June 6 - 12, 2011 Vol. 14 — No. 8

Top Stories

  • Will action star White take flight from Red Bull?

    Olympic gold medalist and action sports star Shaun White and Red Bull haven’t come to terms on a renewal of their three-year relationship, opening the door for one of the nation’s most recognizable athletes to sign with a new beverage partner.

    Top Athlete Endorsers

    The Davie-Brown Index endorsement score ranks the degree to which consumers identify an athlete as being an effective product
    spokesperson.

    RANK ATHLETE ENDORSEMENT SCORE
    1 Lindsey Vonn 76.73
    2 Michael Jordan 75.81
    3 Phil Mickelson 75.47
    4 Peyton Manning 75.08
    5 Aaron Rodgers 74.76
    6 Drew Brees 74.24
    7 Shaun White 74.24
    8 Mario Lemieux 73.31
    9 Gretchen Bleiler 73.25
    10 Joe Mauer 71.75

    Note: Among the more than 2,800 celebrities in the DBI database, White ranks in the top 30, ahead of Jennifer Aniston, Katy Perry and George Clooney, and just behind Brees, the late Paul Newman and Rodgers. Consumers also consider him to be a trendsetter. His score in the DBI's Trendsetter attribute puts him in the top 20 in the DBI database, alongside Tina Fey, Taylor Swift, Beyoncé, Angelina Jolie and Johnny Depp. No other athlete ranks in the top 35.
    Source: The Marketing Arm

    White’s deal with Red Bull, valued at more than $1 million a year, ended after the Winter X Games in January, according to sources. Since then, his team of agents at CAA has been pitching beverage companies on an endorsement deal worth more than $3 million a year. They have discussed a renewal with Red Bull, approached Coca-Cola and talked to Pepsi about a deal with its Mountain Dew or Gatorade brands, but haven’t signed anything to date.

    Sources said brands are objecting to the pricing of the youth marketing magnet and demands for creative authority and control over any content created.

    “There are creative demands … and they only want to give you two or three days of his time,” said one marketer who had been in talks with White’s representatives at CAA. “I wouldn’t do that deal in an Olympic year, and this isn’t an Olympic year.”

    Representatives for White could not be reached for comment.

    Though White’s services are being shopped to the world’s biggest soft drink companies, Red Bull’s U.S. sports marketing chief Chris Mater said his company’s partnership with the snowboarder could be rekindled.

    “We’re still in discussions for him to stay with Red Bull,” Mater said. “He’s been a great face for our brand.”

    The more than $3 million price tag that CAA has placed on a future beverage partnership with White is reflective of the Olympian’s growing fame. In 2010, White had the highest Sports Q Score among active athletes. His score was second only to Michael Jordan and ranked ahead of Peyton Manning, Joe Montana and Arnold Palmer, underscoring the appeal and likability he’s earned as an elite snowboarder and the value he delivers to mainstream brands he endorses, such as Target and BFGoodrich. Similarly, the Davie-Brown Index puts him in the top 10 among athletes in the endorsement category, which reflects the degree to which consumers identify a celebrity as an effective spokesperson.

    White, who signed his first sponsorship at the age of 7, spent four years as the face of Mountain Dew before signing with Red Bull in 2007. During their
    three-year partnership, White became one of Red Bull’s most visible athletes. He stood alongside Travis Pastrana, Ryan Sheckler and Lindsey Vonn at the
    Red Bull built a branded superpipe in the Rocky Mountains where White could train for the 2010 Olympics and posted video online. One marketer called it an “incredibly organic activation piece.”
    forefront of the company’s marketing and promotions.

    Their three-year partnership resulted in one of the most imaginative marketing stunts of 2009. The energy drink company built a backcountry superpipe in the Rocky Mountains accessible only by helicopter. They called the effort Red Bull Project X and flew White into the superpipe to train for the 2010 Olympics so that he could practice new tricks there without being seen by any of his competitors. The pipe had Red Bull logos and a Red Bull-branded foam pit, and the company posted video of White training there online. CBS even taped a “60 Minutes” segment on White there before the Olympics. Footage from the pipe has been viewed 2.5 million times on YouTube.

    “That was an incredibly organic activation piece that shows how Red Bull supports their athletes, and it put Shaun in a different light, giving him a coolness factor of having something no other athlete had,” said Bob Walker, president of Connexions Sports & Entertainment, an action sports agency that works with freestyle motocross star Brian Deegan. “You can’t put a value on the media value of that.”

