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Siya Special

The Big Question: Impact On Sponsorship Deals

According to the PSL’s annual financial report, it is crystal clear that the revenue from the broadcast deal with rights holders SuperSport International is the main source of income that they cannot afford to collapse.

It’s a sponsorship worth R600 mil­lion per season (R3 billion over five years) and, as such, helps ensure that monthly grants are paid and clubs across both the top tier (the Absa Premiership) and the Glad­Africa Championship are able to survive.

With the looming economic crisis due to COVID-19, there will be cutbacks and the longer the delay to resume the football season, the greater the likelihood of revenue streams crippling for the PSL.

“The television rights deal is the lifeblood of the local football economy, it provides much needed liquidity to the local market and should this agreement be dimin­ished in any form, the economic repercussions could be catastrophic for clubs in more ways than one can imagine. This holds true for the PSL as well as African club competi­tions covered by SuperSport,” adds economist Rasool.

The R3 billion broadcast deal is locked in until the end of the 2023/24 season, which complicates the possibility of a reduction, espe­cially in the case of a ‘force majeure’ – the unforeseeable circumstance that prevents an agreement on a contract being fulfilled.

COVID-19 could be defined as an unforeseeable situation.

SuperSport CEO, Gideon Kho­bane, moved quickly to reassure viewers that the channel was “working closely” with its partners, including the PSL, to “mitigate” the absence of live sport, which is of course their bread and butter, too.

In a recent statement, he said, “All of our partners have reached out to explain their measures, which we appreciate. Live sport is massively impacted, we are combatting this by acquiring the best award-win­ning sport documentaries from around the globe, among other top programming. We will use our vari­ous platforms to communicate this to viewers.”

SuperSport, as the television rights holders, have not been able to beam live local matches since March 15 following the quarterfinals of the Nedbank Cup.

The two organisations – the PSL and its rights holders – need to co-exist given that SuperSport is the ultimate funding model for the League, while football guarantees eyeballs on their dedicated chan­nels, especially considering that none of the free-to-air broadcasters own any television rights.

Other notable sponsors who could also consider scaling down include title sponsors Absa, MTN8, Telkom and Nedbank.

The financial statements as of July last season show that revenue from Absa was worth over R130 million, MTN slightly above R43 million, Telkom was R57 million and Ned­bank came up to R80 million.

Add the R41 million from Multi­Choice Diski Challenge, and that’s more than R350 million revenue from sponsorships for the PSL.

It was at the end of the finan­cial year ending July 2019 that the League, for the first time in its hist­ory, recorded a revenue of R1 billion – increasing by seven percent from the previous year’s R983 million and R884 million 12 months prior.

Along with Moody’s recent deci­sion to downgrade SA to junk status amid the COVID-19 crisis, those kinds of figures are under extreme threat.

READ ON: Does The PSL Have A Contingency Plan?

In this 10 article Siya special:

1)  COVID-19: PSL Club Bosses Fear Economic Collapse! 

2) First Glance, Clubs Are Safe…For Now

3) The Big Question: Impact On Sponsorship Deals

4) Does The PSL Have A Contingency Plan?

5) Which Clubs Could Be The Hardest Hit?

6)  The Wheel Needs To Keep Spinning – Kadodia

7) The Industry Will Collapse – Comitis

8) There Is A Deficit In TV Coverage – Matthews

9) Economic Landscape: Who The Biggest Losers Could Be

10) Watch This Space: COVID-19: PSL club bosses fear economic collapse! 

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