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Verizon, NFL Close To Unveiling Groundbreaking $1B Extension
Published June 4, 2013
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Pointedly, the massive Verizon deal does not include the rights to stream NFL games to tablets – only “mobile phones,” which is certain to lead to fights over what is considered a phone. The league likely will have to resolve the difference between dedicated tablets, like iPads, and hybrid devices, like Samsung’s popular Galaxy.
NFL Exec VP/Media Steve Bornstein and NFL Media COO Brian Rolapp handled negotiations for the league. Verizon’s NFL agency Wasserman Media Group handled negotiations for the carrier. The deal was completed long enough ago that senior club officials were briefed on it at NFL meetings at the end of May.
The deal will make Verizon one of the NFL’s biggest business partners outside of its media-rights holders. Verizon has committed to paying $1B over the four-year term, starting with a $210M payment in the deal’s first year, sources said. The deal marks a significant increase over Verizon’s previous deal. An NFL sponsor since '10, Verizon was paying around $50M annually for its NFL rights, including rights fees, team spend commitments and media spending on NFL media partners.
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The TV networks have retained the right to stream their games to tablets and computers, not mobile phones. DirecTV also has a deal to stream every NFL game as part of its four-year, $4B deal to carry Sunday Ticket. DirecTV’s deal is not affected by the Verizon deal, sources said. The NFL currently is negotiating a new deal for Sunday Ticket.
While the amount Verizon agreed to pay the league comes as a surprise, the fact that it signed a renewal does not. Under the agreement, Verizon will develop an NFL app and pick up the tab for wiring many of the league’s stadiums to provide increased connectivity. However, insiders noted that because of the varied conditions across NFL venues, during the negotiations Verizon steadfastly refused to guarantee a standard level of connectivity for NFL team. However, some teams have already done stadium Wifi deals with companies like Enterasys Networks.
A deal of this magnitude will echo across sports and entertainment, since it provides a benchmark for what the mobile content for America’s most popular TV sports property is worth. As such, many sports and entertainment properties will try to cash in on their mobile rights.
Streaming such a sizable amount of NFL content on mobile phones will be the ultimate indicator as to whether content can influence consumers to switch or adopt a new cell phone service provider.
“Obviously the NFL’s appeal is massive, so it will be an ultimate test,” said former AT&T sponsorship chief Tim McGhee, who now heads consultancy MSP Sports. “But we never saw any indicator that content drove choice of (cell) carrier when I was at AT&T. It can be a point of differentiation, but we did not see it as a competitive advantage."