Financial impact of new SS channel

[Rammie1884]

Hi guys, was just wondering what your thoughts are on the new Sky Sports channel and the possible financial loss to the club. I know we will get more out of the coffers for being in the Championship and the extra revenue that will bring but do you reckon that will equal what we lose through Rams TV subscriptions and possible loss in attendance. (Personally I don’t think will affect attendance with us but the lower supported clubs could see them impacted).

 I can’t remember the exact number but aren’t they promising at least 21 live games per club with no extra subscription required if you have the Sports package. 
 

just interested to hear views.

[richinspain]

Those of a far right disposition will be pleased, the far left obviously less

[Simmo’s left foot]

I won't be giving SKY a penny. I hope others will do the same. They are using their financial clout to create a monopoly which is not fair. Just watch them squeeze up prices once they have killed all the clubs own in house streaming. 

Clubs will live to regret signing this deal.

[EnigmaRam]

Weirdly I quite monopolies. I’d just need to pay for one product and have it all. 

Now you have to have sky, BT sport, TNT, Prime etc which costs an arm and leg if you want them all 

[CBX1985]

1 hour ago, Rammie1884 said:

Hi guys, was just wondering what your thoughts are on the new Sky Sports channel and the possible financial loss to the club. I know we will get more out of the coffers for being in the Championship and the extra revenue that will bring but do you reckon that will equal what we lose through Rams TV subscriptions and possible loss in attendance. (Personally I don’t think will affect attendance with us but the lower supported clubs could see them impacted).

 I can’t remember the exact number but aren’t they promising at least 21 live games per club with no extra subscription required if you have the Sports package. 
 

just interested to hear views.

I posted this in May.  In short: we get millions and millions more through the new deal than we could ever get through RamsTv.  We will likely, actually, get more from Sky than gate receipts to the point it would be better to close the ground but accept the Sky money (if it were a choice between them).  The question is more whether Sky is getting value for money in what they are paying, but they will have done a cost benefit and gone for it.  Please see my May post below.

 

"As I explained in a different thread, the model for streaming games is just not there.  It probably never will be as it is the one area normal TV has a distinct, and almost impossible to penetrate competitive advantage.  MM either did not understand this or did and was trying to frighten the horses at Sky to give clubs more.

Basic example.

Sky are giving us £9m for next season.  This will be £195,652 per match whether broadcast or not.  This will be VAT free to DCFC.

To match that, at £10 per game (assuming each is broadcast) we would need 19,562 domestic subscribers.  However, we would only receive £8 in £10 due to tax.  Therefore, to break even we would need 24,456 people to pay for each match home and away to simply break even to Sky.

Home matches would clearly have lower subscriber numbers as you might as well go if you are going to charge.  Therefore, on any reasonable analysis to simply match Sky money we would need as many people watching EVERY game on TV (irrespective of home crowd) as were attending.  We would then need to pay for the production (which would need to have very good values to justify the subscriber needs), which Sky take care of.  

Sky do this by economic aggregation.  The overall number of subscribers is so high that individual payments (to clubs) are relatively low to Sky, but high to the clubs.  We would never have this luxury and can never realistically over come the sheer weight of the numbers I outline".

 

 

[Ghost of Clough]

5 minutes ago, CBX1985 said:

I posted this in May.  In short: we get millions and millions more through the new deal than we could ever get through RamsTv.  We will likely, actually, get more from Sky than gate receipts to the point it would be better to close the ground but accept the Sky money (if it were a choice between them).  The question is more whether Sky is getting value for money in what they are paying, but they will have done a cost benefit and gone for it.  Please see my May post below.

 

"As I explained in a different thread, the model for streaming games is just not there.  It probably never will be as it is the one area normal TV has a distinct, and almost impossible to penetrate competitive advantage.  MM either did not understand this or did and was trying to frighten the horses at Sky to give clubs more.

Basic example.

Sky are giving us £9m for next season.  This will be £195,652 per match whether broadcast or not.  This will be VAT free to DCFC.

To match that, at £10 per game (assuming each is broadcast) we would need 19,562 domestic subscribers.  However, we would only receive £8 in £10 due to tax.  Therefore, to break even we would need 24,456 people to pay for each match home and away to simply break even to Sky.

