Uefa’s move to enlarge the European Championships to 24 teams has helped to swell tournament revenues to nearly €2 billion. Martin Ross and Simon Ward weigh up the commercial pros and cons.
27 September 2008: the date that Uefa’s executive committee met in Bordeaux to ratify the addition of eight teams to its erstwhile 16-team European Championships, sparking debate across the continent.
At the time, Uefa spoke of maintaining the technical level of teams as there “are eight other teams just as good” and a “natural development” for the tournament, given the popularity and “unbeatable” TV ratings for national team football matches at a competition that first expanded to 16 teams in England 20 years ago.
Following a competitive and high-quality Euro 2012 in Poland and Ukraine, fans and journalists alike returned to the topic and some questioned Uefa’s move. Now the answers (from a sporting perspective at least) are set to be provided when France stages 51 games – up from 31 – this summer.
The commercial figures that have been delivered for Euro 2016 by Uefa and CAA Eleven, its appointed agency for national team competitions, lean towards the argument that the move has been a ‘no-brainer,’ even if the sponsorship sales took longer than expected and agencies have been finding it challenging to meet Uefa’s hospitality sales targets for a bigger competition.
This summer, the 24 participants will be dividing up €301 million in prize money (an average of €12.5 million per team, compared to an average of €12.25 million per team at Euro 2012).
In an interview with Sportcal Insight, Guy-Laurent Epstein, Uefa’s marketing director, says that €1.9 billion in overall revenues will be generated, spurred on by a 25-per-cent increase in media rights revenues and a “very healthy increase” on the sponsorship side.
The total revenue figure, which comprises sales of broadcast rights, sponsorships and licensing, tickets and hospitality, marks a 37-per-cent rise on the €1.39 billion derived from Euro 2012, a tournament that had generated just 3 per cent more revenues than Euro 2008.
CAA Eleven, based close to Uefa’s Nyon headquarters, has been handling the sale of Euro 2016 broadcast and sponsorship rights on behalf of the European governing body since its appointment in October 2012, as rights to Europe’s national team qualifying matches were centralised for the first time.
Uefa had signed several lucrative Euro 2016 deals before that point, including broadcast agreements in France (TF1, M6 and beIN Sports), Germany (ARD/ZDF), Middle East and North Africa (beIN Sports), sub-Saharan Africa (SuperSport) and USA (ESPN), and sponsorship deals with Adidas, Coca- Cola, Continental, Hyundai and McDonald’s.
MORE BROADCAST INVENTORY, MORE REVENUE
The global media rights sales for Euro 2016 are close to fully complete, with a deal in Italy worth nearly €100 million with public-service broadcaster Rai and pay-TV’s Sky Italia being signed off, and negotiations continuing in Spain, the last major market without an agreement yet in place (at the time of going to press).
Epstein says that there has been an increase of 25 per cent on average on media rights revenues for the tournament, pushing the figure of €837.2 million generated for Euro 2012 to around the €1.05-billion mark.
The rise is attributable to three factors, according to Epstein:
Uefa’s marketing director stresses: “The TV platform that we’ve put together shows that there is an interest all over the world for teams like Italy, Spain, France, Germany, England, Belgium... it’s a very good barometer to evaluate how much your competition is really global.”
More pay-TV platforms have bought the rights than previously, he points out, given the desire to show a 51-match tournament in the summer to limit the churn rate of those subscribers that leave because there is no football available during the break between the European football seasons.
The fuller schedule has also allowed afternoon games to be introduced and the nine 3pm matches in France this summer will be particularly suitable for Asian viewers.
Nevertheless, a broadcast rights haul of €1.05 billion would equate to an average of just under €21 million per match, less than the average of €27 million per match raised at Euro 2012. Many of the steeper rises in broadcast fees generated by CAA Eleven and Uefa have come from outside Europe, where, as Epstein says, the tournament is now a premium product and the scramble among pay- TV broadcasters for content between seasons has driven up the price.
The situation in Europe has been decidedly more complex, and while, on the face of it, more teams means more interest from broadcasters across the continent, the bigger rights fee jumps have been felt elsewhere. The European Broadcasting Union acquired the Euro 2016 rights in a 26-territory deal, down from the 29 countries covered by the Euro 2012 deal (plus seven more territories in which the EBU sold on the rights in an agency agreement).
Epstein says that the EBU’s footprint has been “one of the most positive impacted” by a bigger tournament, although he underlines that the rights are sold before qualification is decided, so “there is always a betting element from the broadcasters to acquire them subject to how the qualification goes.”
The EBU’s talks over the rights (initially with Uefa) began three years before the deal was announced in June 2015 and member broadcasters faced increased competition for the rights as CAA Eleven, in a bid to deliver maximum margins, initiated sales processes in each of the territories, leading, in the event, to individual deals being signed in the likes of Albania and Iceland, both Euro 2016 participants and part of the EBU’s 2012 agreement.
It is difficult to judge the commercial impact of a larger tournament on the EBU deal given uncertainty over qualification, and it has also ben suggested that rights fee increases matching (or exceeding) Uefa’s tournament average of 25 per cent would only be felt in deals with public broadcasters (as guarantors of an EBU agreement) once a country qualifies for a succession of (24-team) European Championships.