    White’s next big competition is the Dew Tour Pantech Open in Ocean City, Md., July 21-24. He then will compete in skateboard vert at the Summer X Games. Though he hasn’t committed to the 2014 Sochi Winter Olympics, he is expected to compete there for his third consecutive gold medal in snowboard halfpipe.

    White, 24, is one of the few action sports athletes who provides partners with year-round exposure. He is a two-time Olympic gold medalist in snowboard halfpipe and an accomplished skateboarder who won an X Games gold medal in vert in 2007. But even with his year-round visibility and success, a $3 million to $6 million deal will be tough to sell.

    “I don’t see any brand paying that type of money for him during these economic times,” Walker said, “but if anyone can get it, Shaun can because of the Olympic program.”

    Pepsi and Coca-Cola have a history in action sports. Pepsi’s Mountain Dew brand sponsors the NBC- and MTV-owned Dew Tour and has a history of sponsoring athletes ranging from snowboarder Hannah Teter to skater Paul Rodriguez. Coca-Cola signed Olympic snowboarders Ross Powers, Danny Kass and J.J. Thomas in 2002 for a campaign supporting their Nestea brand. Coke could use White across a portfolio of brands ranging from Glacéau to Powerade to Sprite.

    Other possible fits would be the energy drinks Rockstar, an independently owned beverage distributed by Frucor Beverages, and Monster Energy, a Hansen Natural-owned beverage distributed by Coke. Another proposal being floated is exchanging White’s services for an equity stake in a startup beverage brand, sources familiar with the proposals said.

    White left his longtime agent, Mark Ervin, and IMG a year ago. Since signing with CAA, he has signed deals with BFGoodrich Tires and Stride. His other sponsors are Burton, Target, Oakley, Ubisoft and Park City Mountain Resort.

  • NFL readies plans for season as short as 8 games

    Editor's note: This story is revised from the print edition.

    The NFL is considering season lengths for 2011 as short as eight regular-season games, half its normal number, as the league plans for the possibility of an abbreviated season because of the nearly three-month-long lockout, sources said.

    An eight-game season could start in late November. Allowing for five weeks up front for free agency, training camps and perhaps one preseason game, the contingency suggests that the league and players could reach a deal on a new labor agreement as late as mid- to late October and still salvage a season.

    GETTY IMAGES
    "We have contingency planning for our contingency planning."
    — Roger Goodell
    NFL Commissioner
    For now, the league has said its focus remains on playing a full season. Key owners and executives met face to face with player representatives last week in hopes of resolving the labor strife.

    Asked at the owners’ spring meeting last month about the league’s contingency planning, NFL Commissioner Roger Goodell said, “We have contingency planning for our contingency planning.”

    The NFL, in a statement, said, “If and when it becomes clear that we cannot play the schedule as it was announced, we will make the appropriate adjustments with an eye toward minimizing changes.”

    The NFL announced a full, 16-game schedule for all teams on April 19.

    Sources said the eight-game-season scenario is not one that’s been committed to, but it also has not been dismissed and is being studied along with other schedule permutations. How many divisional games would be played in an eight-game season, for example, is one issue the league’s competition committee would have to examine.

    One of the sources said the Indianapolis Super Bowl Host Committee had been apprised of the eight-game scenario to ease its concern about losing the championship game, which is scheduled for Feb. 5. Indianapolis can delay that game date one week, if necessary.

    In 1982, the NFL played only nine of its usual 16 games per team because of a player strike. A player strike in 1987 led to a 15-game schedule, with replacement players competing in three of those games.

    The NFL has said it will not use replacement players this year.

    A Super Bowl in an eight-game season is a consolation prize, said Roman Oben, a former player and current broadcaster.

    “You have to talk about there being a gap in the product on the field because players didn’t get enough time to prepare properly for the rigors of the football season,” he said. “We are really running out of time. Everything will get affected.”

    The NFL has previously said there is flexibility built into the schedule, so a few weeks can be lost without losing games. Bye weeks can be eliminated, the planned off week between the conference championship games and the Super Bowl can be lopped off, and Indianapolis can move the Super Bowl back a week.

    The meeting last week between the players and owners was held pursuant to court mediation.

    The 8th U.S. Circuit Court of Appeals was set to hear arguments last Friday on whether to lift the lockout. The NFL’s response to the players’ antitrust claims in Brady v. NFL was due today in Minnesota federal court.

    The owners are scheduled to meet June 21 in Chicago, and a decision from the appeals court is expected soon after.

