“Sky Sports buys the rights to air English Cricket exclusively for 1.1 billion pounds”

“Fox Sports Australia and Channel 7 tag team to carry Australian Cricket on their networks for a handsome sum of 1.2 billion dollars”

“Star Sports blows the competition out of the water by bidding 2,500 million dollars to carry the IPL globally for five years”

The above headlines are important to understand the professional sports landscape in Pakistan for a simple reason. Money drives development in sports, as it does in every other field, and the major revenue driver in modern-day sports is through broadcasting rights fees. Sports broadcasting rights are perhaps the only remaining TV rights which see a healthy increase year upon year (or ‘rights cycle’ upon ‘rights cycle’ if you go by industry terms). This is because live sports are the only form of entertainment left which demand viewers to tune in on a live basis; almost all other programming can be viewed at leisure and ‘binged’ on demand.

This is why large broadcasting entities spill handsome amounts and fight tooth and nail to gain advantage over their competition. High value sports products being carried exclusively on their airwaves means larger-than-life ratings for broadcasters, as well as a way to incentivise subscriptions and promote their other less attractive programming. These extraordinary ratings help the broadcasters attract lucrative commercial airtime revenue from sponsors as well as demand higher subscription fees from cable providers.

The higher the revenue and consumer subscriptions sports properties can derive for broadcasters, the higher the rights fees broadcasters are willing to shell out to the original rights holders (the sports governing bodies), and the more money these bodies then have to invest in the development and promotion of their respective sport.

Around the world, sports is big business and the greatest source for raising financial resources for its development is sports broadcasting. Pakistan, however, continues to undervalue itself and deny its sports the money required to compete on a global level

This is the primary reason why most of Pakistan’s sports industry, including the dilapidated ruins of our Olympics association, hockey, football, squash, kabbadi, etc, is in a state of perennial decline. Pakistan simply doesn’t have the same model operating, which means there is no money to invest in the development of these sports. To make matters worse — even in the one functional machinery that is cricket — the country suffers from global administrative inconsequence (i.e the ‘Big Three’ debacle), despite having the second biggest market in professional international cricket.

Corruption, administrative ineptitude and a general disregard for the importance of sports development by those in power have certainly played their fair part but, fundamentally, it is a lack of financial resources and clout that is the root cause of our sports industry being in the doldrums.

While the rest of the world has shifted from sports being a primarily government and charity-driven field to a highly professional and commercialised industry in the last 30 years, Pakistan has failed to adapt and keep up with the transition. A primary reason for this inability to adapt is because the transition globally has been fuelled by the era of commercial sports broadcasting and media — a field almost non-existent in Pakistan.

Money generated through sports broadcasting makes up the largest piece of the revenue pie for sports bodies in the current day (in international cricket the size of this piece can go up to a staggering 65-80 percent of the total revenues of boards). Broadcasting rights in essence are the major contributor towards the resources available for development and investment in sports for a governing body.

With a government that is cyclically cash-strapped and unable to invest directly in uplifting sports, the role of sports broadcasting is pivotal to helping Pakistani sports out of its current miserable state and to set it upon a path of development necessary for its revival.

Unfortunately, rather than encourage it, Pakistan’s media policies have steadfastly undermined sports broadcasting in the country.

A STATE-CONTROLLED MONOPOLY

When news media got its privatisation push in the Musharraf era, it spawned the birth of a whole host of private news channels. These channels now make up the largest chunk of the broadcasting industry revenue pie, so much so that they are substituting for the entertainment sector in our everyday households — Pakistanis are consuming news, not just as a form of information, but as their daily source of enjoyment and thrill. This space, in most other countries is taken up by a variety of sports channels.

The key to the involvement and contribution of sports broadcasters are good market conditions and healthy and fair competition amongst relevant market players. Unfortunately in Pakistan this competition — vital for driving the commercial growth of sports — just does not exist. The Pakistan sports broadcasting space is completely devoid of any major local private players with the industry suffering heavily under a state-controlled monopoly. The state broadcaster’s sports channel — PTV Sports — has overarching mandatory rights to broadcast all international cricket terrestrially, while other rules make it mandatory for the cable and satellite operators to carry the state sports network as well — thus creating an unfair environment for any competitor to exist in the same space.