RTCG, the public broadcaster in Montenegro for instance, is unlikely to loosen its purse strings and offer a highly-inflated figure without being confident that its team will be taking part in the finals. Meanwhile, MTVA in Hungary, which qualified for Euro 2016 to reach its first major tournament in 30 years, is only likely to raise its bid significantly once the national team is regularly qualifying.
SPONSORSHIP SALES ‘SLOWER THAN EXPECTED’ BUT INTERNATIONAL BRANDS ATTRACTED
Uefa and CAA Sports finished their search for Euro 2016 sponsors in January, with the announcement of Hisense, the Chinese household appliances and consumer electronics manufacturer, as the 10th and final global partner.
The arrival of the tournament’s first Chinese sponsor is certainly proof of the event’s now international appeal, but the need to look outside Europe is evidence of the reluctance of some European brands to cough up the higher asking price for rights, even for a larger tournament.
Towards the end of 2014, Uefa projected €400 million from Euro 2016 sponsorship and licensing revenues, and the projections have been realised, with a “very healthy” rise on the €314 million generated for Euro 2012, according to Epstein.
However, he admits that the pace of signing up the final sponsors had not matched Uefa’s expectations when a major European market such as France defeated Turkey and Italy six years ago to win the Euro 2016 bidding race. “I think when you look back at 2010 when France was allocated the organisation of the tournament and where for 2016 we already had five partners for Euro 2016 as global packages for [Euro] 2012 and 2016, [then] we expected it to be faster due to the impact of hosting the tournament in one of the major markets in Europe,” says Epstein.
“The economic situation of Europe and France made it slower than expected, I have to admit, but on the other hand that has given us some opportunities. For example, of the last two partners [signed up], one comes from China [Hisense] and the fact that the sales process took longer gave us the possibility to tap into that new market.
“The second one is Turkish Airlines, which is interesting for us as we never had a partner from Turkey, a very rapidly developing market, and we never had a partner in the airline category.” That international appeal was further underlined when Socar, the state oil company of Azerbaijan, which spans both Europe and Asia, signed up as global sponsor three years ago.
There was some domestic interest also in the top-tier sponsorships, however, and Orange, the French multinational telecommunications corporation, became the eighth global partner to sign up.
Keld Strudhahl, former international marketing director at Carslberg, the Danish beer brand and a European Championships sponsor since 1988, questions exactly what additional value a sponsor can enjoy from an expanded tournament, noting: “If you’re being a bit critical, it has been difficult to secure the 10 [global] spots – whether that’s because of the financial climate or the cost of the package.
I know the cost of the packages is individually negotiated, but the rights are more or less the same except for some exclusive rights. However, the package has increased significantly in price in comparison to Euro 2012 and except for the increase in the number of teams, hence more TV exposure, I do not see where the increased value is coming from.”
Strudhahl, who now heads up the Brand Activators consultancy, would like Uefa “to be more brave and challenge themselves” on a commercial rights package that he feels has not changed much in the last 16 years, and would welcome individual solutions for each of the sponsors.
Discussing the expanded 24-team tournament from a purely sponsorship perspective, Strudhahl observes: “There’s still a lot of criticism of the extra teams, but if I was a sponsor I would like it very much. There are smaller teams which may not be attractive to certain sponsors and vice versa, but it’s an opportunity to connect with new and potentially more markets.”
“It’s always a balance. They may have to compromise on a few things. You know that if you expand to 24 teams you will have less interesting matches. How do you compensate for that? Is it in terms of a lower price or do you add extra value on other matches to compensate? I think that is one of many issues Uefa needs to look at in order to find the balance. As a sponsor it will be hard to justify the price if it keeps increasing while the value of the overall tournament decreases.”
Underlining the benefits of the larger tournament, Epstein says that the extra week of competition has been particularly valued by the sponsors “as it gives them a longer platform to activate the rights and a longer opportunity to bene t from the platform that is offered to them.”
The national sponsorship programme for Euro 2016 was also completed in January, with Abritel-HomeAway, a domestic accommodation provider, unveiled as the sixth partner. Crédit Agricole, FDJ, La Poste, PROMAN and SNCF complete the list of national sponsors, which are paying between €7 million and €10 million each for the privilege.
TICKETING AND HOSPITALITY
While Uefa can point to a marked increase in broadcast and sponsorship revenues for a 24-team tournament, and there has been a strong demand for tickets in many countries – Uefa announced that over 3.5 million briefs had been requested by mid- January – the continuing sales process for hospitality packages in Europe remains challenging.
Shankai Sports, Uefa’s exclusive hospitality sales agent in China, points to an increasing demand among fans in the country to go to top-level football matches given the “rapid development of China’s economy and China’s sports industry” and after “thousands of Chinese football fans” bought 2010 and 2014 World Cup hospitality packages from the agency.