    Indianapolis Colts owner Jim Irsay said last month a labor deal needs to be done by July 4 to save the full preseason.

  • NBC's new dealmaker

    Sports executives who know Mark Lazarus typically use the same terms to describe the new head of NBC Sports: a smart, level-headed dealmaker.

    For the most part, sports league and media executives know and like Lazarus, an executive who literally grew up in the media business. Those attributes are reasons why most of the executives contacted for this story believe Lazarus is a good choice to replace the legendary Dick Ebersol as the head of NBC Sports.

    “When I first knew him, Mark was usually the designated bulldog. But as he rose in the ranks at Turner, he became the responsible one in the room who always remained even-keeled with one eye on the bottom line,” said NBA Deputy Commissioner Adam Silver, who has known Lazarus for 20 years.

    “He has an extensive background in sales, programming and production, but I think a big reason why he is one of the most well-respected executives in sports is how he treats people. He is friendly to all, builds strong, long-term relationships, and has a great instinct for deal-making.”

    KRISTINA PAUMEN/LIMELIGHT PHOTOGRAPHY
    New head of NBC Sports has strong relationships with many top league executives.
    Lazarus will need to rely on those deal-making instincts, sports executives say, especially as questions swirl in the industry regarding whether Comcast has the stomach to continue bidding on high-cost sports rights.

    Comments made by Comcast Chief Financial Officer Michael Angelakis last month suggest that these questions haven’t been answered. Speaking at a media and technology conference, Angelakis described sports as a “conundrum” for Comcast.

    “Let me be perfectly clear about sports,” Angelakis said. “Sports are important to the extent that we can make money and build value. Just leave it at that. I think that we are trying to manage sports.”

    Angelakis went on to describe last month’s Pac-10 deal, in which Comcast lost the rights to a combined bid from Fox and ESPN. “Did we lose? So be it. We’re not that emotional about it. … We’re going to be financially disciplined on it. We look at this as a business, and we’re here to make money for our shareholders.”

    A relationship guy

    Lazarus’ strength comes from the strong relationships he has developed with many top league executives, thanks to his time running Turner Sports.

    He owes his job at NBC to the strength of his relationships. Ebersol moved Lazarus to head up NBC Sports’ cable group in February. Lazarus had spent the previous 2 1/2 years as the head of Career Sports & Entertainment after an 18-year run with Turner that ended in January 2008. In an interview with The Wall Street Journal last month, Ebersol said, “I’ve known Mark for the last 15 or 16 years. When he was really unfairly cast aside four years ago by Time Warner, … I kept up the relationship.”

    Officials with the top leagues describe Lazarus as a smart and capable executive. While running Turner, Lazarus maintained relationships with Major League Baseball and the NBA, while cutting rights deals for NASCAR, the PGA of America, the British Open and Wimbledon.

    “This is not his first rodeo,” said Tim Brosnan, MLB executive vice president of business operations. “He gets it. He understands our business. We understand his.”

    There has been talk of a culture clash between the freewheeling NBC Sports and the fiscally prudent Comcast in the five months since Comcast assumed control of the network. When Ebersol and his second in command, Ken Schanzer, resigned within a week of each other, some suggested that Lazarus would come in and clean house, sweeping all of Ebersol’s loyalists from 30 Rock and inserting his own people.

    Insiders say that such a massive house cleaning isn’t likely to happen; it’s not Lazarus’ nature. The department likely will see a restructuring, especially since it lost its top two executives who had run the group for decades. But don’t expect Lazarus to do anything rash. He faced a similar situation in 1999 when he took over as head of Turner Sports from Harvey Schiller. Heads didn’t roll. Instead, Lazarus worked with the existing executive team to expand the business, including executive producer Mike Pearl and head of programming Jeff Gregor.

    Paul Brooks, president of the NASCAR Media Group, recalled cutting NASCAR’s first online deal with Lazarus and
    AP IMAGES
    Mark Lazarus was on hand in April when the NHL announced its new rights deal with NBC. Here, Lazarus chats in the background with NHL Chief Operating Officer John Collins while NHL Commissioner Gary Bettman (left) talks with former NBC Sports President Ken Schanzer.
    coming away impressed with the executive’s commitment to NASCAR as a property.

    “It was Mark’s vision that sold us on their core competency as a company. He really painted a vision and we had a big belief they could do that,” Brooks said. “We were cutting new ground together, and there was always a comfort with Mark.”

