Engines stall on high-speed growth of TV sports rights

In the past month the BBC has spent an estimated £300m on sports rights by netting a five-year extension to its Wimbledon contract and luring Formula One motor racing back from ITV. Anyone would think we were living in a golden age for sports media rights values. However, while the value of sports rights exploded in the 1990s, it has in fact slowed considerably since 2000.

A report produced by research firm Spectrum for telecoms regulator Ofcom shows that the annual value of the UK's top 10 sports rights properties is £1.3bn, with football accounting for 85 per cent of the total. The list is dominated by the Premier League, which costs Sky and Irish broadcaster Setanta a combined annual total of £669m – six times the size of the second-largest deal: football's World Cup.

Languishing at the bottom of the list is F1, currently worth an estimated £29m a year. Even the rights to rugby's Six Nations and English cricket are more valuable than the motorsport, coming in at £40m and £52m respectively. What is perhaps more surprising is that, according to Ofcom's report, over the past 10 years the value of the rights to English cricket has more than tripled whereas F1 has only managed to double its worth. However, few of the sports on the list continue to have such growth.

During the 1990s the value of football's Champions League rights grew by 79 per cent annually, but since 2000 growth has fallen to just 3 per cent. Even the Olympics hit the same hurdle with its 26 per cent growth rate being cut to just 9 per cent. The driving force behind this has been rapid media saturation.

"The Nineties boom was triggered by the deregulation of television. This novelty factor has to a slight extent worn off," says Kolja Spori, chief executive of Samipa, the production arm of leading European broadcast group WIGE Media. Dedicated sports channels sent viewing figures soaring. This boosted interest from blue-chip sponsors, leading rights holders to increase the number of fixtures to capitalise on it.

According to Ofcom, over the last 10 years, rights values for top sports properties have grown at 15.2 per cent – a similar pace to the growth of pay-TV revenues. In contrast, over the same period, UK TV revenues have grown at just 6.9 per cent. But while competition has kicked the amount paid for the Champions League rights up to £85m, the viewing figures haven't kept pace.

Group games involving English clubs typically score audiences of more than four million on ITV, while semi-finals tend to be watched by more than nine million, ensuring that the tournament is the most-watched sporting event almost every week that games are played. However, while 19 million watched Manchester United win the final on ITV in 1999, this slipped to 16.1 million when Liverpool won in 2005, even though the match was shown on ITV and Sky Sports. This illustrates the limitations of a pay-per-view audience and has driven some sports to commit to free-to-air television.

The 11 teams on F1's grid receive well over 80 per cent of their revenue from sponsors, which pump in millions of dollars because of the wide TV exposure they receive. The contract at the heart of F1 is believed to stipulate free-to-air coverage of the sport for this very reason. Similarly, Wimbledon's rights holder, the All England Lawn Tennis Club, has opted not to sell to different broadcasters preferring instead the exposure and status that exclusive BBC coverage gives the event.