The economics of the RPL reform in detail: why is 10 billion rubles for rights not the limit and how to earn them?

For a couple of months now, Russia has been actively discussing a change in the format of the football Premier League. Instead of a smooth championship, a tournament is offered in two stages: after 24 rounds, the participants are divided – the top 6 compete for medals, the rest are fighting to maintain their place and a bonus chance to play in the junior European Cup. To implement the plan, all teams of the Russian Premier League (RPL) must approve it, but there is no consensus yet.

The opposition is mainly the clubs from the bottom of the table – they do not see the obvious benefit from the new scheme. The idea for the reform belongs to the Dutch company Hypercube, which is behind all the key reforms in European football in recent years: from the systems of holding the championships in Belgium, the Netherlands and Denmark to the expansion of the European championships (from 16 national teams to 24) and the Champions League (coming into force in 2024). ).

“Vedomosti. Sport ”asked the head of the company Peter Newvenhays key questions about the financial side of the revolutionary project.

“Giving 1 million to a small club is more useful for the league”

– You propose to update the league’s TV revenue distribution scheme: now the RPL winner gets twice as much of the last team, your idea is only 50% of the difference. Why is it so?

– For the top RPL clubs, the income from the telecontract is not as significant as for the more modest clubs. To raise the level of the league, first of all, you need to provide resources to the teams from the bottom of the table – this is how the competition grows. There is no point in helping to widen the gap.

The expansion of the league’s commercial potential will help, among other things, to cover the regions of Russia, as there are clubs in large cities and in attractive markets. Regional clubs need more money and, in my opinion, a more even distribution of TV income is a convenient way to give them additional funds.

The budgets of big RPL clubs are on average many tens of millions of euros, if not a hundred, and those who are fighting to maintain a place in the league operate not in tens, but simply in millions of euros. To give 1 million, for example, to Nizhny Novgorod or Ufa means noticeably help, adding 1 million to Zenit or Spartak will not make much difference. Therefore, a centralized profit sharing system is an excellent tool for influencing competition in the league.

– Top clubs – Zenit, CSKA, Spartak, Dynamo, Lokomotiv and Krasnodar – will receive less under the new system, but most of them support the reform. Do they better understand how to develop the league?

– At least four out of six agree with this income distribution system. And they are also ready to share with the Football National League (FNL) so that the entire pyramid of Russian football works better. Both from a purely sporting and economic point of view, it is more beneficial to close the gap in opportunity between leaders and outsiders. In the strongest leagues in the world, even those who are eliminated, thanks to a well-built system, have the resources to fight for a comeback.

– You propose to give 20% of the telecontract to the development of the FNL – now it is 340 million rubles. Based on your estimate of the potential value of rights at 10 billion rubles, the FNL would receive 2 billion – more than the RPL currently has. Why is it necessary to give such a substantial share?

– This is not a strict rule, the specific amount of support for the FNL can be discussed. For example, in Germany the second Bundesliga gets just 20%, in the Netherlands – about 12%. Optimal – send to the league at a level below 10 to 20%. Given that there is no such system at all in Russia today, even a bottom-line profit sharing would be a useful step forward for the entire football industry in the country.

“The new format will raise the league’s value”

– Not everyone in Russia believes that 10 billion rubles will be paid for RPL rights in the foreseeable future. How did you arrive at this figure?

– We started not just from the large population of Russia and the size of the country’s economy – these are, of course, impressive figures, and if you focus only on them, we get astronomical indicators, you can reach 30 billion rubles. For us, the key indicator is the distribution of the population’s income, and it is noticeably lower in Russia than in many European countries: a smaller percentage of residents can afford significant spending on entertainment.

Another defining detail is the maturity of the media market. In Russia, it is still underdeveloped. At the previous signing of the TV contract, only one company applied for it – Gazprom-Media and its channel Match TV, and in the absence of competition for the product, its value in the market also decreases. Now there is competition (the desire to acquire the RPL TV rights was confirmed by Match TV, the Okko online cinema and the Start platform with the support of Megafon – Vedomosti. Sport), this is the most important first step.

In addition, it is worth talking about the commercial attractiveness of the product as a whole. For example, many more cars are sold on the Russian market than in Spain, for example. The banking system, insurance and other consumer services are also well developed, which means that, following the example of other countries, they may well become interested in football as a platform for promotion. These are the drivers of financial growth that Russian football has not yet fully exploited.