    Unlike Ebersol, Lazarus is not the type to sit in a production truck directing action. He’s much more of a businessman, focused on cutting deals and developing relationships. Insiders say they expect Lazarus to hire or promote an executive producer to oversee all production. Until then, he will rely on the existing team — built and trained by Ebersol — to continue producing games.

    Ebersol initially brought Lazarus into NBC late last year as a senior adviser to help develop a cable strategy with Versus, Golf Channel and the company’s regional sports networks. Insiders expect him to continue with the plan to rebrand Versus under the NBC Sports banner and to continue co-branding Golf Channel with NBC Sports.

    Lazarus also has online experience, overseeing the launch of NASCAR.com and managing PGA.com. Insiders expect him to spend a lot of time trying to develop NBC’s broadband and mobile services, too.

    “He’s intelligent, very buttoned-down, reliable and with the reputation for being a real straight shooter,” said CBS Sports Chairman Sean McManus. “He’s someone who has a very good background in cable, which I think is very important when he’s now running the portfolio of properties at NBC Sports, because cable is going to be an increasingly important part of that portfolio.”

    The collaborator

    Lazarus grew up in a TV household. His father ran sports sales for ABC Sports for more than 10 years. One brother ran sales for NBC Sports and Univision. Another is a senior executive at ESPN.

    In his college years, during summer breaks from Vanderbilt, Lazarus had jobs as a cameraman and boom operator at ABC. One summer, he was a boom operator on the set of the soap opera “All My Children.”

    One story that shows the effectiveness of Lazarus’ relationship building occurred when he hired Charles Barkley for “Inside the NBA” in 2000. At the time, Barkley was being courted by both Lazarus and NBC’s Ebersol. Ultimately, Barkley picked the smaller network over the big broadcast network thanks, in large part, to Lazarus’ ability to make Barkley feel comfortable.

    Lazarus has built his reputation as a collaborative executive. While overseeing Turner Sports, he partnered with NBC on NASCAR and Wimbledon coverage.

    His first deal as Turner Sports president was to poach Wimbledon rights from HBO for around $10 million per year. Now, his first deal with NBC will be to negotiate a renewal for Wimbledon rights, which end after this year’s tournament.

    “He’s open. He’s collaborative. He’s a relationship guy,” said SportsNet New York President Steve Raab, who worked for Lazarus at Turner Sports. “He is a really smart and straightforward and honest guy.”

    Raab recalled when he accompanied Lazarus to a race at Daytona shortly after Raab started at Turner Sports. Lazarus called the new executive and invited him to dinner with NASCAR Chairman and CEO Brian France and George Pyne, at the time NASCAR’s chief operating officer.

    “There was no reason that he had to call me. He certainly had those relationships himself,” Raab said. “But it was also going to be better for the department. It was definitely not all about Mark. Mark is a real team player.”

    For Greg Hughes, who worked for Lazarus at Turner as a communications executive, that story is not surprising. Lazarus made a point to reach out to all the people who worked for him. Hughes recalls Lazarus frequently standing on a desk in “The Bullpen” — the area where production team cubicles were located — to address Turner Sports employees.

    Said Hughes: “He makes a point to know everyone that he oversees.”

    Staff writer Tripp Mickle contributed to this report.

  • How high can rights fees go?

    In early April when leaders of the Big East were discussing broad outlines of a seven-year extension of the conference’s media deal with ESPN, there was sharp, internal disagreement. Most saw the number — an average of $130 million a year — as a healthy increase that would boost their coffers. A vocal minority, however, saw a TV marketplace ripe for a larger increase.

    Presidents from Georgetown, Notre Dame, Rutgers and Seton Hall voted against the deal, sources said. Others, including Pittsburgh and West Virginia, also were vocal skeptics of the deal, preferring to wait and see what the open market would bring once ESPN’s deals ended, following the 2013-14 football season. Still, the presidents voted 12-4 to accept its broad outlines.

    Four weeks later, just a week after a record-breaking deal for the Pac-10’s media rights was announced, theBig East’s presidents met again. Not surprisingly, they needed only 15 minutes to reach a unanimous decision to reject ESPN’s offer.

    GETTY IMAGES
    Pac-10 Commissioner Larry Scott looks on as Fox’s Randy Freer outlines the network’s deal to pay the conference $250 million a year.

    The reason: The Pac-10’s $250 million-a-year deal has caused all other sports properties — college and pro — to take another look at their rights.

    In the recent run of massive sports rights deals, more properties are looking to revisit their agreements. Each new deal makes all other ones seem more outdated. The Big East presidents realized that the Pac-10’s deal turned an offer that would have nearly quadrupled the Big East’s media fees into one that was well below market value.

