Importance of Discipline and Punctuality at Workplace
Discipline and punctuality are two most essential traits required in a professional to be successful. Discipline ensures individuals behave in an acceptable way at the workplace and also adhere to the rules and regulations of the organization. Individuals who are disciplined are not only successful professionally but also in their personal lives. Disciplined employees are […]
Staff Motivation – Motivation Tips for Employees
Employees are the building blocks of an organization. Organizational success depends on the collective efforts of the employees. The employees will collectively contribute to organizational growth when they are motivated. Below mentioned are some tips for motivating the staff/employees in an organization: Evaluate yourself- In order to motivate, encourage and control your staff’s behaviour, it […]
Models of Transformational Change
An extensive review of the literature details would reveal that both practitioners and academics have explained transformational models with varied perspectives and focus on different points of views. Practitioner Models The Practitioner Models focus on senior management in an organization (Kanter, 1983 and Kotter, 1995). These models rely on opinions and also on illustrative anecdotes […]
How HR Managers Must Address the Pay Disparities and Pay Gaps in Organizations
While Pay Disparities are Natural, Biased Pay Systems are not In any organization, it is natural for different employees to be paid differently based on their abilities, seniority, experience, and value that they bring to the organization. Indeed, no organization can afford to pay all employees the same unless it is a Non Profit or […]
Bank Loans vs. Bonds: Debt Financing in Infrastructure Projects
Debt financing is the most important source of finance for infrastructure projects. In most infrastructure projects, the majority of the project is funded using debt-based financial instruments. Equity holders invest a significantly smaller amount. However, they bear all the risks. The size and scale of debt financing make it an important decision for any company […]
In the previous article, we have already seen the importance of broadcasting revenue. We also know what the shortcomings of broadcasting revenue are. However, in this article, we will have a closer look at a bigger problem which is how the revenue generated by the sale of broadcasting rights should be split between various stakeholders.
It is important to note that the broadcasting rights are owned by the entire league. This means that the franchises as well as the franchisors have some stake in the money which is generated by selling broadcasting rights.
However, in many parts of the world, certain stakeholders benefit more from the sale of these rights as compared to other stakeholders.
It is a known fact that larger football clubs such as Real Madrid and Barcelona are granted between 10% to 15% of the overall broadcasting rights in European football leagues. There are some experts who believe that this distribution is justified whereas others do not believe so.
Hence, the question arises about how should these revenues be split. Should all franchises be allowed to share the revenues equally? Should some franchises be granted more money than others? Should the broadcast rights even be sold collectively or whether individual franchises should be allowed to sell their own broadcasting rights?
In this article, we will have a closer look at some of these issues as well as how they impact the distribution of broadcasting revenue amongst the various stakeholders.
Many franchises and stakeholders across the world believe that the collective selling of broadcasting rights of any sporting event creates many problems from an economic point of view. This is because the collective sale of broadcasting rights raises the issue of how the money should be distributed.
Instead, if the respective franchises were allowed to sell their individual rights on their own, they would be able to generate a better economic value. There were lawsuits filed against the NFL in courts within the United States in order to ensure that the sale of broadcasting rights is decentralized.
However, the American courts have ruled that the entire league should be considered to be a single economic unit. Hence, if every franchise tries to negotiate at their level, there will be more competition and the bargaining power of the league will get reduced. Also, the broadcast needs to be of the same quality so that the end-user experience is not altered. It is for this reason that broadcasting rights are generally sold collectively.
It is important to note that there is no set formula that is followed all across the world with regard to the distribution of broadcasting revenues. It is an individualized agreement that is drawn up after taking multiple factors into consideration.
The number of sports franchises, their relative status as well as their bargaining power are taken into account while deciding how the revenue from broadcasting rights needs to be split. Some of the factors which are taken into account while deciding the revenue split have been mentioned below:
For example, in the English Premier League, about 50% of the overall revenue generated from the domestic sale of broadcasting rights is distributed equally amongst all market participants. This is done to ensure that all teams participating in the league, no matter how small or big, do receive a minimum share of the revenues.
It is common for leagues to provide extra incentives to the teams that finish in the top four positions. This is done to ensure that the profit motive of the franchises and the winning motive of the teams ends up being reconciled.
For instance, clubs that have been consistently performing well and have been drawing in large audiences for a longer period of time (for example five years) are paid a larger share as compared to the clubs which have recently started playing and have no real fan following.
The fact of the matter is that deriving the economic value of a broadcast is almost impossible. Some viewers watch every match, others watch only when a certain team is involved regardless of the opponent whereas certain others only watch when two teams are involved.
It is very difficult to ascertain the cause of the increased viewership. It is for this reason that factors like the ones mentioned above are taken as an approximation to try to distribute the revenue in a manner that is equitable and acceptable to all.
Your email address will not be published. Required fields are marked *
