Nothing beats the excitement and adrenaline rush of watching a live sporting event. A three-hour T20 cricket game is a complete edge of the seat entertainment package ensuring Drama, Emotions, and Action. The perennial question that always stay in everyone’s mind – Score Kya hua hai?
When COVID hit the world last year, the sports industry faced the most upheaval task. With sanctions over travel, cancelled tournaments and even the safety of the players, there was a looming doubt and uncertainty about the industry’s recovery. However, contrary to what business pundits predicted, sports broadcasting has largely remained unaffected during COVID, despite the other related industries such as ticketing, travel, merchandise, still remaining badly hit.
With sporting events being hosted in empty stadiums due to safety reasons, the fans (read the core audiences) devoid of a choice turned to television and digital streaming platforms to consume their favorite sporting events. Interestingly, we also witnessed certain sections of the non-core audiences switching to watch live sporting events during lockdown than the repeats of their otherwise favored fiction or other reality shows. Recently, NFL signed a one-hundred billion US dollars media rights deal for an eleven-year period in the US, and we may safely assume that sports media rights are shielded from COVID.
Any entity desirous of controlling and exploiting the sports media rights should carefully evaluate and meticulously negotiate the scope of rights they are licensing while weighing budgetary considerations, and other key terms as mentioned below. This blogpost is intended to familiarize the readers and young professionals in the sports broadcast industry with the key concepts and clauses that form a part of any standard sports media rights agreement.
- Grant of Rights – This clause describes the various media rights granted to a broadcaster (known as the “licensee”) by the organizing body/sports federation (known as the “licensor”), such as the television rights, digital rights (internet and mobile rights), and other ancillary rights. It also provides for the platforms/media on which, the term during which and the languages and territories in which such rights can be exploited, and the terms and conditions governing such exploitation.
- Reserved Rights – This clause lists out the rights which are reserved/retained by the licensor for exploitation, either exclusively or on a non-exclusive basis. These rights may include Gaming Rights, Public Exhibition Rights, Clip Rights, Betting Rights, Inflight Rights, etc.
- Rights Fee – This clause provides for the total amount of rights fee payable to the licensor, the payment mechanism and instalments (if any), and the due dates of payment. It also provides for any circumstances under which the rights fee may be increased or may stand reduced, for instance, if a league or tournament expands leading to an increase in number of matches, the fee may be increased, while on the other hand, if an entire tournament is abandoned, the fee may stand reduced.
- Minimum Transmission Obligations – This clause lists out the minimum transmission / broadcast obligations of the Licensee, including the quality, technical parameters and standard of broadcast coverage required from the Licensee. For instance, licensee may be required to transmit a minimum of ‘X’ hours of audio-visual content from each edition of the tournament, on a live basis. Another example could be wherein licensee has to broadcast all matches on any of its standard definition sports channels, and in addition, may also broadcast the matches on any of its other channels.
- Number of runs – This clause describes the number of times a programme can be broadcast on the channels of the licensee, and the timelines within which the permitted number of runs may be completed. These can be unlimited or capped at an upper limit. In some cases, there is also a minimum number of runs captured in the agreement, with a view to ensure exposure of the property.
- Sponsorships and Marketing– This clause provides for the terms and conditions governing the grant of broadcast and other sponsorship packages by the licensee to various advertisers. This would inter alia include requirements such as providing a right of first refusal (“ROFR”) or last matching rights (“LMR”) to licensor’s title/official sponsors, product category exclusivity to such official sponsors, commercial airtime to be made available by the licensor, the quantitative restrictions (if any) on commercial adverts during transmission of matches, the broadcast parameters/guidelines to be satisfied during such display of commercial messaging etc. ROFR timelines in some cases are contingent on when the list of official sponsors is notified to the licensees by the licensor.
- Use of Event Marks / Logos – This clause deals with the terms governing usage of event and team marks/logos by the licensee whether as part of promotional material or during transmission of matches. This may include various conditions such as need of prior permission from the licensor for usage of such marks, restrictions on using such marks to promote third party goods or services, permitted usages, use of composite logos etc.