    The Atlantic Coast Conference’s TV deal with ESPN provides another example. In May 2010, the conference signed a deal worth $155 million annually. At the time, the deal was hailed as a windfall for the conference, more than doubling its annual media revenue.

    But ensuing deals with the Big 12 and Pac-10 (which becomes the Pac-12 on July 1 with the addition of Colorado and Utah) made the ACC’s windfall look a lot less gaudy. Now its $155 million payout looks like a paltry sum compared to the Pac-10’s annual average.

    More than four months before their groundbreaking media deal is due to take effect, sources said, ACC officials have looked to see if their ESPN contract contains any language that would allow them to reopen the deal. An ESPN source said the conference has not reached out — either formally or informally — and it’s unlikely ESPN, or any network, would renegotiate any deal that has not taken effect yet.

    It’s not just college sports that are seeing these wild increases in media rights. Wimbledon’s rights with NBC and Tennis Channel end after this year’s tournament and, already, at least four suitors have explored those rights. ESPN’s Wimbledon rights run for another two years. NBC is ending a deal that pays the All England Club $13 million per year. The new deal should be worth much more.

    The NHL got into the act in April, signing a deal with NBC and Versus for an average of $187 million a year, dwarfing the $76 million average annual payout that it had been getting.

    It’s not just national deals that are seeing these increases, either. NBA and MLB teams took note of the local deal between the Houston Astros, Houston Rockets and Comcast that gave the teams an equity piece of Comcast’s regional sports network. And as soon as word leaked out that Time Warner Cable’s deal with the Los Angeles Lakers averages to $200 million over 25 years, NBA franchises in several markets tried to open talks with their RSNs. Rumors of the San Diego Padres’ pending $30 million-a-year deal with Fox has created the same situation with MLB teams.

    Veteran sports media executives said they’ve never seen a media rights market as sizzling as the current one, with annual payouts doubling, tripling and even quadrupling previous rights deals.

    “The market is very, very robust,” said CBS Sports Chairman Sean McManus. “Each of the parties that’s spending this money must be figuring out a way to justify the rights that they are paying.”

    The huge increases may have the feel of a market bubble, having grown so much in such a short amount of time. But veteran sports media executives believe the prices accurately reflect the value of the rights and have room to grow.

    “Have sports rights peaked? I don’t think they have,” said NHL Chief Operating Officer John Collins. “What you’re seeing is that sports are becoming more relevant to more people.”

    Bill Koenig, the NBA’s executive vice president of business affairs and general counsel, agreed, “I don’t think it’s a bubble. It reflects the value of the programming.”

    GETTY IMAGES
    The Big East killed an early offer from ESPN and decided to play the waiting game in hopes of landing a bigger deal.

    Still, properties such as the Big East are taking a risk by passing up a guaranteed increase today for the potential of more money down the road. The conference’s basketball deal with ESPN ends after the 2012-13 season, and its football deal with ESPN ends after the 2013-14 season. There’s no guarantee that the market will stay as robust at that time.

    “If you look at most professional teams, by the time they’re at the end of the contract, they all think they’ve made a bad deal,” said Fox Sports co-President Randy Freer. “When the paper is signed and for those first couple of years, everybody is usually pretty happy. But in the economic reality for a decade or longer, things change.”

    Freer pointed out that those long-term deals have taken some rights off the market deep into the decade.

    No ceiling in sight?

    A sampling of network media rights deals with sports properties

    Network Property Length Estimated Avg. Annual Value Final Season of Contract
    NBC Wimbledon 4 years $13 million 2011
    CBS USTA U.S. Open 4 years $36.25 million 2011
    CBS and NBC PGA Tour 6 years $491.7 million 2012
    ESPN IndyCar 4 years $12 million-$16.25 million 2012
    CBS NFL 8 years $619.8 million 2013
    Fox NFL 8 years $720.3 million 2013
    NBC NFL 8 years $603 million 2013
    ESPN NFL 8 years $1.1 billion 2013
    Fox MLB 7 years $257.1 million 2013
    TBS MLB 8 years $148.6 million 2013
    ESPN MLB 9 years $296 million 2013
    ESPN Bowl Championship Series* 4 years $123.75 million 2014
    ESPN Rose Bowl 8 years $37.5 million 2014
    ESPN MLS 8 years $8 million 2014
    Univision MLS 8 years $9.9 million 2014
    ESPN NASCAR 8 years $270 million 2014
    Fox NASCAR 8 years $220 million 2014
    TNT NASCAR 8 years $80 million-$85 million 2014
    ABC/ESPN and TNT NBA 8 years $930 million 2016
    NBC Kentucky Derby 5 years $5 million 2016
    NBC NHL 10 years $187.5 million 2021
    Turner/CBS NCAA Men's Basketball Tournament
    14 years $771.4 million 2024

    Note: ESPN contracts may share rights with ABC
    * Excluding Rose Bowl
    Source: SportsBusiness Journal research

    “The competition in college is virtually over,” Freer said. “It’s going to be five or six years before another collegiate conference of significance comes to the open market with rights for football.”