Home matches would clearly have lower subscriber numbers as you might as well go if you are going to charge.  Therefore, on any reasonable analysis to simply match Sky money we would need as many people watching EVERY game on TV (irrespective of home crowd) as were attending.  We would then need to pay for the production (which would need to have very good values to justify the subscriber needs), which Sky take care of.  

Sky do this by economic aggregation.  The overall number of subscribers is so high that individual payments (to clubs) are relatively low to Sky, but high to the clubs.  We would never have this luxury and can never realistically over come the sheer weight of the numbers I outline".

 

I think we received about £300k for the season through RamsTV receipts when we were in admin. You may be able to go through the admin reports to find the figures in there. However, this figure would exclude any money due from advertising - you also excluded this from your calculation.

However, I don't see much difference in the RamsTV revenue for this season as 'overseas' viewers will still be able to subscribe and watch through RamsTV

[CBX1985]

10 minutes ago, Ghost of Clough said:

 

I think we received about £300k for the season through RamsTV receipts when we were in admin. You may be able to go through the admin reports to find the figures in there. However, this figure would exclude any money due from advertising - you also excluded this from your calculation.

However, I don't see much difference in the RamsTV revenue for this season as 'overseas' viewers will still be able to subscribe and watch through RamsTV

That was the point I made where I said "domestic subscribers".  As this will be available abroad, we would need to make nearly a quarter of a million pounds for every single game (to account for VAT) in the UK only (so would need to either say bye to 3pm kick offs or the restrictions would need to end).  We would then need more people subscribing to the game than we get for the biggest fixtures.  We would then need not to cannibalise home support.

The Sky deal (which I think they are over paying, but don't care all that much) doesn't depend one jot on whether I go or nor - but the Rams TV part would.

That is why club based streaming does not work at scale (for individual clubs).  The people who would pay are more than likely the people who go.   With Sky it doesn't matter, so the club gets paid more and it gets paid twice.

NB I didn't account for advertising, but we are talking rounding errors.  We may also get more in ground advertising by being available to a wide market on Sky.

Edited July 17 by CBX1985

[Ghost of Clough]

21 minutes ago, CBX1985 said:

That was the point I made where I said "domestic subscribers".  As this will be available abroad, we would need to make nearly a quarter of a million pounds for every single game (to account for VAT) in the UK only (so would need to either say bye to 3pm kick offs or the restrictions would need to end).  We would then need more people subscribing to the game than we get for the biggest fixtures.  We would then need not to cannibalise home support.

The Sky deal (which I think they are over paying, but don't care all that much) doesn't depend one jot on whether I go or nor - but the Rams TV part would.

That is why club based streaming does not work at scale (for individual clubs).  The people who would pay are more than likely the people who go.   With Sky it doesn't matter, so the club gets paid more and it gets paid twice.

NB I didn't account for advertising, but we are talking rounding errors.  We may also get more in ground advertising by being available to a wide market on Sky.

Maybe I overestiamte how many domestic viewers travel abroad to watch games...

[ilkleyram]

22 minutes ago, CBX1985 said:

I posted this in May.  In short: we get millions and millions more through the new deal than we could ever get through RamsTv.  We will likely, actually, get more from Sky than gate receipts to the point it would be better to close the ground but accept the Sky money (if it were a choice between them).  The question is more whether Sky is getting value for money in what they are paying, but they will have done a cost benefit and gone for it.  Please see my May post below.

 

"As I explained in a different thread, the model for streaming games is just not there.  It probably never will be as it is the one area normal TV has a distinct, and almost impossible to penetrate competitive advantage.  MM either did not understand this or did and was trying to frighten the horses at Sky to give clubs more.

Basic example.

Sky are giving us £9m for next season.  This will be £195,652 per match whether broadcast or not.  This will be VAT free to DCFC.

To match that, at £10 per game (assuming each is broadcast) we would need 19,562 domestic subscribers.  However, we would only receive £8 in £10 due to tax.  Therefore, to break even we would need 24,456 people to pay for each match home and away to simply break even to Sky.

Home matches would clearly have lower subscriber numbers as you might as well go if you are going to charge.  Therefore, on any reasonable analysis to simply match Sky money we would need as many people watching EVERY game on TV (irrespective of home crowd) as were attending.  We would then need to pay for the production (which would need to have very good values to justify the subscriber needs), which Sky take care of.  

Sky do this by economic aggregation.  The overall number of subscribers is so high that individual payments (to clubs) are relatively low to Sky, but high to the clubs.  We would never have this luxury and can never realistically over come the sheer weight of the numbers I outline".

