Sports Media Watch presents thoughts on recent events in the industry, starting with a look at the sports rights marketplace.
Heading into one of the biggest weeks in media — the upfronts, paired with the NFL schedule release — there will be any number of glitzy announcements signaling the grand importance of sports to television. Yet look beyond the surface and one starts to see evidence of rare belt-tightening in a media industry buffeted by negative trends, instability and uncertainty. Formula 1 cannot find a bidder. The market for the USGA is cold. ESPN reportedly wanted to cut its MLB rights deal, which at one point approached $800 million per year, down to $200 million/year.
It may seem strange to ask as the NBA prepares to begin a $77 billion rights deal, and as the NFL gears up to opt out of its current deals that pay well over $100 billion, but is it possible that the rights fee bubble is starting to burst?
Warnings have existed for decades about the looming collapse of the sports rights market. Amidst what can only be described as an all-out panic over rising rights fees in the mid-1980s, CBS Sports president Neil Pilson in 1984 voiced his “very real concern” that sports properties would become dependent on network partners paying escalating rights fees “far beyond potential audience or advertiser revenue growth.” Pilson: “We are giving fair notice to all sports enterprises not to create an overdependence on network television financing.” (Associated Press, 8/3/84)
Fair warning is being given. Television does not want to pull the rug out from under sports which depend on TV revenue, but the golden goose of television isn’t going to continue laying larger eggs for sports organizations and athletes indefinitely. (San Diego Union-Tribune, 8/3/84)
Warning not heeded. Over the 40+ years since, rights fees have become an increasingly large portion of leagues’ revenue. The very fact that the leagues were able to successfully weather a two-year period with limited attendance — or none at all — is because of just how much rights fees have grown, not just in raw numbers, but in importance to the leagues’ well-being.
Indeed, it was Pilson who ended up on the wrong side of the argument, losing the NBA, MLB and worst of all the NFL in a five-year span from 1990-94.
Yet those Reagan-era concerns should not be entirely discounted. As AP writer Fred Rothenberg wrote at the time, Pilson’s warning was “meant for certain small and middle-size sports events and leagues — auto racing, some tennis tournaments, soccer and pro basketball … certainly not [the NFL].” Setting aside that the NBA was listed among the also-rans back then, the argument was that the rights fee market is a two-tiered system. That is still the case.
The networks will find the money necessary to renew with the NFL at all costs, and to secure programming that they believe can drive subscriptions, maintain subscriber fees, or build a sports brand where none previously existed. But it is not the case that just any property can simply come to the market, pronounce itself worth double the previous rights fee, and channel its inner Yul Brynner: “So let it be written, so let it be done.”
It may not seem as if Formula 1 is asking for much, going from $90 million to as much as $180 million per year, but for a sport with no ad breaks, its recent viewership momentum does not mean much to a linear network. The USGA is coming to market at the end of a deal that saw partner Fox Sports cede its rights to NBC in exchange for taking half of the rights fee off of its hands — not exactly an encouraging sign moving forward.
Major League Baseball’s bargain basement deal with Roku — worth only $10 million/year — only exists because the previous rights holder Comcast was unwilling to renew for $30 million. The Comcast deal only existed because ESPN wanted to reduce its rights fee from $750 to $550 million, and gave up its Monday and Wednesday night inventory in the process.
Now, that Roku deal is one of the reasons behind ESPN opting out of its current deal and seeking a reduction to just $200 million/year. MLB should by no means find itself in the same boat as F1 and the USGA, but its market keeps being reset downward — and despite heady talk by Rob Manfred in February about suitors for ESPN’s expiring package, recent developments on that front have been scarce.
It is not every league that can simply set its price — as the NBA did when it circled $75 billion — and get exactly what it is looking for. Consider why the NBA got the kind of money it did. For all the 1990s “NBA on NBC” nostalgia, Comcast struck its first-ever national NBA rights deal in order to drive subscriptions to its Peacock streaming service. Amazon struck its first-ever NBA deal to help build its burgeoning foothold in live sports. Disney renewed for more than twice what it was paying previously to hold onto core content. To grow, to build or to maintain. If a property can do none of the three, why would the price tag meaningfully rise?
For as much as the networks tout ‘sports’ as a genre, there has always been a tendency toward being selective. Even when it seems as if there is a sports rights arms race and a bottomless pit of money to fund it, there is still some strategy at play. ESPN paying nearly $200 million/year for LaLiga was not something out of the plot of Brewster’s Millions, but part of a broader acquisition strategy for ESPN+.
The key is being able to justify the spending. As the industry changes, those properties that can help platforms achieve their goals are the ones that will benefit. The rest will be on the bubble.
Plus: Jordan, NFL, Berman, Mavericks
NBC made the most news on the first day of upfronts with its surprising hire of Michael Jordan as a “special contributor” to its NBA coverage. It is impossible to know the extent of Jordan’s presence, but the assumption from this corner is that it will be minimal. Think Frank Gifford on Monday Night Football in 2010, when he provided weekly vigniettes in honor of the show’s 40th anniversary.
Jordan has spent his entire post-playing career in the relative seclusion of luxury boxes, making it hard to imagine him sitting at a desk as part of a studio panel, giving or granting live interviews, or even just being physically at any of the games or events NBC carries. A few taped features seem to make more sense, perhaps with him just providing voiceover.
If there were any questions whether the NFL would keep the pressure on the College Football Playoff to abandon its first round Saturday tripleheader, they were answered Monday. Not only is the NFL keeping a broadcast network doubleheader on that day, but this year’s schedule may be even more enticing than a year ago — Eagles-Commanders and Bears-Packers, two storied rivalries.
That the NFL would in effect waste two of its best rivalry games on a Saturday — rather than on a higher rated Sunday late afternoon or primetime window — is just the latest indication of the league’s no holds barred approach to its competition.
ESPN’s extension with Chris Berman on Monday is just another reminder that the network went too far in minimizing one of its most famous voices. Berman had gotten overexposed and criticism of his work was legitimate, but none of it merited him being all-but-banished from his all of his roles. At the very least, he should have been allowed to continue doing “Sunday NFL Countdown,” especially given the way ESPN botched its succession plan by going with Samantha Ponder instead of his obvious heirs (Trey Wingo or Suzy Kolber).
Berman is 70, meaning that when he lost his ESPN roles nearly a decade ago, he was a mere 62. That is about the same age Curt Menefee is now (59). At 62 in this industry, one can reasonably hope for another 20 years of work.
The Dallas Mavericks winning the NBA Draft Lottery, likely ensuring they draft Cooper Flagg, figures to turn the briefly moribund franchise into a marquee attraction again next season. It is hard to believe that Dallas was in the NBA Finals less than a year ago, destroyed its title-contention hopes in one fell swoop in February, and now will almost certainly be a glamour team again.