    Still, the deals that are getting done today reflect big increases. Sports media executives cite several reasons why leagues and networks could expect these wild increases to continue.

    More deep-pocketed TV networks are getting into the mix for media rights these days. The more bidders there are, the higher the rights fee.

    The market to acquire sports rights will get only more crowded, networks say, since live sports generally bring the highest ratings on TV and reach the young men that advertisers crave better than any other form of TV programming.

    And the cable industry’s push to the “TV Everywhere” concept — where cable subscribers can stream channels to computers and mobile devices — has created a new bucket of rights for sports properties to sell.

    Any one of these reasons would create a robust market for sports rights. Having all three coalesce at one time has turned the market red hot.

    “The playing field there is a lot more crowded and a lot more competitive,” said Derek Chang, executive vice president of content strategy and development for DirecTV. “The headline product probably isn’t changing that much. Any time you have an environment where demand starts to exceed supply, pricing goes up.”

    Competition: The More The Merrier

    Cable TV channels view sports programming as the easiest way to increase ratings and the license fees that distributors pay. Today, several cable networks actively are trying to add sports to their schedules, which, sports media executives say, is the main reason why media rights fees are rising so quickly.

    Comcast wants more sports on Versus. Fox is putting more sports on FX. Turner is trying to build up truTV’s sports assets. And, of course, ESPN needs reams of sports content for its multiple TV channels, broadband platforms and mobile applications.

    For the past year, the glut of TV channels vying for sports rights has ensured multiple bidders during each negotiation.

    “You have the dynamic of a number of companies trying to build their cable assets, who are competing against each other for a limited number of content deals,” CBS’s McManus said. “Obviously the dynamic of Comcast now owning NBC and trying to maximize the value of both their cable assets and their network sports division has presented a competition for ESPN that they haven’t seen in a while.”

    The threat of Comcast and its deep pockets helped push the Pac-10’s media rights fee far higher than anyone would have expected. Traditional rivals ESPN and Fox decided to join forces to outbid NBC and keep the Comcast-owned network out of the college sports market.

    College conferences cash in

    Once each respective deal kicks in, these are the estimated average annual values of the most lucrative media rights deals with college conferences:

    Conference Avg.
    Annual Value
    Contract Years Network(s)
    ACC  $155 million  2011 through 2022-23  ESPN/ABC 
    Big 12  $90 million 
    $60 million 
    2012 through 2024-25 
    2008 through 2015-16 
    Fox
    ESPN/ABC 
    Big East  $36 million  2007 through 2013  ESPN/ABC 
    Big Ten  $232 million 
    $20 million 
    2007 through 2031-32 
    2006 through 2015-16 
    The Big Ten Network* 
    CBS
    Conference USA  $15.6-16.1 million  2011 through 2015-16  CBS College Sports 
    Mountain West  $11.7 million  2007 through 2013-14  CBS College Sports 
    Pac-12**  $250 million  2011 through 2022-23  ESPN and Fox 
    SEC  $150 million 
    $55 million 
    2009 through 2023-24 
    2009 through 2023-24 
    ESPN/ABC
    CBS College Sports

    * The conference owns 51 percent of the network and supplies the content. News Corp. owns 49 percent and operates the network. The two entities share expenses.
    ** The conference becomes the Pac-12 on July 1 when Colorado and Utah formally join.
    Source: SportsBusiness Journal research

    The same dynamic is in play with Wimbledon rights. NBC, ESPN, Fox and Tennis Channel have been nosing around for the NBC and Tennis Channel rights that are available. The presence of multiple bidders is certain to increase the four-year, $52 million deal NBC currently pays for Wimbledon’s media rights.

    The presence of multiple bidders also worked for the NHL (where ESPN and NBC competed) and the ACC (ESPN and Fox went toe-to-toe).

