Drop in Bundesliga rights value signals end of bubble

Germany's top football league continues to be a bellwether for sports.

The Bundesliga's return to action in May after a two-month hiatus caused by the coronavirus pandemic gave other big leagues the courage, and also some helpful guidance, as they pressed forward with their own returns.

Now the Bundesliga has become the first major European football competition to sell its domestic broadcast rights since the Covid-19 outbreak.

The clues from Germany this time are far less reassuring.

Monday's sale, which covers four seasons, starting with the 2021-22 term, generated €4.4 billion (S$6.9 billion) - less than the record €4.6 billion the Bundesliga earned under its current agreements.

It represents the first drop in the value of a new Bundesliga rights package since 2002, and none of the expected new players such as Amazon figure in the new deal.

In fact, the pool of broadcasters narrowed in the new deal, with all the games divided between Sky, the long-time incumbent, and streaming service DAZN.

The modest decrease in the new deal could be encouraging for leagues and clubs nervous about the game's financial future. But the reduced fee, and smaller pool of interested bidders, could also be a worrying harbinger for dozens of other leagues and broadcasters as they head into negotiations uncertain if games will be played on schedule, in front of fans, or if they will even take place at all.

The Bundesliga sale took place against a backdrop of empty stadiums and unusual summer schedules as leagues raced to complete their suspended seasons to meet spectator demand and - perhaps more crucially - to limit the risk of non-payment from broadcaster partners.

The Bundesliga has yet to resolve a multimillion-dollar dispute with Eurosport, which pulled out of an agreement to show games it had been contracted to broadcast.

While the sale offers a sign that premium sports properties are likely to command large fees even amid a bleak outlook for the wider global economy, it could also mark the end of a years-long inflationary bubble for elite-level sports programming.

The value of the current Bundesliga deal, for instance, had represented an 85 per cent leap from when the rights were last sold for a four-year period.

The impact of the pandemic almost certainly played a part in dulling the demand for football rights in Germany and also in other key European television markets like Britain, Italy and Spain, which are typically the most sought-after programming.

Only last year, Christian Seifert, the Bundesliga's chief executive, predicted his league would continue its upward march, saying he anticipated broadcasters and digital upstarts like DAZN would be prepared to spend even more.

"The German pay-TV market still has a lot of room to grow," he told the Financial Times last year.

Ultimately, that did not prove to be the case.

But it could also have been worse, given cost-cutting plans at Sky and what appears to be the absence of strong bids from Amazon and Deutsche Telekom, two companies that had been rumoured to be preparing to compete fiercely for games.

Sky managed to secure the main Saturday night game. But in what could be a sign of the belt-tightening measures imposed by its new owner, Comcast, Sky secured six games per week, two fewer than it currently airs.

DAZN has doubled down on its bet in Germany, where starting next year it will also be the country's main Champions League broadcaster. The company has been burning through cash as it seeks to build its subscriber base, and it has shown little sign in slowing even as it has lost more than US$1 billion (S$1.39 billion) in the past two years.

Germany, along with Japan, is the streaming company's biggest market.

DAZN will show games on Friday nights and Sunday exclusively, while Sky's matches will be largely limited to Saturdays.

NYTIMES