Once in four years, we have a chance to watch the best football in the world. Who deserves appreciation for that? Intellectual property and economy. In this text, I will explain the basic principles of football monetization and why the IP is the legal basis for every competition and marketing activity in the sports industry.
1. Economic principles of football
Instinctively, it seems that income gained from the sale of tickets is the main income in the sports industry. But this is not a fact. The most important income is gained from sponsorship agreements and monetization. To reveal the economic essence of the sponsorship agreement it is necessary to quickly analyze sponsor incentives for such a deal.
At first sight, the sponsor transfers a certain amount of money to a sport organization[1] without anything that shall serve as a consideration. Does this mean that sponsor will only have losses? No, the sponsor is undertaking a kind of investment. It invests money to increase the number of consumers and consequently to increase the profit. Football is an excellent business opportunity to sell more goods or services because there will be not just 80,000 people in the stadium, but 1,000 times more viewers that will watch games on their TVs, on-demand services, or other media. Every single person will see sponsor advertisements on the kit, pitchside boards, scoreboards, mobile applications, or websites. Aforesaid sponsors have a direct relationship with sports organizations.
Except for them, there are participants in the sports industry that are not sponsors. These participants are companies that buy TV advertising slots for a lot of money. Companies have the incentive to invest a lot of money when they consider how many viewers will see their advertisement before the game, after the game, or at half-time. For example, I am ready to invest 1 million dollars for a 30-second TV advertisement if my prediction is that there will be 100,000 new consumers for me with a profit of 100 dollars per consumer. In the final balance, concerning economic activity will produce a surplus of 9 million dollars.
2. How it works
International football association (FIFA for example, hereinafter: the Association) in cooperation with the host football association invests money in the organization of the competition. At the same time, as the provider of broadcasting of the matches, Association is a broadcast producer and holder of the broadcasting rights. Association sells broadcasting rights to numerous broadcasters (hereinafter: the TV stations) all around the world. Rights are sold individually for every market (one or more states in the same region). Every interested broadcaster has the incentive to obtain exclusive broadcasting rights for the concerned territory. If the broadcaster broadcasts the tournament solely, all viewers will be on their TV channel (otherwise, the TV station will “share” viewers with other TV stations). So, TV station now invests money in buying broadcasting rights and raising the value of their advertising slots. After they had acquired broadcasting rights from the Association, and TV stations sell advertising slots to companies to return their investment (for a selling price that is higher than the acquisition price). Companies buy advertisement slots, increase the number of consumers and make a profit.
At the end of the distribution channel, Associations earns money, TV station earns money and Company earns money. Because of you.
3. Schedule of the matches
It is easy to understand the schedule of the games after considering all the preceding circumstances. Organizers shall provide a maximum number of viewers per match. So, national teams play matches one by one, and there is no more than one match per kick-off time (except in round 3 to prevent match-fixing). Most interesting matches are played in the afternoon. If there are two or more matches that occur at the same time, the viewer must choose which fixture will watch. So, it is better to arrange that every fan can watch every single game and that the most interesting matches are played after fans finish their working day.
4. IP Law and the Football
The holder of the broadcasting right has a right to transmit the signal to the end users, but in case that license is exclusive, the broadcaster has a legal remedy against all others that broadcast concerned content without the holder’s permission (for example via internet streaming). Broadcasting rights are a kind of related rights (IP Law consists of copyright and related rights and industrial property rights).
The design of the ball is the subject of design protection rights. Everyone has a right to produce the ball, but no one has a right to produce a ball with a design that is protected without the holder’s permission.
The design of the national team kits is also the subject of the design protection right, but it could be also the subject of the copyright.
Football club crests are the subject of the copyright, but they could also be protected via trademark.
In the end, stadiums are a kind of creative works of architecture and copyright protection. Architects are the holder of such copyright.
Mihajlo Jovicic, LL.M. in Intellectual Property Law (University of Belgrade Faculty of Law)
[1] Football club/national or international football association