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Volume 21 No. 1
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WCOS: Pay-per-view prediction

The World Congress of Sports moved to the West Coast for year three, specifically the Four Seasons Hotel in Newport Beach, Calif. The overall theme was the convergence of sports and entertainment, and panelists tackled a variety of far-reaching issues.

One panel looked at whether sports properties were hurting their growth potential by moving from networks to cable, lured by hefty media rights paydays. Another panel featured a lively exchange over who is truly responsible for rising player salaries — the owners or the players unions. And yet another addressed the potential for the International Olympic Committee to place spending limits on host countries, as construction in Beijing went into overdrive.

Pay-per-view prediction

Fox’s David Hill (center) joined other sports leaders to discuss the future of the industry.
Fox’s David Hill said he saw a real possibility of teams and leagues trying to sell games through pay-per-view in the future as a major revenue stream, much like they relied on ticket sales in the past.

“In the future, the stadium is worldwide. It means leagues and sports teams can control the egress that the public has to them, so the day will come — but it is not going to happen in the next decade, in 20 years — that everything will be [PPV] and you will be buying a ticket and you will have a worldwide stadium.”

Is moving to cable a short-sighted decision?

Dick Ebersol
Fox Sports TV Group Chairman David Hill indicated that sports leagues that take more lucrative cable deals as major networks tighten their purse strings may be risking their sports’ long-term popularity.

“As soon as sports leaves [free] television, you virtually guarantee you can’t grow that fan base,” Hill said. “You are almost guaranteeing that the people tuning in are [already] fans, and if that is the case, your fan base continually erodes. … That is what is happening with the NBA, the ratings are dropping.”

Tony Ponturo, then vice president of global media and sports marketing for Anheuser-Busch, echoed the sentiment. “The decisions sports teams are making are, ‘No. I can’t say less; I have to say more. What allows me to say more?’ That structure points to pay cable. That is lower ratings. … That is not necessarily good for the product.”

NBC Sports & Olympics Chairman Dick Ebersol said: “As you gravitate to cable, you will get the money, but what is your opportunity to reach the casual viewer and make that person a branded lover of your sport? That is what is lost.”

Despite such warnings, there was no letdown in the migration to cable. Some of those making the move most recently include the BCS championship, most of the NASCAR Chase for the Sprint Cup races, and the British Open.

Competition for ESPN?

NESN President Sean McGrail addressed the possibility of someone stepping to the plate to take on ESPN.

“Between them and all the regional sports networks … I’m not sure there’s enormous demand. And from what I’ve heard from cable operators, I’ve never heard the appetite to support another network.”

No new venture was launched, but when Comcast completed its purchase of NBC at the start of 2011, it created a formidable foe for ESPN. Combining the likes of NBC with Comcast’s Versus and family of regional sports networks creates a company that may be able to go toe-to-toe with ESPN on future rights deals.

Recalling 'Playmakers'

One panel tackled the issue over whether ESPN was right to pull the plug on its “Playmakers” series in 2003, after the NFL complained about the series’ portrayal of professional football players.

Orly Adelson, who served as executive producer of the series, said ESPN had refused requests by other networks to resurrect the series.

Mandalay Entertainment Group Chairman Peter Guber said that ESPN didn’t make a mistake by airing the show, and should be commended for taking a risk.

“I think the real challenge is to the NFL to realize that, at the end of the day, dramatic narrative and story telling is their business. They are in the emotional transportation business. … They are not in the hut, hut, hut, hut, business. If they embrace that, they will continue to grow their league; if they don’t embrace risk and story telling as part of the process, they may go the same way as some other leagues we know.”

However, Rick Dudley, Octagon Worldwide president and CEO, said ESPN could have risked its relationship with the NFL had the series continued.

“I think the distributor [of sports content] has a responsibility as a caretaker. … And I know the guys at the league were very, very upset and the players association was upset.”

Spending limits

While the world looked forward to the 2004 Olympics in Athens, an Olympic marketing panel couldn’t help but look ahead to the 2008 Games in Beijing. The question was whether Beijing’s over-the-top infrastructure projects would force the International Olympic Committee to set limits on such spending.

“In the Beijing region, they’ll add more power than England has in existence today; they’ll build a whole new city for the Games,” said Mark Lewis, then vice president of General Electric’s Olympics sponsorship division. “I feel sorry for the winning city in 2012. The IOC is already addressing cost containment, and [IOC President] Dr. [Jacques] Rogge is talking about white elephants and the concern of cost containment.”

The IOC continued those talks, but so far, no spending limits have been established for future hosts.

Labor pains

As the NHL faced a labor showdown with players, the labor relations panel was front and center.
During a panel on labor relations, the rhetoric was heavy as the NHL crept closer to a work stoppage. One exchange came between the NHLPA’s senior director of business affairs at the time, Ted Saskin, and NHL chief legal officer Bill Daly (now the league’s deputy commissioner).

Saskin seemed to upset Daly by maintaining that the current labor market was controlled by the owners. “One thing the union does not do is we do not set wages,” Saskin said. “The owners set the wages in our system. It’s a marketplace system.”

“Yeah, it’s a marketplace,” Daly retorted. “It’s a total free marketplace. There’s an entry-level system, there’s restricted free agency, there’s salary arbitration, there are minimum salaries and there are qualifying offers. It’s a marketplace defined by its rules.”

The NHL’s labor battle led to the league canceling its next season.

Bullish on NFL rights fees

OMD Managing Director Ray Warren discussed whether the NFL could keep up its TV rights increases, since NBC had bowed out the last time.

“I’m not sure that the NFL won’t do real well next time rights come up,” Warren said. “‘Friends’ cost NBC $10 million an episode, and they will probably spend $2 million to replace it. That leaves about $200 million, and so NBC might think, ‘What if we replace ‘Friends,’ the highest-rated show on our network, with the NFL, the highest-rated show?’ And why wouldn’t NBC want to package the NFL and the AFL together, giving them six months of football? I don’t think the NFL is going to have a problem.”

No problem, indeed, as networks continued to dig deep for NFL rights. As for NBC, it’s in an eight-year, $4.82 billion deal with the NFL that runs through 2013.