Ten Sports, a locally-driven foreign subsidiary of Sony Sports, has been in a marriage of convenience with the state broadcaster for years. The partnership means an overall sports broadcasting landscape that lacks fair competition and the participation of any major players from the local private media sector. This means the broadcast rights of even Pakistan’s most-watched sport, cricket, are perpetually undervalued. The eventual loss is of the governing body and sports itself. By allowing the state broadcaster to dictate the broadcasting space, our state (probably without even realising it) is actively responsible for the suffocation of all professional sports and its development in the country.

THE CASE OF THE UNDERVALUED PSL

The situation is so bad that the Pakistan Cricket Board (PCB) allowed commercial media agencies to bid directly for broadcasting rights of its professional T-20 league, the Pakistan Super League (PSL). They resorted to this practice — that is practically unheard of in sports rights selling — because the lack of competitive bidding from local players meant the product would have otherwise been commercially unviable to launch.

Even then, the broadcast revenue numbers with the PSL in its second rights cycle — after an immensely successful four seasons — don’t come close to what such highly rated programming should be fetching the PCB. This leads, naturally, to underwhelming financial returns for the league and its franchises.

While it is folly to compare the IPL (Indian Premier League) to the PSL, given the sheer difference in market sizes, a closer look at the numbers after controlling for the difference in size, does help illustrate the impact a lack of proper exploitation of broadcasting revenue has on Pakistan cricket’s most commercial product.

Broadcasting rights in essence are the major contributor towards the resources available for development and investment in sports for a governing body.

For the sake of basic comparison, let’s apply a very rudimentary one is to 10 ratio between the PSL and IPL. For instance, the franchise rights sold by the PCB when they launched the PSL in 2015/16 — for an average of $18 million/franchise — were actually able to fetch a handsome amount when compared to the IPL’s sale for $90 million/franchise (equivalent to approximately nine million dollars/franchise after applying the 1:10 market size differentiator). It can be said that the original five PSL franchises sold for almost 100 percent higher value than the original IPL teams, after factoring for the difference in market size.

However in terms of revenue, the IPL currently rakes in $285 million/year (USD 28.5 million/year once the 1:10 market size differentiator is applied) from broadcasting revenues alone. This is after catering for the difference in number of matches between the two leagues — the PSL has 34 matches to the IPL’s 60. (The actual broadcasting revenue figures for all of IPL’s 60 matches are around $500 million/year.)

The PSL in comparison sold its latest broadcasting rights for approximately $12million/year, considerably short (approximately 140 percent less) of the IPL’s comparative $28.5 million. If the first broadcasting rights cycle revenue figures are taken into account for both leagues instead, as we did with the franchise fees, the difference would be around 150 percent less for the PSL.

To put it another way, after controlling for market size and number of matches, while the PSL franchise teams are piling up expenses 100 percent more than their IPL counterparts, they are making 140-150 percent less through their main source of revenue — broadcasting. If you disregard the number of matches, the difference exceeds 300 percent. This model is not sustainable in the long run.

While there are many other business factors that can be improved to better leverage PSL’s business potential, there is little doubt that the primary factor i.e. local broadcasting, is a major inhibitor and will continue to hold the league and its teams from emerging as globally impactful cricketing brands till steps are taken to reform the space.

That the PSL has been able to achieve the impact it has locally is a testament to cricket’s strength engrained in our social fabric. But it begs a host of questions. If our most commercial cricketing product is being crippled to such an extent due to the lack of sports broadcasting infrastructure, what sort of impact this inadequacy could be having on the rest of the sporting landscape? Does it even stand a chance? A quick scan of Pakistan sports should give you an answer.

GRASSROOTS CONUNDRUM

There is no doubt that Pakistan cricket is in need of a drastic domestic structure overhaul (one the PCB is aiming to put into play with the latest revamp). Or that the dilapidated state of school and club cricket in the country is beyond measure, and systemic changes are required from ground level up. Academies with state-of-the-art facilities, which can cater to high performance athletes, are few and far between, while grounds and venues in the country are run-down and too few in number. But here’s the thing: this grand overhaul and grassroots reform needs money pumped into the sports development pipeline. The upgradation of both athletes and the resources available to these athletes depends on considerable investment of financial capital.

Given the perpetual cash-strapped position of the government, it is unrealistic to expect this capital will be coming in from the state. However, what is more alarming is not that the government is unwilling or not capable of funding these large-scale changes in the sports sector, but that there is a complete lack of awareness on what is a core reason why our sports development is suffering and regressing year after year.