The impact of heightened projections for a 51-team tournament has taken effect in Europe though, and on the agencies selling packages on a commission basis. Lagardère Sports, which is selling in Austria, Belgium, Germany, Spain and Switzerland, plus the Netherlands, which failed to qualify, has flagged up “a little bit of softness” around its sales and after Uefa raised its targets by going from 16 to 24 teams.
Ticketing and hospitality generated €256 million (ticketing €101 million/hospitality €155 million) at Euro 2008, a tournament staged in the very accessible Alpine countries of Austria and Switzerland before the crippling Eurozone financial crisis took effect. Sales for Euro 2012 fell to €238 million (ticketing €136 million/hospitality €102 million) as the financial debt crisis took hold and VIP packages were mainly purchased by customers in the host countries of Poland and Ukraine.
Uefa has not yet provided an update on the figures derived from the larger Euro 2016, but did communicate a projection of €500 million from ticketing and hospitality in late 2014. Whether that figure can be reached with several group-stage matches on offer that might not excite business clients without an interest in either team remains to be seen.
Uefa will certainly be able to boast record revenues from its move to enlarge a tournament that was born as a four-team event in France 56 years ago, and the expansion provides a financial boon to national associations that have previously missed out. Drilling down into the detail, however, underlines that it will take some time before commercial revenues can be expected to match the 50-per-cent increase in the number of participating teams.
UEFA CONTROL OVER TV PRODUCTION
Relatively little is said about Uefa’s broadcast production for the Euros compared to the pre-World Cup noises made by Fifa and its appointed partner HBS, Infront Sports & Media’s production subsidiary.
While Uefa is certainly not matching Fifa’s lavish $370-million production spend on the 2011-2014 World Cup cycle, the offering is extensive and will include the use of 14 cameras to produce eight games in 4K from Euro 2016: the opening match, quarter-finals, semi-finals and final.
Uefa oversees its own TV production, but has appointed live outside broadcast suppliers (Outside Broadcast, Euromedia, Telegenic, AMP Visual and Mediatec) for the finals, along with live experienced match directors, namely the French trio of François Lanaud, Jean-Jacques Amsellem and Laurent Lachand, plus Germany’s Knut Fleischmann and England’s Jamie Oakford.
The quintet, described by Epstein as “not only technicians but also artists,” will work with Uefa on a consistency and running order of broadcast coverage across all games.
Up to 49 cameras will be used for the final at Paris’ Stade de France on 10 July, an increase on the set-up for the Euro 2012 final, while a second-screen application will be delivered to broadcasters to allow them to make use of alternative camera angles.
Epstein remarks: “We benefit between the synergies of the [Uefa] club competitions and the Euro to have built a core team of 30 people within Uefa that is looking after production of all our competitions [including qualifiers].
Hisense’s exclusive product category covers televisions, mobile devices, air conditioners and other home appliances and it has plans for a series of Euro 2016 public viewing events across Europe this summer and will invite 100 Chinese fans to enjoy the competition in France as part of its campaign.
The deal comes at a time when China is finally bringing its economic power to bear in soccer, with the country’s media companies investing heavily in rights to competitions including the Chinese Super League and top clubs forking out large sums for overseas stars.
Hisense’s move forms part of a wider strategy incorporating sport as it seeks to consolidate its position as the third-largest manufacturer of televisions in the world and a major exporter to Europe, its fastest-growing market.
“All of the production strategy [for the Euro] and central development is run from Uefa. We invest a lot of money and value into the production, because that’s where we reflect our competition to the world. It’s very important for us that the quality of the production is of a high level.
“By controlling the production centrally, we have the ability to deliver digital services to the broadcasters and to our own platforms, because we can re-offer all the content that we generate for digital exploitation.”
CHINESE TARGET EUROS AS INTERNATIONAL PLATFORM
The globalisation of the European Championships was reflected in the appointment of Hisense as the final global partner of Euro 2016, with the Chinese company, like other partners, signing up to also support Uefa’s other national teams competitions until the end of next year, including the Women’s Euro 2017 and the European qualifiers for the 2018 World Cup.
Cheng Kaixun, senior vice- president of Hisense Group, tells Sportcal Insight: “Uefa Euro is one of the top three football competitions and a worldwide event.
Hisense’s sponsorship of Euro 2016 will make a difference to our global marketing. “In the past few years, Hisense sponsored some world-class properties like the Australian Open, the Red Bull Racing F1 team and Nascar and witnessed a rapid growth of the brand. Sports marketing is an important strategy for a global brand.”
In concluding the deal Hisense worked closely with Chinese sports marketing agency Shankai Sports, and the relationship will continue as the sponsor plans future activation. Shankai was granted sponsorship sales rights in China for national teams competitions from 2015 to 2022.
Feng Tao, the chief executive and co-founder of the agency, said: “As a local Chinese company seeking globalisation, Hisense will come closer to consumers worldwide and cultivate potential new customers in Europe by sponsoring Euro 2016.”
With respect to how the sponsorship will be leveraged, he added: “Shankai Sports will help Hisense on brand promotion through TV, print media, websites and social media, making the most of its sponsorship rights and resources. Shankai Sports will also help to organise offline events, set up sponsor booths to promote Hisense and call on more fans to watch Euro games through Hisense equipment.”