LONDON -- Strong demand for global sports content from five U.S. consumer technology giants and two Chinese tech giants will ensure that the price of sports rights will continue to grow, according to WPP CEO Martin Sorrell.
Speaking on Wednesday at the Leaders Sport Business Summit, Sorrell said, "I think the price of sports rights is going to continue to rise. Although a lot of people when they look at some of the prices being paid say it can’t go on. Getting to the heart of it, the five most valuable companies on the planet -- Apple, Google, Facebook, Amazon and Microsoft -- and then the two Chinese companies -- Alibaba and Tencent. They are all worth more than half a trillion dollars. They are all going to be demanding or wanting to bid for content."
There has been increased speculation that the U.S. companies will become major players in bidding for global sports content, driving up the prices of rights, and muscle in on ground traditionally occupied by linear broadcasters.
In August, Amazon pinched the U.K. rights to the ATP World Tour from Sky, marking Amazon’s first major live TV sports rights deal outside the U.S. It followed Amazon’s deal with the National Football League to stream Thursday night games.
Premier League Exec Chair Richard Scudamore has also indicated that he would welcome bids for the rights from the likes of Amazon, Twitter and Facebook.
Sorrell said that there was a fierce competition going on between each of the consumer tech giants, as they looked to pinch market share from each other.
"They are all competing against each other," he said. "The biggest conflict is going to come between Amazon and Google. Amazon is attacking Google on search. This is a very, very fast-changing world and sports rights holders, football clubs and cricket leagues are not immune from this. The demand for content is going to be so strong and varied and it has major implications."
But Sorrell acknowledged that price inflation for sports rights would not "go on forever." He said that rights holders were facing a quandary.
"Do you package up all the rights? The linear rights, the network rights with the digital rights? Do you sell them off separately?" he asked.
Sorrell also said that brands need to spend more on sponsorship activation in order to do it properly.
He said, "Buying the sponsorship rights is just the beginning. What you have to do is activate it. And the usual rule of thumb people will use is two dollars for every dollar activation to sponsorship payment. My view is to do it properly, we are talking bigger amounts than that."
Sorrell also addressed reforms made by sports governing bodies amid widespread corruption at some organizations. He said that while a number of organizations had addressed corruption issues, others still had a way to go. He said, for example, that "FIFA has a way to go still."
Leaders is owned and operated by American City Business Journals.
John Reynolds is a writer in London.