    “If you talk to any of these guys, none of them like the fact that sports costs are going up quickly. No buyer likes that,” said DirecTV’s Chang. “At the same time, nobody wants to tell their boss that they lost a product because they got outbid. That’s what they’re all dealing with. For the most part, they are basically saying that they don’t like it, but they have to stay in it because this is the business that they’re in.”

    The problem for a distributor like Chang is that his business is at the end of the line for these increases. When networks pay more for sports programming, they charge distributors more to carry their channels. In turn, distributors pass those increased costs on to their subscribers.

    So far, there hasn’t been a lot of pushback. But Chang, and others, worry that costs will get too high for cable and satellite subscribers.

    “I think that there’s cord cutting because of the economic factor, where rates continue to rise for people and they can’t stomach the whole cost,” Chang said. “Going back to whether or not customers will ultimately bear the freight is something that everyone is cognizant of and trying to assess what the tolerance level there is.”

    Ratings: The Way to Reach Young Men

    The reason so many TV channels are clamoring for sports content is because live sports have become the most valuable programming on television.

    In the face of media fragmentation and declining prime-time network ratings, live sports ratings continue to grow virtually across the board.

    Most sports media executives point to the NFL as evidence of this trend. Last year, “Sunday Night Football” was the highest-rated series on broadcast television through the end of the regular season, and “Monday Night Football” was the highest-rated series on cable television.

    But the trend is even more pronounced in other sports perceived to be on a downswing, like NASCAR and horse racing. Up until this season, NASCAR has seen its TV ratings drop four years in a row. That’s a ratings disaster, right? But when TV ratings bottomed out last year, the NASCAR Sprint Cup Series still averaged almost 6 million viewers over 34 races (not including two Monday rain-delayed broadcasts) across ABC, ESPN, Fox and Turner.

    Horse racing gives another example. Take last month’s unremarkable Preakness Stakes on NBC, which drew nearly 9 million viewers to NBC for the race portion of the event.

    “Go try and find entertainment programming or other things that do those kinds of numbers on a regular basis,” Fox Sports’ Freer said. “You really have some predictability with sports.”

    Live events have become programming gold for TV networks. Last year, 99 of the 100 highest-rated TV telecasts in the 18- to 49-year-old demographic were live, including sports and event shows such as “American Idol” and the Oscars, according to ESPN research.

    “We know that sports is appointment viewing,” said David Levy, president of sales, distribution and sports for Turner Broadcasting System. “We know that five, 10 years from now, this might be the only and final appointment-viewing product in the market, other than news. Nobody’s watching the Super Bowl on Monday morning.”

    TV networks are not just attracted to the numbers of people who are watching. They like the kind of people who are watching — the young men advertisers are clamoring to reach. They also embrace the passion that these audiences bring to the telecasts.

    “You’re getting a built-in fan base each time you buy these sports properties,” Levy said. “If I buy the Pac-12 or NHL or NFL or NCAA basketball — any of these sports properties have automatically built-in fan bases and pretty much a track record of a ratings process you could almost guarantee will be there day in and day out.”

    For the past several years, television network executives have fretted about declining ratings among young men. Sports is among the few genres on TV that they watch.

    “The value of the sports content is increasing as it becomes more and more difficult to get people in front of a set — and a specific demographic in front of a set,” McManus said. “Sports is still able to attract that demographic, and it’s pretty consistent in terms of the people it brings to the set. That isn’t true of a lot of other programming on television.”

    TV Everywhere: Sports on the Go

    The drive to reach young men is occurring beyond just television. The push into broadband and mobile applications also is cited as a cause for the rapid increase in sports rights fees, according to several sports media executives.

    The cable industry has been pushing a concept called TV Everywhere, which would allow its subscribers to stream traditional TV channels to computers and mobile devices.

    The development of these kinds of digital applications — built on the back of sports content — has created a new revenue stream for sports properties and helped push rights fees even higher.

    “The TV Everywhere revolution that we see happening is part of the driver in this increase in sports rights,” said Tim Brosnan, Major League Baseball’s executive vice president of business operations. “There is value added when content providers can go on a multiplatform basis.”

    The NBA’s Koenig agreed, saying the concept has a lot of potential, even if it hasn’t been fully realized yet.

    “Given some of the struggles of authentication, TV Everywhere hasn’t hit full stride yet,” Koenig said. “Increasingly, you’re going to get your content wherever you are through whatever device you happen to have in your hand or on the table or in the living room.”

    Turnkey Sports Poll

    The following are results of the Turnkey Sports Poll taken in May. The survey covered more than 1,100 senior-level sports industry executives spanning professional and college sports.

