Advertising Revenue in Sports Broadcasting

This assignment examines the financial viability of broadcasting sports events, specifically focusing on an Adelaide FC versus Brisbane Lions AFL match aired on Foxtel Channel Seven. It calculates the revenue generated from various advertisements during the one-hour broadcast, comparing it to the network fee charged by the channel. The analysis reveals that advertising revenue significantly surpasses the broadcasting cost, resulting in a substantial profit for the channel.

Topic: Analysis of Free to Air Channels Right Fee Sport Broadcast
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Introduction
Soccer is one of the most watched sports globally, especially during weekends when most people
are not at work (BLISS, 2013). This game is widely broadcast via Televisions and radio channels
worldwide. These broadcasting networks can provide commercial services or free-to-air (FTA)
services while broadcasting this game. This report entails an evaluation and analysis of an
Australian Football league one hour match featuring Adelaide Fc vs Brisbane lions that was
aired live on Foxtel channel 7 (Guthrae, 2015). This is one of the FTA channel in Australia that
broadcast soccer games live (Industry, 2016). During the broadcast the channel runs various
sponsors’ advertisement within the 120 minutes allocated for each soccer match. For an FTA
channel such as Foxtel channel 7 to broadcast such game via broadcasting network for free it has
to take some considerations on how to compensate for the network fee charged while airing the
game, thus the use of advertisements (OECD, 2013).
During the one-hour game between Adelaide Fc vs Brisbane lions, the following adverts were
displayed at different intervals; Coca-Cola, CrownBet, SportsBet, Toyota, Gatorade, Carlton
Draught, Woolworths and nab. Amongst these Cocacola appeared twice, while SportsBet and
CrownBet appeared once each in the first 45 minutes of the game. The rest appeared after the
first half during the first half analysis of the game where Toyota appeared twice while Gatorade,
Carlton Draught, Woolworths and nab appeared simultaneously each once while still in half
time. The duration at which advert were being displayed was exactly 30 seconds. The events
were displayed in a manner whereby some appeared scrolling at the bottom of the screen when
the game was still in play while others were displayed in the main screen taking most part of the
screen actually like three-quarter of the screen window used (Poggi, 2016).
Adelaide Fc versus Adelaide Fc vs Brisbane lions
Time Interval (Minutes and
Second)
Event
00:00-07:27 Game in play
07:28-07:58 Game in play with a SportsBet scrolling advert at the bottom
of the screen
07:57-18:23 Game in play
18:24-18:54 Adelaide Fc Goal replay with an advert of Coca-Cola
18:55-30:12 Game in play
30:13-30:43 Game in play sharing the screen with CrownBet advert
30:44-44:07 Game in play
44:08-44:38 Brisbane lions equalizer goal replay with a Cocacola advert
44:39-46:00 Game in play and the blows the first half whistle
46:01-48:03 Major highlights on the first half match

48:04-55:04 The adverts appear simultaneously in the following: Toyota,
Gatorade, nab, CrownBet, Carlton Draught, SportsBet,
Woolworths and Cocacola. This was repeated in the same order
as indicated above
55:05-60:00 First half match analysis
From the above footage timeline, the game is underway for seven minutes without advert
disruption. Then SportsBet advert scrolls at the bottom of the screen for exactly 30 seconds while
the game is still in play. Between 8th to 18th minute there was no advert being displayed. At 24th
second of the 18th minute to the 54th second a Cocacola advert appears taking half of the screen
from the left during Adelaide Fc’s goal replay. The game continues to play with no adverts for
about 12 minutes when a CrownBet advert appears for exactly 30 seconds taking the bottom part
of the screen. From 30th minute to 44th minute the game plays with no adverts displayed. At the
8th second to 38th second of the 44th minute of the match a Cocacola advert appears after Brisbane
Lion Equalizes Adelaide Fc’s goal. Then the game continues until the 46th minute when the
referee blows the whistle for half time.
At the 46th to 48th minute major highlights of the first half match such as shot on targets, best
saves and goals scored were displayed. This was followed by a series of adverts taking exactly
five minutes i.e from 4th second of the 48th minute to 4th second of the 55th minute. The adverts
were in the following order - Toyota, Gatorade, nab, CrownBet, Carlton Draught, SportsBet,
Woolworths and Cocacola respectively. This was repeated in the same order for a second time.
Then the first half match analysis began at 55th minute to 60th minute before the game was
underway for second half.
Cost of Rights Calculation
From The Australian website, AFL signed a contract with Foxtel Channel seven where Seven
Channel paid $840m for the free-to-air network fee for a span of six years (DAVIDSON, 2016).
This translates to $140m per year in which in a year the channel is supposed to broadcast 34
soccer games. The cost for network fee for an hour soccer match can be shown in the calculation
below.
$140m - > 1 year (broadcast 34 games)
Thus,
1 game = $140m/34 games
= $4m/120minute of the game.