While most other countries are benefiting from commercial upheaval in the sports sector, mainly on the back of revenues coming in through sports broadcasters, the authorities in charge in Pakistan are oblivious to its importance in the modern-day functioning of sports as businesses and self-sustaining economies.

Sports broadcasting is a big money game around the world.

Of the total advertising spend commercial advertisers make on TV in the US, between 35-40 percent is being made on sports networks. Similarly, in India — a less mature, but fast-growing sports market — this percentage is somewhere around the 15-20 percent mark, with the percentage growing every year. Pakistan, by comparison, only sees three to five percent of the total ad spend on sports (and this after a strong improvement due to the advent of PSL in the past few years). The paltry amount spent on sports by advertisers compared to the overall spend is due to the lack of sports networks and properties in the country.

While the advertising industry grows in Pakistan at a faster pace compared with the rest of the world, that revenue is not finding its way back to the sports sector because the advertisers just don’t have enough avenues in sports which will give them the needed exposure they require. Simply put, in sports broadcasting we are still stuck in the era of the PTV Khabarnama — imagine the privatisation news media boom never took place in the early to mid-2000s and people still consumed all their news from the state broadcaster. That is how sports broadcasting still is in Pakistan.

And the resulting lack of investment in sports development in the country is also plain to see.

BRANDS, FANDOMS AND MONEY

Financial lifeline aside, sports broadcasters are also key in terms of branding and promotion of sports as well. Like any other type of network, they need to run constant content on their platforms; this content is usually based around building up teams and athletes of teams they have rights to. Such branding and promotion is essential for developing storylines and arcs around teams, tournaments and players, and helps in strengthening the bond between fans and the sport.

With younger audiences hooked to smart phones, tablets and digital platforms, and having a plethora of entertainment options at their fingertips, it is essential that there is proper research behind content generation and its dissemination to these audiences. A hook provided with top quality ancillary content by broadcasters, which gives them a competitive edge over others vying for the same attention and investment from fans, thus becomes important in developing and strengthening sports fandoms.

The sports broadcasters, in essence, become the main mode of marketing, PR and brand development for sports teams and players around the world, and are key in creating an enhanced image of teams and players.

Take, for example, the rise of “Team India” and its players as a cricketing brand over the past 15 years. Yes, it has to do with the team’s performance, but a major factor has also been how the team and the players have been marketed and projected to the outside world by the broadcasting machinery.

CHECKS AND BALANCES

There is yet another reason the government should pay attention to the impact of broadcasting revenues. Given the money being pumped in, elsewhere in the world sports broadcasters act as a strong check on the governing bodies and their performance as well. Yes, given their commercial inclination, they are not the best adjudicators to drive the direction a governing body should take to develop its sport and enhance performance. But it is still necessary to have accountability of the sports bodies and the product they are putting out for the fans to consume.

So sports broadcasters are not only important but play a pivotal role in the business and development of sports in countries. Just take the cricket “Big-3” as examples. Each country has intense competition amongst local private broadcasters, driving up financial returns for the sports bodies: Sky Sports and BT Sport in England; Fox Sports, Channel 10, Channel 9 and 7 in Australia; the Star Sports Network, Sony Pictures Network and others in India.

Broadcasters can, in fact, reshape and dictate the product to such an extent that they start playing an active role in the creation of properties themselves, wresting away control from inept governing bodies entirely. The rise across the border of professional kabbadi, football, badminton, hockey, table tennis, volleyball and futsal, etc., are great examples. They have completely transformed India’s sports business from a once cricket-dominated enterprise to a vibrant multi-sports industry, thanks to the active participation of and intense competition between sports broadcasters (primarily Star Sports and the Sony Network).

BEYOND CRICKET

While the current situation badly affects cricket, it is much worse and has almost proved fatal for the survival of the rest of the professional sports in Pakistan. Given that no sizeable population can survive without sports entirely, and people naturally relate to sports as a favoured pastime, cricket has ended up benefiting, and almost entirely soaking up whatever little commercial ‘juice’ there is in the market.

Other sports aren’t that lucky.

It is completely unrealistic to expect Pakistan to find its long lost glory days in sports such as hockey, squash, etc., or for other sports such as football to develop professionally, without them benefiting from a strong injection of funds.

It was perhaps easier for us to compete at a global level during a time when most of these sports were still in a semi-professional phase around the world, and the commercial aspect didn’t play that big an impact. Individual skill and will superseded professional systems and grassroots machinery then. But that is no longer the case.