The RPL clearly lacks a massive sponsorship program right now – like the Champions League, which has partners from every key industry. When it comes to the sale of a package of rights – television along with commercial – the potential buyer will have a wider space for monetization in addition to the subscription model.

With a larger number of long-term commercial contracts, RPL has 10 billion rubles. – the minimum cost of a telecontract that should be expected.

– Representatives of many RPL clubs that do not yet support the reform believe that Hypercube lacks an understanding of Russian reality – football and social. Yuri Semin from “Rostov”, Grigory Ivanov from “Ural” spoke about this. How did you dive?

– We had data on the attendance of all RPL matches over the past ten years, on their basis we made a conclusion, from which we are now making a start – fans in Russia are more willing to come not only to top matches, but also to games where something is decided in the tournament plan.

In this regard, we have proposed a format in which the number of such matches will increase. Knowing how much more attractive these games are to the audience, we predicted an increase in traffic from 3.7 million to 4.8 million.

Analysts from Nielsen estimate the current market value of the telecontract at 6 billion rubles, but taking into account the growing competitiveness of the league and the increase in the number of matches, the bar will be 10 billion rubles. much closer. There will be more important matches, including at the intermediate finish – when, after the first stage, the league will be divided into two groups. This can be compared to qualifying for the Champions League or qualifying for the World Cup: medals are not awarded, but the very fact of passing further is so important that these are games of increased interest.

The value of the product on the market increases noticeably after the format is changed to a more attractive one. For example, in Belgium, the cost of a media contract has more than tripled in ten years. In the Netherlands, our first project in the early 2000s, we predicted an increase in attendance from 4.9 million to 5.9 million in five years, bringing the league to 6 million in two seasons.

When developing a new format for the Champions League, which will operate from 2024, we estimated the potential growth of club revenue to 3.5 billion euros, the UEFA marketing partner, TEAM, saw a potential of 4.5 billion, and after the initial discussion with media partners, the forecast rose to 7 billion euros. Hypercube’s 20-year experience suggests that RUB 10 billion. – minimum for RPL with proper work.

“We need a signal about economic efficiency”

– Another area where the RPL still lacks efficiency is international law. The league sells them on its own, and in many countries it sells subscriptions directly through the new YouTube service – and makes almost no money. Do you see the potential for income growth here?

– Before my eyes, the proceeds from the sale of rights abroad in the Netherlands have grown from a very modest to 20-30 million euros per season – this is more than the RPL now earns at home. At the same time, Russian clubs are, on average, stronger than Dutch ones – there has been a lot of evidence of this in European competitions lately, except that Ajax stands out.

For market interest, internal competition in the league is more important. In addition, there are many more Russians around the world than Dutch – already an excellent basis for international sales. So far, this direction is not really used. The same “Ural” or “Wings of the Soviets” are quite far from the international media market, they do not interact much with it – of course, it is more difficult for them to understand the key ideas of the reforms.

In my opinion, the most important task now is to convey the essence to all those interested from the point of view that concerns a particular club.

Another area is the interest of international companies, including investors. We talk a lot with investment companies – such as CVC Capital, which recently invested € 1.7 billion in La Liga – and we know they are interested in the emerging football markets.

Recently, I spoke with the director of the Danish League, Klaus Thomsen – just after the introduction of the new championship system, they have more foreign club owners: he noted that the change in format has significantly improved the international image of the league. And by the way, the Danes, with a population of 5.8 million people, earn 57 million euros from a TV contract per season – almost three times more than the RPL.

– In one of your interviews, you called Russian clubs organizations with checkbooks, outlining the main problem of Russian football: when the owner or anchor sponsor writes out the required amount at the request of management, there is no need for economic efficiency. How to get rid of this?

– Yes, it really interferes: in fact, in such a situation, the clubs simply do not need to generate profits themselves, all costs are covered anyway. In my opinion, one of the chances to rectify the situation is to change the format now and increase revenue, when one common solution is sufficient for this. This will send an important signal to the entire industry that football can be more cost-effective.

Club owners will soon understand this too. The next step will be for them and for the directors – to invest in the development of management personnel. You will need people who can profit from their interest in football, in the league. Top clubs in Russia already live by this model, and the rest have yet to come to it.

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