Everything you need to know about the $5.3 billion agreement between the NRL, Nine and Foxtel
After all the bluff and fuss, all the talk of new broadcast giants threatening to shake things up and all the doubts about whether Peter V’landys can deliver the talk, negotiations over a new mega NRL rights deal have probably arrived at where they always end up: the status quo.
That doesn’t mean the massive deal between the NRL and broadcasters Nine and Foxtel is boring. Far from it. The seven-year, $5.3 billion deal announced Tuesday will have serious consequences for the program, players and fans.
The Nine will pay $145 million in cash each year, which will be offset by the NRL’s promised $10 million in advertising spend. In return, Nine, which owns the imprint, has the right to broadcast up to three games each week and retains exclusive rights to the important State of Origin and grand final.
In comparison, Foxtel will earn approximately $520 million a year; That’s roughly double the current deal. Nine’s $145 million contribution is only 25 percent more than current spending.
Given this stark difference, there was an odd tone to Tuesday’s agreement signing. Foxtel boss Patrick Delany, who coughs up a fortune and has a big job ahead of him in generating enough subscriber revenue to justify it, was all smiles as he hugged NRL chief executive Peter V’landys.
Nine-time chief executive Matt Stanton seemed less enthusiastic. It didn’t help that V’landys initially mispronounced his surname as “Staunton”. The hurtful nature of the negotiations in recent months did not make the families happy on Tuesday either.
But behind Stanton’s poker face lies the fact that Nine emerged from this deal in a better position than Foxtel.
Nine needs to pay an extra $210 million in cash over seven years, while Foxtel needs to come up with an extra $1.8 billion.
How will they do this? Some of the first questions asked at Tuesday’s media conference were whether the Kayo streaming app’s subscription price would need to increase and whether the deal included any caveats to ensure access remains affordable for fans.
V’landys said the deal would ensure “fans can contribute financially to watching the great game of rugby league”, but Delany did not rule out a price increase.
Assuming Kayo increases subscription prices by $10 per month for 1 million league subscribers, this will generate $120 million in extra revenue each year; That’s not enough to cover the $250 million annual difference between Foxtel’s old deal and its new deal.
Delany noted other strategies to increase subscriber numbers, including introducing three new teams to the competition by 2029 and an effort to expand the game internationally.
But the jury is out on whether the new teams (PNG Chiefs, Perth Bears and possibly a second New Zealand team) will attract major new interest. The NRL’s past attempts to globalize the game have also struggled to gain traction.
Delany insists he can make the economy work. “People have been talking about Foxtel survival for a long time,” he said. “Foxtel is improving.
“We’re seeing sports rights increase and their value increasing. This is actually the fourth deal I’ve done with the NRL. With every deal people were saying: ‘Oh my God, this is a lot of money. How are you going to afford it? How are you going to survive?’ But we’re still thriving here. Sport is the one thing everyone wants to watch. It’s very, very valuable.”
V’landys also said the more Foxtel and its parent company DAZN grow overseas subscribers, the less pressure there will be on prices in Australia. “We have a one-on-one chance to globalize the game, and we will do it,” he said. “Who’s to say there won’t be a European team in the NRL in 2050? That’s the aim. Why isn’t there a team from America? The world is our oyster. If you sit back and do nothing, you’re destroyed.”
Foxtel has a big task ahead of it, but the alternative of losing the rights would be much worse. That would be existential for Kayo. Foxtel has been forced to step up big to deal with the threat, with streaming giant Amazon sniffing out the rights and bidding to acquire all games and finals to be broadcast on Nine’s free-to-air channel and streaming platform Stan. He did this with tons of cash and a commitment to growing the game internationally; The V’landys, who thought big, could not resist this.
All nine had a lot to lose going into negotiations. Delany made a big play during the talks to steal State of Origin and the Nine’s grand final but failed. Given the huge audiences and advertising revenue these events bring in, losing this privilege would be a disaster for Nine. While Stanton wants to gain all the rights that will help strengthen Stan, he is more than happy with the status quo.
The new terms give the NRL a massive 90 per cent increase in cash compared to the previous deal; this was likely artificially low because it was made during the COVID era, when the future of the game was uncertain. V’landys will use some of this windfall to eventually increase the salary cap from $12 million to $20 million, paving the way for the league’s first $2 million-per-season player.
Perhaps the biggest winner of Tuesday’s deal is V’landys itself.
Outgoing NRL CEO Andrew Abdo has been vital in keeping difficult negotiations on track, and while he is unlikely to get the recognition he deserves, V’landys could gain $5.3 billion in momentum in the campaign to install him as the NRL’s most powerful executive this year.
Having raised the money, V’landys will march to Suncorp Stadium for the Status of Origin decision on Wednesday and take his place alongside the media executives he has been fighting against for months.
Many thought he was crazy last year when he announced he wanted the NRL’s new deal to eclipse the AFL’s record-breaking $4.5 billion rights deal. Whatever you think of V’landys, there’s a lot to be said for it, he delivered.
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Bevan Shields is a senior writer and former editor of The Sydney Morning Herald.Connect via email.
