- Joint-bid for packaged rights from Infront and DAZN Group secured 300-per-cent increase in EHF’s media and marketing rights
- Agreement has strong digital focus, with DAZN brought on board to help modernise EHF’s output
- Goal across decade-long agreement is to grow handball by running federation “like a business”
Last year, on the eve of the EHF Champions League FINAL4, the European Handball Federation announced it was entering into a 10-year media and marketing rights partnership with agency Infront and digital sports broadcaster DAZN.
The deal packages all of the rights for the EHF’s club and national team competitions together for the first time, in the most lucrative agreement in the history of handball – one which guarantees the federation an average of €50m ($58m) per season between 2020 and 2030, a 300-per-cent increase in the value of its rights over the previous arrangements.
Internally, the EHF had long felt that its byzantine rights structure – with Infront handling global media and marketing rights for national team events, the now-defunct MP & Silva agency selling media rights for club competitions, and its own in-house commercial arm, EHF Marketing, filling in the gaps – was hampering growth. It also believed that the rights themselves were undervalued but, due to the irregular nature of its rights cycles and the sport’s niche status in most markets, had been unable to secure the comprehensive deal it felt its combined rights would command.
David Szlezak, managing director of EHF Marketing, who was named a 2019 SportBusiness Trailblazer for his part in negotiating the deal, admits the role of fortune in enabling the agreement that secures the future of the sport for the next decade. “Back in 2016, we found ourselves in a situation where all the main contracts of the EHF were finalising in four years’ time,” Szlezak tells SportBusiness. “That gave us a once-in-a-lifetime opportunity to package the complete rights of European handball and to ask the market about the relevancy and strength of handball.”
Running like a business
The EHF issued two tenders, allowing for separate bids for the media and marketing rights, with little expectation of receiving one bid for both packages. The feedback was immediate and positive, Szlezak remembers: “We saw that the decision was the right one because all of a sudden, the EHF was in a position to talk to players like Amazon, ESPN, Google. Before that we had no chance to talk to such media giants because they were asking: ‘what’s handball?’”
Seven bids were received from leading sports marketing agencies and media companies, but the joint-venture between Infront and DAZN (then Perform Group) emerged as an early favourite, and was the only bid that was seriously considered. Sascha Kojic, chief executive of SN1 Consulting, which works with the EHF, recalls that the bid which came through from DAZN and Infront was “a 180-page book, with full analysis on the media markets, on the value of the rights and how they’d been undersold, on the potential from the marketing side and how they intended to elevate the sport. It was comprehensive and clear that these guys were serious about promoting handball.” The bid, says Kojic, was “a total game-changer for the EHF.”
The two parties came together after DAZN identified handball as a key strategic sport for its growing portfolio of rights but, having never worked in the sport before, turned to Infront – an EHF partner since 1994 that was separately preparing a bid to expand its marketing rights agreement – and suggested the joint proposal.
“The opportunity to partner with Infront, who have such experience in handball and with the EHF over the last 25 years, was one where we felt could come up with a proposition that was much stronger than if we’d independently bid for the media and marketing rights,” says James Chubb, vice president of global rights partnerships at DAZN.
Julien Ternisien, Infront’s vice-president of summer sports, agrees that the partnership allowed the two to present a much more robust bid than either would have been able to independently, but adds that while each party brings its own strengths, the venture will be run like a single entity: “It’s not like we are selling marketing rights, DAZN is selling media rights, EHF is running the sporting side. Any and all decisions are taken by the joint venture – we don’t even really call it a ‘joint venture’ because it’s one fully dedicated team working on the project.”
That, says Szlezak, was “one of the main points of the bid – that Infront and DAZN will build up a 100-per-cent dedicated handball team.” Both are committing full-time members of staff to the joint venture, which will be based in the EHF’s offices in Vienna.
At the time the agreement was signed, EHF president Michael Wiederer declared that the deal would ultimately see the body “run more like a business than a sports federation would usually work.” Part of the thinking behind the EHF’s initial desire to package its rights together was an acknowledgement that “we were not able to run the whole European handball machine,” says Szlezak, “particularly when it comes to the specifics of the market. We recognise that we don’t know everything about handball. Most of it, but not everything. We needed to accept that we can achieve more by working with people who know their markets.”
Being able to retain control over its rights was another key part of the agreement, he adds. “Yes, we need revenues; yes, we need to earn money. Otherwise we cannot grow the sport. But we do not want to lose access to our competitions and to our sport, which is something the big agencies are aiming for – they want to control everything because they have pressure to refinance their investment. When Michael says we will run this like a business, it means that three parties are aligning our strategies rather than it being, ‘they are selling and we are playing’.”
Above the guaranteed €50m annual average the EHF is due from DAZN and Infront there is revenue-sharing agreement, though Szlezak declines to make the details of this public. “We can say that it will increase motivation, because all four parties have a common interest in driving revenues.”
