Roger Federer has won USD130m in prize money, but it’s the IP in his brand that’s really built his empire – his 10 year contract with Uniqlo is worth $300m alone, and isn’t even dependent on him continuing to play tennis.
World IP expert and IPH Strategic Advisor Dr Francis Gurry discusses the monetisation of sport, and explains how the sporting ecosystem, comprised of various rights including merchandising, trade marks, branding, and broadcasting, relies on IP to ensure all parties receive an equitable share of revenue.
There are cautionary tales too; like Mr Rubik, who didn’t have the money to patent the Rubik’s Cube in Asia, and lost huge royalties as a result. Or the risk of piracy, leading to loss of revenue from selling broadcasting and advertising rights.
And the future? Francis shares his experience at a recent eSport tournament and his prediction as to whether this is the next new Olympic event!
For more insights on the importance of IP in turning ideas into commercial realities, be sure to follow From Idea to Intellectual Property.
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Listen to the full episode here:
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Read the transcript
Lisa Leong:
Well, these days, sport covers everything from Rubik’s Cube Championships and eSports to the Olympics. So whether you’re just getting started or you are the next champion of the world, how do you ensure that you’re making the most out of your sporting career commercially?
G’day, sport. I’m Lisa Leong. This is From Idea to Intellectual Property, a podcast about today’s big ideas and the IP considerations behind them. Francis Gurry is the strategic advisor to IPH and former Director General of the World Intellectual Property Organization. So if anyone can help you to make the most out of your sporting career, he’s the one.
So even if you’re not a sports person, you would’ve heard of the Olympics. Francis, could you please explain how intellectual property applies to sport using the Olympics as a case study?
Dr Francis Gurry:
Sure. It’s not obvious, of course. What people are looking for is the spectacle. Whether it’s the hundred meters or the high jump or the long jump.
Now, originally of course, one monetized the spectacle by selling tickets and letting people into the ground who watched it. Of course, along came television and broadcasting. And broadcasting enabled that spectacle to be transmitted to… Well, actually a worldwide audience.
These broadcast rights, which are intellectual property rights, are actually fantastically valuable because of course, they’re an opportunity for the broadcaster to sell advertising space as well. If I give you the example of NBC, it paid 12 billion United States dollars for the broadcast rights for each edition of the Olympic Games from the 2014 Winter Olympics in Sochi, Russia to the 2032 Summer Games in Brisbane, Australia. So the amount of monetization that can be achieved through the transmission of the spectacle these days with technology is quite exceptional.
Lisa Leong:
And Francis, now, you’re talking really big money here, but sport hasn’t always been such big business. Can you explain how you’ve seen the industry change over the course of your time as the Director General of the World Intellectual Property Organization?
Dr Francis Gurry:
Sure. So Lisa, I think it’s technology which has transformed what were originally local or perhaps national markets into international markets. That’s created the opportunity to monetize on a wholly different level.
Let me give you the example of Roger Federer. So Roger Federer has won, it’s estimated about 130 million US dollars in prize money. Now he signed a 10 year exclusive contract with Uniqlo for 300 million.
Lisa Leong:
Wow.
Dr Francis Gurry:
So 130 million for prize money, 300 million from one sponsorship contract. And he does many other sponsorship contracts. So for the individual star, sponsorship, which is branding are enormous sources of revenue.
Lisa Leong:
Francis, you’re speaking about technology in this space, and I’m wondering whether there are any specific downsides of technology in IP and sport?
Dr Francis Gurry:
Yeah, so the figures that I mentioned are revenue generated for the exclusive right to broadcast. That whole model is threatened by the possibility that someone pirates the broadcast signal.
So whoever it is who’s got the exclusive broadcast rights is sending out that signal and it’s being picked up all around the world, usually. Now, if someone’s intercepting it and retransmitting it, they are able to avoid the payment that needs to be made to the exclusive broadcaster, authorized broadcaster. And they’re also able to hijack the revenue stream from advertising. Because the broadcaster recovers some of the cost of the broadcast rights by selling advertising space and that you see around the football ground or whatever it might be. Now the illegal streamer is able to free ride on that. So illegal streaming puts at risk the whole ecosystem and financial ecosystem around the monetization of sport.
Lisa Leong:
And so if I was a sporting individual or maybe a club who’s not at that upper echelon that you were talking about, Francis, what are some of the clever ways I can use intellectual property to maybe drive myself up a little bit higher up that value chain?
Dr Francis Gurry:
Sure. Well, look, I think the local football club, the local soccer club, whatever it might be, they have an opportunity to brand themselves. So using a trademark, they can merchandise their name, they merchandise their products, they put their T-shirts, jumpers, whatever it is, out there with the official logo on it. That generates income for them. So it’s a small start, but it’s an important start.
And at the same time, they are becoming much more well known because you see people walking around with whatever it might be as the club. There’s a whole range of merchandising that you can achieve, and at least when you’re a suburban club, which has a following amongst the suburb, the local suburb, obviously.
Lisa Leong:
Are you suggesting that perhaps I could build my own personal brand, so perhaps Lethal Lisa, the tennis star, I could start building that. What would I need to look out for in terms of intellectual property if I was going to build my profile, Francis?
Dr Francis Gurry:
So you’d want to be taking out a trademark and you see that Lethal Lisa, you might well qualify for the World Wrestling Federation.
