFL] is the No.1 sport in the country, where content is king,” Goyder said.

Foxtel boss Patrick Delany has acknowledged that the competition for AFL rights was keener than ever before. Credit: Don Arnold

Foxtel chief executive Patrick Delany attested to how tough the final bidding process was, especially when the final presentations were made last Monday, when the so-called silent auction commenced, pitting the owner of this masthead - Nine Entertainment, Paramount, and Seven West Media/Foxtel, against each other.

“In the last 48 hours, and in particular on Monday with the shoot out, the competition became very intense and cutthroat,” he said.

“It was a matter of putting your best foot forward otherwise, it was time to go home. All bidders took that extremely seriously. And there was very hot competition for the rights.”

Channel Ten and Paramount lobbed a $6 billion offer over 10 years and Paramount Global chief executive, Bob Backish, was part of the team presenting its bid to the AFL executives.

The step-up in rights is a burden but the cost of not renewing would be even higher.

Morningstar analyst Brian Han

With the incumbents - Seven and Foxtel - clinching the deal, analysts said losing the broadcast rights simply wasn’t an option for either company, thereby delivering the hefty windfall for the AFL.

UBS media analyst Tom Beadle saw the $4.5 billion price of the deal as a necessary evil for Foxtel and Seven despite the price representing a 54 per cent premium to the original 2017-22 broadcast deal, and a 36 per cent premium to the recent 2023-24 deal.

“Strategically we see the deal as positive for both Seven and Foxtel. However, high levels of competition for premium sporting content such as the AFL continues to drive significant inflation in the cost of premium content globally, particularly as the barriers to entry for sports broadcasting are lower than history,” Beadle said.

“In our view, this dynamic makes it difficult for platforms to derive excess returns on premium sporting content,” he added.

While no breakdown was offered on the $4.5 billion headline figure, Morningstar’s Brian Han estimates that the current split for broadcast rights (and costs) at 65:35 Foxtel/Seven.

While expensive, he says losing the broadcast rights would have been bad for both Seven and Foxtel.

“The step-up in rights is a burden but the cost of not renewing would be even higher. News Corp’s video subscription services rely heavily on AFL as a subscription driver for Foxtel and Kayo. As Australia’s premier sporting code, AFL’s importance to Seven is even greater,” he said.

“One only needs to look at Network Ten to see the consequences of losing AFL. Ten lost the rights at the end of 2011 and its metropolitan (television) revenue share fell from 28.1 per cent in fiscal 2011 to 20.9 per cent by fiscal 2014 and has not recovered since, showing the vulnerability of an undiversified TV network which Seven still mainly is.”

Foxtel’s Delany highlighted the role that sports like AFL will play as it looks to grow its audiences across Kayo and Foxtel Sport.

“The big product feature of Kayo and Foxtel is to have 50 sports in one place. And that’s quite unique in the world. And it means that all the big sports have got to be with us in order to grow,” he said.

It is part of a bigger strategy at Foxtel to be the home of all content.

“We think the era of aggregation is coming. That’s the next big thing that the Foxtel Group is working on - how we can aggregate all of our own streaming services, and those of others together with free-to-air TV, in a way that’s highly cost-effective for consumers and ourselves.“

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