 

 

I don't know enough to challenge your statistics or the tax situation so let us presume that you are correct.

But

Regarding MM I think the point he was making (some years ago now) was that Sky was underpaying for the EFL 'product' in comparison to what they were paying the PL and that the EFL decision makers were incompetent in agreeing the deal that they did with Sky.  The vociferousness of his challenge to the EFL and the threat that he would refuse Sky cameras access to PP was one (of a number) of issues that caused the falling out between the EFL and DCFC/Mel.  The fact that Sky are only now - if your figures are correct - paying more suggests that maybe Mel had a justifiable point.  No doubt you could make a case that they are still underpaying for the amount of football airtime they are gaining - '50% more sport for free' was the banner running around the boundary at Lords last week.

And.  RamsTV is probably something of a loss leader to the club with other benefits than 'just' the coverage of matches to an overseas audience.  It is effectively the club's communication department for all DCFC fans in the UK and around the world.  No longer do we turn to the DET for breaking news of Ebou's arrival, it's announced through X and RamsTV.  If the streaming of matches through 'our' channel attracts income from subscribers and sponsors that offset some of the costs as well as helping to build the DCFC brand and build the link between supporters and club - Sky are hardly going to think it's worthwhile to give daily coverage of our training camp in Spain, for example - then that's a 'good' thing.  The 'model' is not only the matches, it's wider than that.

It'll be interesting to see how the situation develops.  Sky will give this season for 'free' (it's not really) but I doubt there's a contractual commitment to extend that.  They'll sucker fans in and then start charging.  They might start to find ways of closing the overseas loopholes or developing their own club specific content (a SkyRamsTV for example) in direct competition to the clubs own services.  If they think they can increase subscribers they'll consider it.  RamsTV will feel the competition and may start to develop/extend their own services - the Podcast, for example - albeit limited by technical and financial reach and audience size especially whilst we are part of the EFL.

There's also a wider battle going on, IMO, for the attention (and money) of the fan that goes v the fan that watches on TV v the fan that sometimes goes and also watches on TV.  Once upon a time gate receipts from the fan that went to the match was pretty much a club's sole income.  Now not so in the top two divisions at least.  The big question regarding this latest deal is whether it eats into the numbers of people that sometimes go - makes them attend less matches overall and watch more on TV.  I would bet that there will be a lot of data analysis of TV audiences and matchday attendance figures this season 

 

[CBX1985]

2 hours ago, Ghost of Clough said:

Maybe I overestiamte how many domestic viewers travel abroad to watch games...

Not 30,000 a game.  Or the company accounts would be very different.  

DCFC has previously confirmed that the number of overseas viewers is "not great".  When you think of the people who have a day trip to wherever (wink) they *technically* count. 

 

[CBX1985]

1 hour ago, ilkleyram said:

I don't know enough to challenge your statistics or the tax situation so let us presume that you are correct.

But

Regarding MM I think the point he was making (some years ago now) was that Sky was underpaying for the EFL 'product' in comparison to what they were paying the PL and that the EFL decision makers were incompetent in agreeing the deal that they did with Sky.  The vociferousness of his challenge to the EFL and the threat that he would refuse Sky cameras access to PP was one (of a number) of issues that caused the falling out between the EFL and DCFC/Mel.  The fact that Sky are only now - if your figures are correct - paying more suggests that maybe Mel had a justifiable point.  No doubt you could make a case that they are still underpaying for the amount of football airtime they are gaining - '50% more sport for free' was the banner running around the boundary at Lords last week.

And.  RamsTV is probably something of a loss leader to the club with other benefits than 'just' the coverage of matches to an overseas audience.  It is effectively the club's communication department for all DCFC fans in the UK and around the world.  No longer do we turn to the DET for breaking news of Ebou's arrival, it's announced through X and RamsTV.  If the streaming of matches through 'our' channel attracts income from subscribers and sponsors that offset some of the costs as well as helping to build the DCFC brand and build the link between supporters and club - Sky are hardly going to think it's worthwhile to give daily coverage of our training camp in Spain, for example - then that's a 'good' thing.  The 'model' is not only the matches, it's wider than that.