Lisa Leong:
Oh, that’s much better. I like that. Okay, world wrestling. Yes.
Dr Francis Gurry:
They are branding and you want to have exclusive rights to the brand.
Lisa Leong:
Yes.
Dr Francis Gurry:
For that, you need a trademark. Sometimes people use design. People are using smarter designs, for example, in swimming costumes. So design enters into it too and technology as well. Think of running shoes. Once they were extremely primitive compared to the sort of shoes that athletes wear now. And so a lot of design technology has gone into that as well. So those are intellectual property rights on the manufacturing side.
Lisa Leong:
Okay. So we’ve got at the individual level and then at the team level. Let’s flip it a little bit, Francis, we started talking about the downsides here. What are the things that we should watch out for as we’re building our intellectual property in sport, in the individual team, and even at that club level, what have you seen go really wrong?
Dr Francis Gurry:
Well, look, I think the main thing is trying to get some equitable sharing of the overall revenue basket so that each level, the associational league level, and then the club level, and then the individual level, get a reasonable or a fair share of the overall pie. That’s something that’s quite hard to achieve. Of course, the association is prevailed upon by the clubs, and the clubs are prevailed upon by the individual players. It’s a whole ecosystem that hangs together really on intellectual property, whether it’s broadcast rights, the merchandising rights, the trademark rights, the branding rights, or even some of the technology that enters into it.
Lisa Leong:
Have you ever seen someone give up their rights before they get big or before the team goes up the ladder too early?
Dr Francis Gurry:
Yeah. Look, I’ve seen that in particular in different areas. A couple of years ago I met Mr. Rubik of Rubik’s Cube. He’s a Hungarian gentleman, and when he started off, he didn’t have very much financial backing or money. So the Rubik’s Cube, he patented in North America and Europe, but not in Asia because he didn’t have the finance to do the patenting. Now, the result was that, of course, as we know, the Rubik’s Cube became extraordinarily popular, particularly in Asia, where they made zillions of them and Mr. Rubik didn’t get anything out of it. So you really need to be careful that you’re covering your intellectual property position in all your potential markets.
Lisa Leong:
Now, over the course of your career, Francis, you’ve seen huge changes in the intersection of IP and sport. You’ve seen it go from a pretty modest venture into a multi-trillion dollar enterprise. You recently went to South Korea to see an eSports tournament. Tell me about that.
Dr Francis Gurry:
It’s the next generation, isn’t it? So eSports is very big in Republic of Korea, also pretty big in the United States of America. What it is is the spectacle of two teams playing a computer game against each other. And then monetized. So this spectacle you have… Well, you have an arena. You enter into the arena via a hallway, which has a lot of merchandising, selling portraits, paraphernalia with the various stars of the teams on it, the various teams, you need to pay for the ticket. And then you go into the arena and people watch while two teams come out and they play a computer game against each other, and that computer game is projected onto a huge screen. So you can see in great detail each of the moves, and the audience gets fully engaged in this. They start cheering like they’re at a film. And it’s… Well, it’s something quite extraordinary. It’s not my cup of tea, but I recognize that there’s a generational question here, but it is, if you like, the virtualization of sporting activity. So we’ve seen the virtualization of activity right across the economy in different areas, and now we see, for example, if you take music, most people consume music without a physical support, without a CD, without a record, whatever it is, it’s streamed, it’s virtualized almost completely.
Lisa Leong:
When you were entering into that stadium and looking all around you, what were you noticing about or extrapolating about money, IP and the future of sport?
Dr Francis Gurry:
I admit that I have maybe an old fashioned view of really liking the spectacle. And so really liking the physical engagement, whether it’s in ping pong or tennis or football, the physical engagement and the physical skills that are displayed. Well, when you take this virtualization that occurs through eSports, well it’s a different set of physical skills that are involved in being extremely agile, in being able to seize opportunities that present themselves in the course of the computer game, whatever the computer game might be. It’s a step. How far it’ll go, it’s quite popular. I personally don’t see it taking over physical sport. So it’s probably an additional layer that we will see placed on the physical sporting arena. There are movements to bring it into the Olympic Games. Whether that will happen is another question.
Lisa Leong:
And so finally, what are your words of advice, your words of wisdom for how we might increase our IP IQ in relation to us either as sports people or at the team level as well?
Dr Francis Gurry:
Well, my advice would be that it’s not an obvious connection. However, IP is the way in which you’re going to monetize any activity in the sporting area. So if you want to play cricket, the game of cricket on the village green and allow everyone to come in and watch it, you’re not monetizing anything. But the moment you start to want to monetize in order to finance the development of the sport and the infrastructure that you need for the sport, and also enable the players to get a share and to earn some revenue, then IP is the way.
Lisa Leong:
Thank you so much, Francis.
Dr Francis Gurry:
Thank you, Lisa.
Lisa Leong:
That was Francis Gurry, Strategic Advisor to IPH and former Director General of the World Intellectual Property Organization. Thanks to our producer, Cara Jensen McKinnon. This podcast is brought to you by IPH, Asia Pacific’s leading intellectual property services group, helping you turn your big ideas into big business. And I’m your host, Lisa Leong. Bye for now.
This episode was brought to you by Wrestler Lethal Lisa, trademark.