Therefore, for 1-hour match broadcast network fee as per the contract
=$4m/2 hours
=$2m.
Considering the number of supporters both Adelaide FC and Brisbane Lion Fc has globally, this
translates to large number of viewers. Hence, the cost of adverts displayed during the match will
be higher than normal depending on the organization. Thus the total amount charged for all
adverts by Foxtel channel seven in the 1-hour match broadcast is as follows:
For:
Cocacola -> $190,000 per 30 second
Appeared 4 times hence
$190,000*4 = $760,000
For:
Toyota - > $180, 000 per 30 sec
Thus,
$180, 000*2 = $360, 000
For:
SportsBet and CrownBet -> $100, 000 per 30 sec each
Appeared thrice each, thus
($100,000*3 )*2 = $600,000
For:
WoolsWorth, nab and Carlton Draught -> $100, 000 per 30 sec each
Appeared twice each, thus
($100,000 * 2) *3= $600, 000
Therefore, the total amount generated from the above adverts for just one hour of match play is
equivalent to:
$760,000+$360, 000+$600, 000+$600,000

= $2.32m
From these calculations, Foxtel channel Seven is able to receive a total of $2,32m revenue from
airing various company’s adverts during the match between Adelaide Fc and Brisbane Lion. This
amount exceeds the cost charge for broadcasting network fee of $2m by $320,000 in one hour.
This therefore means that Foxtel Channel Seven is able to recoup the network fee it paid for one
hour broadcast as well as making a good profit of $320,000 as shown in the calculations from the
frequent adverts.
Conclusion
From the above explanations it is therefore right to conclude that Free-to-air channels are able to
compensate the amount of fee paid for broadcasting channels from the number of adverts
displayed during sports such as soccer matches (Wun, 2016) . Also apart from recouping
network fee amount, they are also able to make profits from the amounts collected from the same
adverts as seen in the AFL Adelaide Fc versus Brisbane Lion aired on Foxtel Channel Seven.
References

BLISS, K., 2013. Livestrong. [Online] Available at: http://www.livestrong.com/article/455079-
what-is-soccer/ [Accessed 20 August 2017].
DAVIDSON, D., 2016. Football fever will cost advertisers more. Adelaide Fc: The Australian.
Guthrae, T.K.a.B., 2015. AFL signs new six-year, $2.5 billion broadcast rights deal. Adelaide
Fc: AFL.
Industry, F., 2016. AFL and NRL Grand Final Advertising Costs. What happens off the field in
Australian Football, pp.1-5.
OECD, 2013. Competition Issues in Television and Broadcasting. Research Paper. Bulgaria:
OECD Global Forum.
Poggi, J., 2016. TV Ad Pricing Chart. A show in its 13th season returns to the top 10 most
expensive buys, pp.1-12.
Wun, C., 2016. Top 10 priciest shows on broadcast for advertisers. pp.1-2.