It'll be interesting to see how the situation develops.  Sky will give this season for 'free' (it's not really) but I doubt there's a contractual commitment to extend that.  They'll sucker fans in and then start charging.  They might start to find ways of closing the overseas loopholes or developing their own club specific content (a SkyRamsTV for example) in direct competition to the clubs own services.  If they think they can increase subscribers they'll consider it.  RamsTV will feel the competition and may start to develop/extend their own services - the Podcast, for example - albeit limited by technical and financial reach and audience size especially whilst we are part of the EFL.

There's also a wider battle going on, IMO, for the attention (and money) of the fan that goes v the fan that watches on TV v the fan that sometimes goes and also watches on TV.  Once upon a time gate receipts from the fan that went to the match was pretty much a club's sole income.  Now not so in the top two divisions at least.  The big question regarding this latest deal is whether it eats into the numbers of people that sometimes go - makes them attend less matches overall and watch more on TV.  I would bet that there will be a lot of data analysis of TV audiences and matchday attendance figures this season 

 

All good points.  Rams TV is really good and I will miss it (for a Tuesday away fixture).  Can't be bothered "travelling" as by the time I find my "Pass"port half an hour has passed.  Hopefully watch a couple of friendlies on it before season proper starts.

I think MM was valuing the EFL compared to the Premier League and it was unseemly and he lost.  I would value EFL more compared to cricket - fills lots of airtime, lots of fans but quite spread out and play off/League Cup excluding (see test matches) very few humdingers (Sky pay the majority of the money just for those events and the rest is a nice big filler bonus). 

My aggregation point about Sky is the most important. Amazon tried with PL streaming rights, got them for peanuts as no-one wanted them and still couldn't make it work. Amazon!   Sky do this very well as the Sport is subsidised (i.e. they make huge losses on TV sport, but it drives all the other subscriptions they have so bear the loss for the gains).  They will put the price up, but they will aggregate it across all the packs and the services so the increase is lots of small rises rather than SKYSports + now £5 pcm.   

To make streaming work over simply taking Sky cash, you would need a vast operation.  Rams TV is small and you rightly identify is PR.  It shows games that previously no one else wanted to show, but you had to pay to watch.  EPL PPV was tried in 2001-2004 and it made no money.  

Not all that long ago I watched the MUFC Directors call (as they are a stock listed firm).  Even Manchester United didn't think they could make more money going it alone than the sweet easy cash from normal TV.  We would have no chance.  

 

[therealhantsram]

40 minutes ago, CBX1985 said:

All good points.  Rams TV is really good and I will miss it (for a Tuesday away fixture).  Can't be bothered "travelling" as by the time I find my "Pass"port half an hour has passed.  Hopefully watch a couple of friendlies on it before season proper starts.

This is how I feel too. I am a casual user. I probably purchase about 5 games a season to watch live on RamsTV.

Not enough for me to justify paying for Sky Sports.

I'm a lost viewer who won't be able to watch anything this season 😟

[CBX1985]

1 hour ago, therealhantsram said:

This is how I feel too. I am a casual user. I probably purchase about 5 games a season to watch live on RamsTV.

Not enough for me to justify paying for Sky Sports.

I'm a lost viewer who won't be able to watch anything this season 😟

You should consider a Now TV day Pass.  Can get them for £14 and can get all the Sky Sports for 24 hours.  Not great value if buying lots of times (but as a one off give times a year not too bad.

Can get for a tenner if prepared to just watch on your phone.

https://help.nowtv.com/article/sports-membership

[RamuelLJackson]

How do you factor in the people who pay £20/month for a subscription to Rams TV and then let it roll all year round?

[CBX1985]

56 minutes ago, RamuelLJackson said:

How do you factor in the people who pay £20/month for a subscription to Rams TV and then let it roll all year round?

There aren't enough supporters of this club that £20pcm would be even nearly enough.  Ignoring that Rams TV would need to pay VAT where as taking Sky money would not, let's look at it from the baseline of no tax.

Sky pay £9,000,000 per season for the rights.  20*12 = 240.  9,000,000/240 = 37,500.  We would need to sell 37,500 of those subscriptions to break even. 

When the real tax position is taken into account it is actually 240*0.8 = 192.  9,000,000/192 = 46,875 monthly subscribers at £20 per month to simply break even to what Sky is offering with no effort to the club.  

This is the reason why every single club accepted the deal.  

[therealhantsram]

9 hours ago, CBX1985 said:

Ignoring that Rams TV would need to pay VAT where as taking Sky money would not, let's look at it from the baseline of no tax.