Modern-day professional sports is about strong fundamental systems; a clear pipeline structure for talent to be scouted and developed through various age-levels of training; mental and physical strengthening through customised coaching; strong domestic structures that replicate the intensity of international competition; and constant high performance training along with all-round life and academic skill development. Countries having such systems in place are positioned to consistently deliver results, instead of sporadic moments of brilliance. All of this requires one thing before anything else: money.

It is unfair to constantly lay all the blame at the feet of the inept sports governing bodies or the athletes. Yes, they are to blame, and need to be critiqued and overhauled. But should one be even comparing teams and athletes coming out of systems that have millions and millions of dollars invested on them every season to our own? We need to ponder if we are even asking the right questions for that to happen. More importantly, do we even know what those questions should be?

COURSE CORRECTION

The unfortunate fact is, our thinking around sports is limited to short-term corrective measures. The state is actively holding back the development of all sports by letting the status quo run and by maintaining its authoritarian grip on a revenue lifeline that has the ability to give the sports industry the oxygen burst it so desperately craves.

Every now and then the Pakistan Electronic Media Regulatory Authority (Pemra) issues sports licences for channels. These are either not picked up due to a lack of will to take on the state or when they are picked up and channels try to put their plans into execution, these efforts are lost in a quagmire of legal stays and red tape. The current rigid and archaic rules around sports broadcasting have to be relaxed and private broadcasters need to be welcomed with open arms — maybe even pushed in through the door where needed — to establish a competitive environment for our sports to benefit.

Allowing entertainment networks (there are quite a few operating in Pakistan with mass reach) to broadcast sports alongside their entertainment programming (a practice common around the world), instead of requiring specialised channels specifically for sports, will get the ball rolling.

The state sports network should either be made a terrestrial signal network only, and cable operators and direct service providers should not be compelled to carry it on their service, or a mandatory revenue-sharing mechanism in favour of the original rights holder — similar to the one implied by India’s Sports Broadcasting Signals Act of 2007 (see box) — needs to be put in place. This will help level the playing field for private networks to function and operate.

Unless the true importance and impact of levelling the playing field for private networks to operate in sports broadcasting is realised by the government, and a sustained push is made in collaboration with the sports governing bodies and relevant stakeholders to introduce locally invested sports media players, we will be unable to start seeing a true commercial upheaval of sports in Pakistan.

Wresting away the control and loosening the authoritarian grip the state broadcaster currently has on sports broadcasting is an essential first step towards initiating the long-term strategic change needed for sports in Pakistan. Only then will we truly emerge as an industry able to produce and sustain professional athletes and teams that can compete at the global level.

Shoaib Naveed has a Masters in Sports Industry Management from Georgetown University and has served as the Senior Project Manager of the Pakistan Super League (PSL). He has worked in the commercial divisions of NBA and NHL teams as well as at the NFL Player’s Association in the US. He is currently serving as Chief Operating Officer at Islamabad United and is also Adjunct Faculty at LUMS Business School, teaching Sports Management. He tweets @SillyTiddy

The Indian Sports Broadcasting Signals Act of 2007

The Sports Broadcasting Signals Act of 2007 is an important piece of legislation passed in India to help settle the constant battle between private broadcasters owning rights to broadcast sports having to share the live feed of the content with the state broadcaster.

The state broadcaster, being a terrestrial network, has the capacity and reach to touch the remotest parts of the country. It can be claimed (and rightly so, given the importance certain sports and tournaments have for a country as a whole — cricket in South Asia for instance) that it is essential for all ODI and T20 international cricket matches to be available on the terrestrial state broadcaster’s networks. Such sharing of the live feed greatly undermines, however, the ratings and viewership of the original rights holders (i.e. Star Sports, Sony ESPN etc in India).

The Act, passed in 2007 by the Indian Parliament, may on the face of it look like an easing measure to allow the sharing of feed with the state broadcaster. But, crucially, it also mandated sharing 75 percent of the revenue earned by the state broadcaster from these broadcasts with the original rights holder. This revenue share is fundamental in levelling the playing field for private entities and helps ensure there is competitive interest within the domestic market.

It also ensures that the state does not have a monopoly on showpiece sports events, and the rights it has to air are more due to fundamental rights of access for citizens of the state than commercial gains. Since the cricketing and sporting landscape across the border was quite familiar to our own with similar debates up till a decade or so ago, the Sports Broadcasting Signals Act is a relevant piece of legislation to study.

Published in Dawn, EOS, September 15th, 2019