Thanks for sharing that! Very useful.
I think a total new deal of $400M over 5 years ($80M/year) makes sense if you
include the 5% shares as part of that figure.
If you look at the income statement for 2019, it shows that Sky paid ~$57.5M in FY19 for the rights which would have implied the total previous deal was worth ~$290M.
The 5% shares were valued at ~$25M at the time they were issued from memory. So that would be the equivalent of $5M/year over 5 years.
In other words, Sky would have been on the hook for a cash payment of $75M/year for 5 years under the new deal. That is an increase of ~$17.5M/year on the 2019 figures (~$4 per month increase per sport subscriber based on approx 350K Sky Sport subs.
Slide 23 shows that 59% of satellite base has Sky Sport. Add in some Sky Sport NOW subs and you cans see that 350K sport subs is me being conservative. There were 565K satellite subs in the last report, so 59% of that is 333K. I am pretty sure Sky have more than 17K Sky Sport NOW subs).
That works out to be a 30% increase in cash paid from 2019 - which probably is about right, as Sky did state that they had to pay substantially more to secure the rights. We are effectively paying ~$110M more over five years in total ($85M of actual cash paid once you deduct the equity part of the deal).
Though my numbers won't be 100% correct, let's assume they are 'near enough'.
Now, in 2020 the claw back was significant - damn near $25M worth by my estimations. For 2021, Sky does not have the full complement of Super Rugby etc, so discussions have been ongoing in terms of how much Sky can claw back this year. It won't be $25M because NZR have put on another fantastic SR Aotearoa tournament, and there is going to be some trans-tasman SR in the coming weeks.
NZR have also worked with Sky to create an awesome opportunity for RugbyPass with their recent SR NZ deal. In theory that is a completely separate issue to the claw back...but in reality I don't think so. Sky will claw back less than they could under the letter of the contract due to this deal, with a view to more deals for RP in the future. It is what I would do if I was negotiating.
Who gives a shit about clawing back an extra $5M today when you could potentially have so much more RP revenue in the future?
We know that if the rights shot up to full price in 2021 it would be an increase of ~$23M. It won't be that much due to negotiations, but probably an increase of somewhere between $15-$20M would seem reasonable?
Between the recent NEON price increase as well as a likely increase to Sky Sport soon, Sky will probably raise an additional $12-$15M revenue per annum on the existing subscription base. Sky Broadband will be bringing in a bunch more revenue too (I was contacted today to sign up, so looking forward to seeing how the new service works).
Rugby rights this time round are a lot more expensive, and has pushed Sky to the limit of what it could pay before it hurt too much. But we are still in good shape, and well positioned to increase underlying earnings over time.
(20min delay)