No VAT for international sales though, and all sales this season are supposed to be international, right? Place of supply would be considered outside the UK for tax purposes.

[CBX1985]

16 minutes ago, therealhantsram said:

No VAT for international sales though, and all sales this season are supposed to be international, right? Place of supply would be considered outside the UK for tax purposes.

Correct, but this Sky deal only affects UK sales.  Rams TV would still be available to overseas viewers.  So the calculations of what it would take to break even by definition could only be for the UK market - and VAT would need to be charged on all UK sales.

[therealhantsram]

4 minutes ago, CBX1985 said:

Correct, but this Sky deal only affects UK sales.  Rams TV would still be available to overseas viewers.  So the calculations of what it would take to break even by definition could only be for the UK market - and VAT would need to be charged on all UK sales.

Fair enough. That makes sense. 

But the bit that didn't was that you were tacking on the tax calculation on to the £20 a month subscription calculation to give what you call the 'real tax position'. However that £20 a month subscription has never been sold in the UK market. It's only ever been for international buyers.

[CBX1985]

1 hour ago, therealhantsram said:

Fair enough. That makes sense. 

But the bit that didn't was that you were tacking on the tax calculation on to the £20 a month subscription calculation to give what you call the 'real tax position'. However that £20 a month subscription has never been sold in the UK market. It's only ever been for international buyers.

Well, no it hasn't but here are a few pointers (ignoring the converse of a standing start):

That figure I gave of 48,878 at £20pcm is the break even point and it is a numerical fact.  What that means is, if we went down that road we would need bandwidth to cope with that number of subscribers, we would need properly staffed hotline (with lots of staff on every matchday as when s**t hits the fan people will want someone to call or "it never works, I'm cancelling"). We would need to deal with those wishing to cancel.  They would need training and if part time, would have a high turnover. That is going to all cost a lot, but under this deal Sky kindly do that all for us.  

Then, remember that is simply to match the income - not to beat it by a single penny.  The club would be taking on massive risk by abandoning a sure thing with Sky and so is going to want to at least project doubling it's investment - otherwise why get up in the morning when someone else is prepared to do it for you.  You either are going to have to make it too expensive that no one buys or too cheap (which £20pcm absolutely is) and you can never make enough with the size of the fan base.  You are onto a sure fire loser.

Then we have the 3pm kick off issue.  We are going to have to give that up because at that level I am going to want every match broadcast.  Then we have the issue of cannibalisation where in at present I can subscribe to Sky and yes I can watch these DCFC games, but I also get PL, cricket etc and so me missing DCFC games doesn't impair me, the club or the vendor (Sky).  Not so here - i am subscribing to watch DCFC games on Rams TV at £20pcm and then buying an on the day ticket/ST going away.  The most passionate supporters (as a general rule, exceptions obviously apply) will not buy as they are probably there.  The casual fan who purchases this will go less often or not buy or buy less often.

 

[Ghost of Clough]

@CBX1985 why does it have to be an either/or situation? This thread started asking what the impact from changes this season will have on the revenue generated through RamsTV (and match day attendees. Therefore, comparing the previous Sky deal withthe new deal. I think we can safely assume the impact on the match day attendance will be negligible. This answer to the OP's question is therefore: how much will Rams TV revenue decrease?

In 21/22, the approximate income from RamsTV subscriptions was £318k (total doesn't cover entire season)

There was also some advertising revenue for people watching RamsTV. Somewhere up to £926k (total for all stadia related activities). 

There is/was also a deal signed with Derby Uni worth £150k a year

 

If we take the subscription income, assume it's only *overseas* subscribers paying £20 pm for just 10 months (cancelling in the summer), it equates to just 1590 people [there's likely to be less monthly subscribers with some people paying match by match]. How many of those people will cancel (or not restart) their RamsTV subscription in favour of Sky? Bear in mind, the majority of those people already aren't geo-restricted, they can continue to watch Derby on RamsTV and don't need Sky. The people who already had Sky Sports probably didn't watch on RamsTV anyway. Overall, I don't see revenue from RamsTV decreasing by much (if at all).

 

When Mel Morris was critisising the EFL/Sky deal, Championship clubs received just £600k per game vs the £11.1m PL clubs received. When factoring in number of viewers, the fairer amount should have been £2.5m (4 times higher). The current deal is only 50% higher. To put it all into perspective, Luton got more from broadcasting last season than every Championship club combined.