Fox Sports looks to cut A-League outlay by half in renegotiated TV deal

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Besieged rights holder Fox Sports is seeking to slash its $57 million per year funding commitment to the A-League by 50 per cent or more, as parent company Foxtel fights for survival.

Having last month paid a $12 million quarterly instalment to Football Federation Australia amidst the spectre of legal redress had the money been withheld, Fox Sports has now flagged its intention to renegotiate the remaining three years of the six-year contract.

Parent company Foxtel is $2 billion in debt and has cut 250 jobs with more redundancies likely as subscribers desert the pay-TV provider for cheaper streaming services.

Multiple sources close to the matter have confirmed that initial discussions are imminent on a restructuring of the agreement between Fox Sports and the FFA, which could include a ‘performance based’ component in terms of the A-League delivering improved viewership numbers and match attendances.

Broadcast rights analyst Colin Smith, head of the consultancy Global Media & Sports, is convinced Fox Sports will be looking to trim its annual outlay to $28 million, or less.

“The A-League, as it stands now, is not in great shape,” Smith said.

Fox Sports will be looking to make big cuts in any renegotiations but there might be some potential upside in performance-type clauses relating to lifting crowd numbers and viewers to levels of the past.

“Frankly, if you can’t get your fans back your days as a television sport are numbered.

“Right now, I don’t see (rival) broadcasters lining up to want to screen the A-League.

“Especially when you factor in production costs which are $40,000-plus a game.”

Should Fox Sports succeed in downgrading its financial outlay to the A-League, the ramifications for the clubs - who receive $3.6 million a year in grants - would be profound in an already dystopian-looking post-COVID-19 sporting landscape.

As it is, with FFA having shed 70 per cent of its staff during the coronavirus outbreak, and with a black hole in sponsorships and myriad national team programs to fund, the clubs can expect to receive only a fraction of the $900,000 apiece they were banking on from the latest quarterly instalment.

With no product currently available due to the coronavirus shutdown, FFA also has contractual obligations to Fox Sports with a resumption of an abridged end to the season and finals format slated for early August, health and safety stipulations permitting.

Smith believes Foxtel’s re-evaluation of its relationship with domestic football has as much to do with its own dire financial position as the under-performance of the product it has invested so heavily in.

“People wrongly think, ‘oh yeah, the broadcasters are trying to screw down on sports’,” he said.

“But this is a fight for survival for everyone and there’s no certainty who is going to come out of it in one piece.

“I don’t think a lot of people realise this and they say ‘oh, it’s the bloody broadcasters just trying to take advantage of the situation because they can’.

“But they’re also trying to ensure they have a future themselves.

“Whilst Foxtel has the support of (majority shareholder) News Corp, and News Corp is okay, they’ll come out of this.

“But, whatever happens, they’ll be a reshaping (of the business model) and they’ll want to keep the must-have sports (AFL, NRL and cricket).

“As for the others (like football) they’ll pay a proper value for them, or they won’t broadcast them at all.”

When Fox Sports began its relationship with the FFA 15 years ago, they were, according to Smith, “believing in the dream”.

“But the dream has soured (since the new six-year $346 million deal was signed in 2016) and audiences are down a third or more of what they once were,” he said.

Fox Sports were investing in the vision of new teams, expanded TV audiences and attendances but the figures have gone the other way.

“The last deal was signed on the basis of what the code needed to grow, rather than what it was worth.

Fox Sports had to pay the last instalment - there was no get-out-of-jail card for them.

“If I was FFA, I would be looking to extend the term beyond the remaining three years in return for a reduction in payments from Fox Sports.”

With the FFA looking at a Plan B should the Fox Sports talks not yield a sustainable outcome, Smith sees Optus Sport as a potential new home for the A-League.

“Optus is looking like the home of football now with the Premier League, Champions League and now J.League (and K League),” he added.

“The A-League should be talking to them also. What’s critical is they need a broadcast partner.

“You could make an argument that once Foxtel lost the EPL rights to Optus it accelerated the demise of the A-League on Fox Sports and (more recently) Kayo.”