All about digital
The EHF has made digital growth a cornerstone of its strategy going forward and Ternisien says that after reviewing the tender, “it made perfect sense for Infront to team up with a company like DAZN to strengthen our digital component.”
“It’s all about digital,” adds Szlezak. “Digital content, digital storytelling, big data, identifying all the possibilities of the digital market. We knew that when it comes to digital, we cannot survive on our own. We wanted to bring in external experts to work internally for European handball because our digital offering needs a lot of work.”
That work will entail a full revamp of the EHF’s digital strategy at all levels, what Szlezak calls its “digital business card.” A badly needed new website is in the offing; so too is a redress of how the EHF uses its digital channels to engage existing fans, and how it utilises digital distribution to attract new fans in territories where handball is still establishing itself.
“We’ve seen in our research over the last 12 months that handball needs an injection of youth in terms of its audience,” says Chubb. “We are very heavily looking at the digital landscape, as we would as DAZN, and looking at the marketing strategy and the content strategy behind the promotion of the sport. So we obviously have the traditional marketing and media sales operations ongoing. But really, each of those will be kind of impacted by our digital strategy to ensure that we are reaching new audiences. Handball is a hugely successful sport in Europe, particularly in a few countries; our aim is to widen that scope, not only in Europe, but globally as well.”
While attracting a younger fanbase will be a significant challenge over the next decade, DAZN and Infront’s belief that handball can engage those audiences was a major part of the reason the joint venture came together in the first place. Ternisien believes the sport is uniquely placed to benefit from a set up like this.
“I think a project like this is beneficial for handball because it’s a sport which is growing extremely fast and which has massive potential,” he says. “There are other sports we wouldn’t do something like this for, where they have already reached the maximum benefit they can get from the market and the margins are small.” Handball, he explains, has a few core markets in which it is extremely strong – Ternisien namechecks France, Germany and Scandinavia as the territories where the sport is popular and rights fees are high – and many others where its footprint is growing.
With a few months remaining until the partnership officially kicks in from June 2020, he already has evidence to back him up. The joint-venture has signed media rights deals in three key territories over the past 12 months, including Germany and the Nordics. The latest, an agreement in eight Balkan countries with Serbia-based broadcaster Arena, brings all EHF competitions under a single umbrella in the region, with Arena taking digital and linear rights and, with the broadcaster paying €7m over four years, is also the greatest indication so far of the joint-venture’s ability to squeeze maximum value out of the EHF’s assets. The figure represents a 75-per-cent increase on the previous valuation, according to SportBusiness Media estimations.
In addition to the rise in rights fees, a source close to the deal told SportBusiness that the production obligations for broadcasters under the new regime have increased significantly, with the EHF’s partners now expected to cover the full production costs for Champions League and European Handball League home games – another major boost to the EHF.
Duration offers stability
Szlezak emphasises the two key qualities of stability and predictability that the deal gives the EHF. Given the previous undervaluing of the rights, he is confident that the EHF would have had the potential to recoup a similar amount, if not more, over the coming decade had it continued to issue a fresh tender every three years. But it would have missed an important opportunity to “take risks” and to “change things dramatically.”
“It would have been easy to go for three years, and another three years, and another three years,” says Szlezak. “But we recognise that we need to change things significantly, and this will mean a lot of effort on our side. We need to more or less reinvent ourselves, and we can’t do that if we are going back to the market every three years and struggling to find stability. If you know that you need to build up a project for 10 years rather than three years, then you are more motivated to invest at the beginning. And obviously there is investment needed, not only in terms of finances, but also in terms of mentality, in terms of motivation, in terms of staff.”
Chubb says that from DAZN’s perspective, being able to plan media rights sales over a decade “means we don’t have three years where we are restricted by ensuring there is an immediate impact in commercial terms. We obviously have targets to hit and objectives to meet, but it allows us to be a bit more strategic about looking further ahead towards where we want to get to, not where we have to be in a couple of years.”
Kojic also suggests that the longer duration gives the joint venture the opportunity to take more risks with the digital strategy and to test the waters with the “likes of Amazon and Facebook”, who have shown some interest already, to try and get EHF competitions in front of a wider audience.
“What we were looking for with the long term of the deal was a partner who was ready to invest aggressively, and also to take a risk,” says Kojic. “By having the long-term stability, the EHF is enabled to work on the brand, on the competitions, and not think every 18 months about entering renegotiations over its rights. Instead of seeking maximum value in the short-term, we can look for agreements that help to build handball over the future.”
The 10-year agreement has still not officially commenced, but Szlezak is already looking beyond its end, so excited is he about the potential for handball’s growth over the next decade. “What we can achieve in these years is to really put handball on the global sporting radar,” he says. “Infront and DAZN obviously have the task to refinance our inventory in the best possible way, but we also know that there is a time after 2030 as well. It is our task to not only grow and develop the sport over the next 10 years, but to build an EHF that is flexible enough to handle the challenges that come after that.”