- Use of Archive Footage – This clause deals with the terms governing usage of Archive Footage by the licensee as part of promotional material for the relevant event/licensee’s channels/network and/or in its programming. This may include various conditions such as need of prior permission from the licensor for usage of such archive footage, restrictions on using the same to promote third party goods or services, permitted usages and permitted platforms, permitted durations of archive footage to be used within each individual promotional trailer etc. For example, a contract may require the total duration of excerpts of archive footage used must not exceed 1 (one) minute in any single trailer, advertisement or promotion.
- Use of Player Images – This clause deals with the terms governing the use of player images for promotion of the relevant sports property or, in some cases, licensees’ channels. This may include various restrictions/conditions such as the minimum number of players to be used in each promotion, restrictions on using the player images to promote third party goods or services etc. For example, a contract may require that any promotional material by the licensee must feature a minimum of 3 (three) different players from 3 (three) different teams to give emphasis to them all.
- Indemnity – This clause deals with the specific circumstances under which a party may claim damages/indemnity for the other party’s breach of any material obligations, representations or warranties under the agreement.
- Limitation of Liability – This clause provides for limitation of the aggregate liability of a party under the agreement. This may take the form of a quantitative liability cap and/or other kinds of limitation / exclusion of liability such as for loss of business, loss of profits, loss of revenues, indirect or consequential damages.
- Sub-Licensing – This clause sets out the restrictions around sub-licensing of rights granted under the agreement to licensee by the licensor. For example, a licensee may sub-license any of the rights granted to it only subject to licensor’s prior written approval.
- Termination – This clause sets out the various events on the occurrence of which a party may get the right to terminate the agreement and the mechanism for such termination. It also sets out the consequences of such termination including arrangements for separation and adjustment /refund of dues (if any) inter se between the parties.
- Assignment – The clause deals with the right of either party to assign its rights and obligations under the agreement to either an affiliate or to a third party. There may be absolute restriction on assignment, or such assignment may be permissible with prior written consent of the other party.
- Dispute Resolution and Governing Law – This clause states the law which shall govern the provisions of the contract and which dispute resolution mechanism would be applicable to resolve any dispute arising from the contract.
- Schedule – Matches – This schedule lists out the schedule (date and venue) of matches as declared by the licensor.
The clauses mentioned above may seemingly appear simple, however are the most intertwined, convoluted and complex clauses in any media rights agreement. Also, these agreements are drafted, negotiated, and closed by only experienced lawyers on both sides for the worth of these deals, e.g. Star India licensed IPL global media rights from the BCCI in 2017 for a whopping 2.55 billion US dollars. With the advent of technology and more digital streaming platforms like Facebook showing keen interest in the business of streaming sporting events live, the broadcast industry is witnessing stiff competition and will continue to do so in the times to come. The fans can however continue to enjoy the broadcast or steaming of sporting events for this industry has proved itself to be COVID-resistant.
This article is made for education/information only and to be read as the personal opinion of the author. It should not be construed as substitute for competent legal advice.
About the author: Abhilasha Bhatnagar is an entertainment, sports, gaming and technology lawyer, and partner in a Gurugram based law firm, Ashraya Legal. She has extensive experience in the broadcast sector, with particular expertise advising rights owners and content platforms on their acquisition and monetization of sports rights. Prior to joining Ashraya Legal, she worked at Star Sports, one of India’s leading sports broadcasters, and Hotstar, India’s most-watched sports OTT platform, and has worked on many major deals in the sports rights market such as IPL and BCCI global media rights amongst others. She currently advises sports league rights holders, sports media companies, start-ups focused on sports and gaming, athletes, sports academies, amongst others. If you have questions, please reach out to her at email@example.com.
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of Bizbehindsports and Bizbehindsports does not assume any responsibility or liability for the same.