Nine’s record $925m NRL deal ‘puts pressure’ on AFL rights negotiations say media buyers

The Nine Network is thought to have set its sights on securing at least one AFL game a week despite announcing this morning it had tied up the NRL free-to-air rights until 2022 for a $925m price tag.

AFL grand final match with the Swans versus West Coast Eagles Source Wiki Commons

AFL grand final match with the Swans versus West Coast Eagles
Source Wiki Commons

Media buyers have welcomed the NRL deal, which sees the TV network paying $185m a year for the rights between 2018 and 2022, up 76 per cent on the previous deal which saw Nine pay $105m a year, but warned it piles the pressure on the AFL to secure a similar price rise.

“The AFL will become critically important,” Mark McCraith CEO of Maxus told Mumbrella today. “The other networks are now going to have a red hot crack at the AFL.

“For Nine they are the home of the NRL and clearly it is a good thing for them, particularly with the extra Saturday, and as a tentpole for their scheduling it will just reaffirm confidence that buyers have with their network.”

Starcom Medivest CEO Chris Nolan warned: “This puts more pressure on the AFL to get their increase because they are looking for a 50 per cent increase on their rights. This will put pressure on them to get that from Seven and Ten.”

Dave Smith speaking at a press conference this morning.

Dave Smith speaking at a press conference this morning.

Their comments come as NRL CEO Dave Smith trumpeted the deal today telling reporters it was “the biggest deal in Australian free-to-air history”.

“This deal is worth $925m over a five year period and to put that in some perspective for you that is nearly as much as we secured for the entire rights deal last time,” said Smith, who noted that the pay-TV, overseas and digital rights negotiations were yet to conclude.

NRLKey to the deal is the decision that there will be a Thursday, Friday and Saturday evening and Sunday afternoon games as well as the finals series and State-of-Origin, with the second round of the interstate Origin contest to now happen on Sunday afternoons rather than Wednesday night.

Smith emphasised that the NRL was regaining control of the sports’ schedule and which matches would be played where, with the revised rights deal meaning the game would be played over 25 weeks instead of 26, a move which he said would benefit players.

“The condensed season has obviously been a big consideration from a player welfare perspective,” he said. “The other significant benefit is that the NRL will regain control of the draw and schedule and will decide in the best interests of the fans and the clubs how that schedule plays out.

“My view is that this agreement continues the work we have had underway over the last three years to secure the financial future of this game.”

Mumbrella understands that the final stages of the deal have been negotiated in recent weeks with Nine commercial director Amanda Laing and former managing director Jeff Browne, who was brought in as a consultant, working in tandem to secure the rights.

Sources have suggested that Nine believes it can break even on the deal, although media buyers have cast doubt on this noting the price rise will put significant pressure on the TV network’s sales team to deliver new value.

Simon Ryan

Simon Ryan

“In terms of the money it is a very high price,” said Simon Ryan CEO of Carat. “At $925m with four games Thursday-Sunday the ratings are going to have to be pretty substantial in the markets that watch the NRL to justify that money.

“They will have to chase pretty hard to get sponsorship dollars to help bridge the gap however, overall ratings are what is important here.”

“I would be amazed if they were able to monetise it,” said Peter Horgan CEO of OMD. “But it is obviously a strategic imperative particularly with the threat they were facing from News/Ten it is an important hold.”

It is thought that Nine is still in talks with the AFL to see if it can secure at least one game per round, although buyers were sceptical whether the TV Network would have the money to secure a Saturday night fixture.

The combination of AFL and NRL would allow Nine to put NRL on in the northern states and AFL on in the Southern states and demand a premium across all markets.

Ryan told Mumbrella: “If they did AFL Nine would have to get Saturdays and that would help bring the gap across the other markets and help them dominate nationally around live sport.

“The issue will be around affordability.”

Starcom Mediavest’s Chris Nolan agreed saying: “You would have to think (Nine getting AFL) would be less likely now.

“What this deal does do certainly put more pressure on the asset to provide a return to the network. Obviously they will get that through increased advertising into the event and that may put pressure on the networks to leverage the asset not just with the NRL but leveraging it across its total formats.”

The NRL has also signalled that the TV network was looking at broadcasting some games in HD, noting that Nine was looking at a “multichannel strategy”.

“I know Nine is thinking carefully about its multichannel strategy and they’ve got some exciting plans,” Smith said.

Nine has previously drawn fire for its previous refusal to put games on HD channel GEM claiming “technical difficulties” prevent the network from utilising the technology.

The new deal also give Nine the streaming rights to those four games it will broadcast, which may make the rest of the NRL rights less attractive for current digital holders Telstra.

However, in the press conference today Smith said they had been “talking to all the streaming companies and technology companies” around the rights, signalling there could still be intense competition for them.

The Nine Entertainment Co share price was down 2 cents to $1.42 this morning a decline of 1.39 per cent.

Nic Christensen 

Nine’s Melbourne managing director Ian Patterson and former NRL chief and current Repucom Australia joint MD Shane Mattiske will be among the panel looking at sports rights at Mumbrella’s Sports Marketing Summit at the MCG on September 9. Click the banner below for more details.

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