The obvious consensus is that the NFL will score a major boost in media rights fees.Getty Images
In the NFL’s next round of media rights negotiations, the league will see a massive rights fee increase. A tech company will wind up with an exclusive package of live games. The league will package its games differently. And a vast majority of the NFL’s games will remain on broadcast television.
That is the consensus from media industry veterans who make their living by helping leagues, conferences and teams maximize the value of their media rights. I moderated a panel at a National Association of Broadcasters conference in New York earlier this month, and the topic of what happens with NFL rights was broached immediately.
“There’s no question that the NFL is going to make a lot more money this time around,” said Chris Bevilacqua, co-founder of Bevilacqua Helfant Ventures.
The NFL’s leverage probably increased two years ago while its television ratings dropped, said Doug Perlman, CEO of Sports Media Advisors, who noted its ratings dropped less than other genres such as entertainment programming. “On a relative basis, they’re more powerful than ever — that’s something that is often overlooked. If you want to look at where you can reach significant audiences, the NFL dwarfs everyone else. There’s really no comparison.”
The NFL has been public about its desire to keep the majority of its games on broadcast television, and the panelists agreed. Tech companies may grab most of the headlines. But the NFL has long valued reach, and the executives on the panel believe the NFL will sell most of its inventory to broadcast networks.
What I found interesting was the broad agreement Bevilacqua, Perlman and Adam Schwartz, a senior vice president at Horizon Media, shared about how the NFL will be able to negotiate such big rights fee increases from networks that are experiencing slower growth due to cord cutting.
Here are two of the more interesting points:
A tech company will pick up a package of exclusive rights to live games
The sports business has been waiting for the day when tech companies get serious about picking up sports rights. All of the executives on the panel believe a tech company will step up and pay for an exclusive package.
They did not offer a prediction on which tech company it would be, but Amazon clearly appears to be a front-runner.
“This time around, there will be a material package secured by a digital player,” Perlman said. “It will not be one of the primary packages. The NFL preaches reach, and for a good reason. But it will create an even brighter future for the NFL with even more potential bidders for their rights.”
Schwartz went so far as to say he wouldn’t be surprised to see a tech company show interest in one of the Sunday afternoon packages. But both Perlman and Bevilacqua said they expect one of the smaller packages to move.
“I’m not convinced that a big tech player — because they don’t have the kind of reach that the NFL is looking for — will buy a primary Sunday afternoon package,” Bevilacqua said. “I’m just skeptical, having been on the other side of the table from the tech players, that they’re ready for an all-in jump like that and will pay for it.”
Perlman said the NFL has a good selling point with tech companies. It can point to the fact that ESPN, Fox Sports and DirecTV used NFL programming to grow their businesses as an enticement to get the tech companies to pay up.
“The NFL is going to want to explore new platforms and leverage their capability to make or break a platform and drive their fans to that platform,” Perlman said. “They will probably be a combination of those things in this next series of deals.”
NFL packages will look different
TV executives expect the NFL to combine the AFC and NFC packages into one Sunday afternoon package that could be split among two bidders. The league is exploring the possibilities of adding a 17th game and adding playoff games to the schedule — moves that would create more inventory and, presumably, higher rights fees.
“I’m most curious to see how they re-architect the packages and go into the market,” Bevilacqua said.
He also pointed to other league contracts — including the NFL’s data deal with Sportradar — as an area where the NFL could bring in a lot more revenue during this round of negotiations.
“The Sportradar deal was only a two-year deal,” Bevilacqua said. “The NFL obviously is trying to line that up for the media companies, like Fox Bet and others, to buy. … That’s where the tech guys come in. They have more flexible architecture where they can do things with video and data that traditional broadcasters can’t do. That’s where you’re going to see a lot of action.”
