Lagardère to contest CAF cancellation of $1bn rights deal

07 Nov, 2019 - 11:11 0 Views
Lagardère to contest CAF cancellation of $1bn rights deal

The Sunday News

Lagardère, the France-based conglomerate, has said it will contest the Confederation of African Football’s decision to cancel its global media and sponsorship rights agreement with the Lagardère Sports agency.

The CAF has terminated the 12-year agreement, which covered the sale of its media and sponsorship rights internationally from 2017 to 2028 and was worth $1bn (€890m), in what Lagardère last night described as a “unilateral decision” that was “unlawful, unreasonable and unjustified”.

Lagardère said: “There is no reason – including the ongoing investigation by the COMESA [Common Market for Eastern and Southern Africa’s] Competition Commission (CCC), which has yet to issue its decision – to cancel the agreement at this stage. Lagardère deeply regrets this situation and has asked the CAF to adopt a more reasonable position and honour its commitments.

“The CAF has a responsibility to support Lagardère Sports in the ongoing procedure before the CCC with a view to maintaining the agreement, adjusted, as necessary, following discussions with the authorities, in their common interest and in the interests of African football.”

The company, which is in the midst of attempts to sell its sports division, added: “Failing this, Lagardère will take any and all action to defend its interests and obtain compensation for any harm it may suffer.”

Properties covered by the contract include CAF’s flagship Africa Cup of Nations, the Africans Nations Championship and the CAF Champions League.

The deal has long been a controversial one and has come under pressure from competition probes. It has also been the subject of much scrutiny since Ahmad Ahmad deposed Issa Hayatou as CAF president in March 2017.

CAF and Lagardère announced the “landmark” agreement (an extension of a previous deal running from 2009 to 2016) in the middle of 2015. At the time, Hayatou said that CAF had “appreciated and is very satisfied” with the agency’s performance.

However, the deal, which was struck without the rights being made available in a formal tender, became the subject of the CCC’s antitrust investigation that has been running since February 2017.

The CCC has said it has concerns about the impact on market competition of the lengthy duration of the deal, and those agreed under it with broadcasters and sponsors, and rights of first refusal included in the deals. The investigation continues, and in August the CCC requested the attendance of the CAF at an evidentiary hearing.

Earlier this year, the CAF renegotiated part of the deal to take back control of certain free-to-air media rights in sub-Saharan Africa.

A probe by the Malawi-based CCC followed swiftly on from an investigation by the Egyptian Competition Authority, which claimed that the Lagardère Sports agreement was signed without offering opportunities to other agencies “in a natural framework that ensures the existence of free and fair competition”.

The ECA’s action was set against the backdrop of the diplomatic crisis in the Middle East and North Africa and the battle for broadcast rights in the region with attempts to take on the Qatar-based beIN Media Group, the erstwhile dominant player. The Cairo Economic Court last year fined Hayatou LE500m (€27.9m/$31m) for his role in the CAF-Lagardère agreement.

Ahmad was quick to criticise the Lagardère deal after taking office at the Cairo-based confederation. Shortly after his election, he said that he would investigate the agreement and flagged up his concerns about its length, specifying that he would “never sign anything for longer than three years”. He also described the contract as “not good for African football”.

CAF is thought to have first made moves to renegotiate the deal at the end of 2017. At the CAF general assembly in September 2018, Ahmad declared that CAF had agreed with Lagardère to review the terms of the contract and promised an update to member associations by the end of the year.

News of CAF’s termination of the agreement – while not unexpected – comes as a hefty blow to Lagardère as it continues its efforts to sell the Lagardère Sports & Entertainment unit. The agency is now shorn of what were previously regarded as its two ‘crown jewels’ in its portfolio, namely the CAF agreement and the Asian Football Confederation deal (with rights secured by DDMC Fortis from 2021 to 2028).

Wasserman, the sports marketing company and talent agency, and Mediapro, the Spain-based production and media rights group, are among those to have been interested in a purchase. Mediapro’s interest is said to have cooled of late and the loss of the CAF rights could make any intensification of its interest very unlikely. Other aspects of Lagardère’s sports business, including Lagardère Plus, its developing brand consulting and activation business, will, however, doubtless retain their appeal with the likes of Wasserman.– .sportbusiness.com

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