Michael Payne: The most important sports broadcast deal in 2010

US broadcast rights fees are the International Olympic Committee’s largest source of income. The country’s major networks are currently positioning themselves ahead of the next round of negotiations, for the Sochi 2014 and Rio de Janeiro 2016 Games. Writing exclusively for SportsPro, former IOC marketing director Michael Payne sets the scene for a billion-dollar battle.

One of the most important – if not the most important - media deals that the international sports movement will likely strike in the next 12 months, will be for the US broadcast rights to the 2014 Sochi Olympic winter Games, and the Rio 2016 Olympic Games. All of the 33 winter and summer Olympic sports federations, and 205 National Olympic Committees (NOCs), and especially the United States Olympic Committee, will be anxiously awaiting the outcome of the IOC’s negotiations with the US networks.

Everyone has become accustomed to regular quantum leaps in US rights fees - and have developed ambitious sports development programmes, in large part funded by the network fees. At a time when nearly all budgets are facing significant financial pressures, the stakes are perhaps higher than ever. Will the IOC succeed in once again increasing the rights fee, or will there be, for the first time since 1988, a reduction in fees, with the ensuing belt tightening all around?

The US broadcast rights represent the single largest source of revenue for the Olympic movement

The US broadcast rights represent the single largest source of revenue for the Olympic movement – with the NBC 2010/2012 deal generating a record US$2 billion in rights fees, and a further US$200 million in Top sponsorship from NBC’s parent General Electric (GE). Although broadcast rights fees have continued to grow dramatically around the world, the US territory still accounts for around 55 per cent of the IOC’s total broadcast revenues. These revenues are distributed according to a complicated formula. For the first time with the 2010/2012 Olympic Games, the IOC is attempting to cap the amount of revenue distributed to the organising committees at 2006/2008 levels, plus inflation – and in the process reducing the Games share to less than 50 per cent of total broadcast proceeds. The balance – the plus 50 per cent - is distributed to the broader Olympic family.

The United States Olympic Committee has perhaps the most at stake, and is by far the most dependent on the revenue from the US deal of any of the Olympic stakeholders. The current NBC deal, including the GE Sponsorship, will generate in excess of US$250 million for the USOC. The international federations will likely share over US$300 million from the US deal, and a similar amount will be distributed to Olympic Solidarity for the NOCs.

To say there is a lot at stake is to put it mildly. The midnight oil will already be burning brightly at Chateau Vidy, the IOC headquarters, as the IOC negotiators plot and plan their strategy to strike the most important commercial deal they make each quadrennium.

Across the Atlantic, the presidents and chief executives of the US networks, their holding companies and a potential barrage of diverse other new media groups are weighing up the benefits and risks of bidding for the world’s single most important sports event.

The outlook and environment for all parties is very different today than it was last time the IOC called for offers

The last time the IOC went to market with the US rights was a surprising seven years ago – June 2003, shortly before the election of Vancouver as host city for 2010. Much has happened in the intervening years to the Olympic movement, the US broadcast and media market and not least the world advertising market – all of which means that the outlook and environment for all parties is very different today than it was last time the IOC called for offers and the networks accepted the invitation to come and dance.

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