    In how many years will online/device streaming of sports surpass traditional cable viewership?

    1-2 years 2%
    3-5 years 22%
    6-10 years 31%
    11+ years 16%
    It will never surpass traditional cable 25%
    Not sure / no response 4%

    Who holds more power in the relationship between networks and cable carriers?

    The networks 47%
    The carriers 41%
    Not sure / no response 12%

    Source: Turnkey Sports & Entertainment in conjunction with SportsBusiness Journal. Turnkey Intelligence specializes in research, measurement and lead generation for brands and properties. Visit www.turnkeyse.com.

    ESPN, in particular, has bought into the TV Everywhere concept, making it an essential part of its carriage deal with Time Warner Cable last year. It released an app that lets Time Warner Cable and Bright House subscribers stream ESPN, ESPN2, ESPNU and ESPN3 to mobile devices and tablets.

    ESPN executives say they will not consider any rights deal unless it includes the broadband and mobile rights to support TV Everywhere. Sean Bratches, ESPN’s executive vice president of sales and marketing, asked when was the last time ESPN did a linear, TV-only rights deal, said, “It was well before the current management regime was in place. Our ability to enter the authentication marketplace has really been the byproduct of a strategy that was born probably eight years ago in terms of our investment in rights for multiple platforms.”

    All sports networks are pursuing the TV Everywhere concept, viewing it as a way to address viewers who aren’t watching television.

    “Anything that comes out next? I don’t know what it will be,” said Turner’s Levy. “What I do know is this. The early adopters for all this new technology are men, 18-34. Those are the ones that also watch sports, as well.”

    It’s not just the national channels. Some RSNs see the TV Everywhere concept as a way to expand their business.

    “The multiplatform approach that is so much a part of TV Everywhere? Of course I buy into that,” said SportsNet New York President Steve Raab. “But there is a lot of content that various segments are passively interested in. Sports may be the only content that a meaningful segment is passionately interested in.”

    Bratches agreed, adding that ESPN’s experience has been that ESPN’s mobile and broadband applications effectively push viewers to watch more ESPN on television.

    “The value of sports has extended well beyond the linear television platform,” he said. “The aggregation of all of the nonlinear components is meaningful but also driving incredible value back to the core. We talk about the best available screen a lot at ESPN. We’re buying rights for what the best available screen is.”

    As networks build out their digital and mobile businesses, sports properties see a new batch of rights that will continue
    pushing media rights fees higher.

    “TV Everywhere is a reality. We buy into it,” said the NHL’s Collins. “Our fans are tech savvy. They want the games. We see that they consume the games in many different ways.”

  • Wimbledon media rights drawing interest

    A potential bidding war is developing for Wimbledon’s media rights, with NBC/Versus, ESPN, Tennis Channel and Fox expressing some interest.

    Wimbledon’s rights deals with NBC and Tennis Channel end after next month’s tournament. The tournament’s deal with ESPN runs for two more years, ending after the 2013 tournament.

    GETTY IMAGES
    Wimbledon’s rights deals with NBC and Tennis Channel end after next month’s tournament.
    NBC’s current four-year deal averages out to $13 million per year. It’s not known how much the All England Club is seeking in the new deal.

    Tennis Channel’s rights appear to be most at risk. Tennis Channel holds a secondary cable package that gives it an exclusive prime-time window to re-air matches that occur earlier in the day. On occasion, Tennis Channel has shown some live matches during the past several years when ESPN did not have the shelf space to carry them all.

    NBC is seeking to pick up that package for Versus, believing that it would be easier to share content between the two Comcast-owned channels. Such a move would position Versus as more of a legitimate competitor when ESPN’s package is available.

    NBC Sports President Ken Schanzer is handling the NBC negotiations. Schanzer announced his retirement May 26 but has told Comcast that he would stick around through the summer, in part, to close the network’s Wimbledon negotiations.

    NBC has drawn fire for its strategy of showing many Wimbledon matches on tape delay. Sources said any new broadcast contract would mandate that matches be carried live and in-progress.

    ESPN has been making noise about trying to pick up NBC’s package and move it to cable.

    Last week, ESPN signed a four-year deal for the Australian Open and French Open. It will cover the finals of the Australian and through the women’s semifinals of the French.

    Fox has not carried professional tennis before on its broadcast network. Its executives have looked into crafting a deal, but any deal with Fox would be considered a long shot.

    Staff writer Daniel Kaplan contributed to this report.


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