Iranian Football Clubs Denied Hefty Broadcasting Rights

EghtesadOnline: Competitive sport has become a global billion-dollar industry due in large part to intellectual property rights and ever closer cooperation among the media, sponsors and sports organizations.

News ID: ۷۴۶۵۲۵

20 January 2019

Broadcasting of sports events, including football matches, have enabled billions of people all over the world to watch the games on television or other media platforms. Television and media organizations pay huge sums of money for the exclusive right to broadcast top sporting events live; and in return, they earn big bucks.

Media rights are a big source of revenue for professional football clubs across the world. However, the story is totally different for Iranian football clubs.

Sports Clubs' Sources of Revenues

Financial Tribune talked to Sadeq Raeisi-Kia, sports economics expert and former managing director of Rah Ahan Football Club, to explore the ins and outs of media rights in Iranian professional football, Financial Tribune reported.

Raeisi-Kia explained that just as economic entities generally offer products or services or both, sports entities also produce matches and sports events.

"Like any other economic operator that receives money in exchange for their products or services, sports clubs also have every right to receive money for the events they organize. Clubs create events, entertainment, and excitement, and naturally should earn revenues for what they offer," he said.

The expert noted that sports clubs earn revenues through several ways, one of which is by attracting spectators who buy tickets to watch the games in stadiums.

Another way is through production units using the sports clubs’ trademarks to advertise their products, as sports clubs have social influence and supporters are interested in buying products bearing their favorite clubs’ trademarks.

Nurturing players has also proved to be a fruitful source of income, as clubs train and prepare players until they develop into quality players. Then, they can sell them on transfer markets and earn hefty revenues. Football clubs earn a share from nurturing players even years after they sell them to other clubs.

“But the most important source of revenues of all for a professional sports club is broadcasting rights,” Raeisi-Kia emphasized.

Football Broadcasting in Iran

Unfortunately, broadcasting rights are non-existent in the professional sense in Iran and clubs do not receive any profits from the events they organize, as the Islamic Republic of Iran Broadcasting airs them for free on state media.

This is while across the world, according to the expert, football clubs earn 40-50% of their revenues through broadcasting rights.

"IRIB pays to buy non-sports programs to fill its schedule and broadcast media materials for the audience. The producer, director, actors, etc. receive their share when a TV show is aired on television," he said.

"Shouldn’t the broadcaster pay, for example, for a match between Iran’s giant football clubs Persepolis and Esteghlal, which supporters find extremely exciting and attracts hundreds of thousands to watch the game on television?"

Raeisi-Kia opined that IRIB earns considerable revenues through commercials aired before, during and after the match.

“When the broadcaster fills 90 minutes of its programming schedule, increases its social influence and provides the platform to attract advertisers and eventually makes a great fortune, it should pay its price,” he said.

The expert stressed that sports events are clubs’ exclusive assets and television should pay to use them.

"In many countries, broadcasters even pay for the number of times they replay goals and highlights," he said.

When the broadcasting rights are not respected, the livelihoods of all those earning a living in the clubs are affected. As local clubs experience economic problems, they lose the capability to compete with those in other countries.

In Iran, clubs usually earn revenues through either their sponsors or their owners who provide financial resources for them. For instance, two of Iran's largest automakers Iran Khodro and SAIPA own Paykan and Saipa football clubs, as Iran's two major steelmakers Mobarakeh Steel Company and Esfahan Steel Company own Sepahan Sports Club and Zob Ahan Isfahan Football Club respectively.

In principle, there are three sides dealing with broadcasting rights. Sports federations and organizations sell events to broadcasters, while viewers subscribe to broadcasting channels to gain access for watching the games.

Raeisi-Kia believes the relationship between the television network and viewers should be reconsidered and reconstructed, especially in the realm of broadcasting.

“Our people are currently paying for watching TV programs, including sports events, indirectly since IRIB gets its budget from the government which, in turn, is funded by taxpayers,” he said.

As per the government’s proposed budget bill for the next fiscal year (March 2019-20), IRIB will get about 18.4 trillion rials ($158.75 million) to finance it operations.

He believes people indirectly pay their shares, but IRIB is still making losses instead of profits.

“I’m not comparing IRIB with Sky, CNN or other private networks. IRIB has lots of employees, high current expenditures and relies heavily on the government for its expenses. Even the revenues gained from advertisements are overshadowed by the budget allocated by the government,” he said.

Cultural or Economic?

Some professional football clubs in Iran carry the word "cultural" in their title, which has led to wrong views about their activities in that many do not even consider them to be economic entities that should have financial operations and revenues.

“Why should these clubs charge supporters for tickets? Why should they have economic activities if they are cultural in essence?” these are some of the questions being asked.

Raeisi-Kia explains that in professional sports, a club is an economic entity in the first place. Any other activity, be it cultural or social, is secondary to economic operations in professional sports.

"There are around 50 sports federations in Iran and since they do not consider themselves to be economic entities, they do not make the slightest effort to stand on their own feet financially. They rely on the government because they believe they are doing ‘cultural’ activities and are entertaining people so the government must allocate budget for them," he said.

"Clubs do not have plans to compete with each other economically. They do not try to attract better sponsors, or more supporters, and their managers also do not have long-term, economic plans."

When sports entities are convinced about conducting economic operations and earning revenues, that's when the ties between the clubs and the media can improve.

Multibillion Dollar Industry Worldwide

According to the Sports Business Institute, the value of the best European football leagues has skyrocketed, as fans follow their favorite football clubs, players and competitions.

The commercialization of TV rights represents the highest value of the profit and loss account for the top European football clubs and leagues. Through a complex tender process, broadcasters compete to acquire the rights to broadcast the European football league games and become the official rights-holder of the competition.

A total of £2.41 million were paid to clubs in the English Premier League in the 2017/18 season for broadcasting rights, including domestic and overseas airing.

According to a Euronews report, the French Professional Football League secured the domestic TV rights of the 2020-24 Ligue 1 for a record deal of €1.15 billion per season. By crossing the symbolic billion euro bar, the French Football Championship is rising to the heights of other major European leagues, excluding the English Premier League with its €2.3 billion value per season.