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Joint sale of broadcast rights to sport events

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Photo credit : Tim Mossholder

The issue of the joint sale of TV rights to sport events are rife in the sports industry and raises interesting legal issues for the dramatis personae in the broadcast chain. It raises a plethora of legal issues of copyright law and eventually becomes the subject of a specific legislation on cross border broadcasting. An elaborate analysis of the decided cases and the ensuing disputes in the area is beyond the scope of the present article.

For our purposes, a Joint selling of TV rights describes a situation where sport clubs assign their rights to their associations, which sell the rights on behalf of the clubs. The practice is for the relevant associations to bundle all the rights in large exclusive packages and sell them to a single broadcaster in each country. This relationship results in the preparation of joint selling agreements to prevent the constituent clubs from competing in the sale of their rights.

This arrangement has been known to limit competition between broadcasters and thereby consumer choice. To date, the application of competition law to sports broadcasting has focused mainly on the collective selling by sports leagues of the rights to broadcast exclusive live coverage of their sports. The case for regulatory intervention is based on the argument that by selling their rights collectively through a league, teams act as a cartel.

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From this perspective, collective selling agreements have a tendency to restrict competition in three main ways.

First, collective selling gives the league market power to dictate the price of broadcast rights, which leads to inflated prices for both broadcasters (upstream) and consumers (downstream).

Second, collective selling arrangements also tend to limit the availability of rights to sports events. This is because teams often fear that live broadcast coverage of matches will undermine their attendance revenue. By selling their broadcast rights collectively, teams have a mechanism through which they can limit the total number (and time) of games broadcast so as to lessen the impact on attendance revenue.

Third, collective selling arrangements can strengthen the market position of the most important broadcasters because they are the only operators who are able to bid for all the rights in a package. In theory, if broadcast rights were sold by individual clubs, rather than collectively, there would be more possibilities for other broadcasters to obtain rights, which, in turn, would foster competition in broadcasting.

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A number of theories have been used to rationalize joint selling of broadcast rights. The protagonists of the joint selling model are quick to point out that sport, and in particular team sport, has a number of distinct economic characteristics which make the application of general competition law inappropriate.

“First, the production of sporting contests in professional team sports requires joint production by at least two individual teams. Consequently, unlike the underhand and/or secret behaviour that typifies cartels in other areas of business, team sports, by definition, need to co-operate and do so openly through leagues and tournaments.

Second, a league or competition is more exciting and attractive to fans (and broadcasters) if the outcome is uncertain. Consequently, no team has a long-term interest in the failure of its main sporting competitor(s).

Supporters of collective selling claim that, if individual teams are allowed to sell the broadcast rights to their matches, it leads to significant income disparities between teams, which reduces the competitive balance of the league and, in turn, undermines the long-term popularity of the competition”.  

On this basis, they have argued that the collective selling of broadcast rights may be pro-competitive, rather than anti-competitive, and as such should be granted exemption from the application of competition law.

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