Media Rights Issues in Sports Are Costly!

photo: ESPN.com

Has anyone ever wondered about the cost a television station is charged to broadcast a sporting event?  DNS-NFL will review several media rights issues in professional and collegiate sports.   

Professional Sports

According to Sporting News.com, the NFL was receiving $4 billion annually from their broadcast partners for fees running through the 2013 contract.  The NFL lockout of 2011 was largely due to shared revenue issues amongst the NFL Player’s Association (NFLPA) and the owners.  According to Bleacher Report.com, the NFL negotiated TV rights for over $7 billion annually with the networks on a nine-year extension.  Broadcast rights were estimated to reach $8 billion annually and renegotiations in the new Collective Bargaining Agreement (CBA) would determine which party would receive more annual revenue.

According to Forbes.com, the NBA currently receives $930 million annually in media rights fees.  MLB currently receives $711 million annually in rights fees, according to the New York Times.com.  Renegotiations loom large for MLB between 2013-2014.  One pro MLB team who is one of the biggest benefactors in rights fees is the New York Yankees.  The Yankees receive a hefty $90 million a year from their own YES network, according to Bleacher Report.com. NBC and their Versus Network locked in the entire NHL for a record $200 million annually in TV rights, according to NHL.com.  NBC will broadcast the Stanley Cup playoffs nationally for the first time ever, according to NHL.com.

Even though golf may not be the minute-to-minute action packed sport, golf is always filled with intense anticipation.  Since pro golfer, Tiger Woods entered the PGA scene in 1997 the golf purse has skyrocketed from $80 million to $280 million in 2011, according to ESPN.com.  In 2011, the PGA Tour signed a nine-year TV contract with CBS Sports and NBC Sports, according to ESPN.com.  "In our business plan, we did not assume any golfer was going to be as dominant as Tiger had been in the past," stated by CBS Sports chairman Sean McManus, according to ESPN.com.  PGA commissioner Tim Fench did not want to disclose the dollar figures of the new media rights deal, according to Multi Channel News.com.  One thing we know for sure, Woods has helped the PGA Tour establish media rights relevance.

Collegiate Sports
The number one player in sports media seems to be ESPN.  Yes, every state has their local affiliate televising college games in addition to cable and satellite providers showing their sports packages.  No matter how much you watch ESPN, you always seem to see some type of college programming on the variety of ESPN channels. 

ESPN and the ACC were working toward an agreement to establish an ACC Network, but media right holdups have stalled their plans.  In 2010, the ACC signed a media rights deal with Raycom Sports Network (RSN) through 2027, according to Sports Business Daily.com.  One of the TV rights holdups is the sublicensing deal the ACC has in televising live games through RSN with Fox Sports Network (FSN).  Currently, ESPN is not willing to move forward on creating a network for the ACC unless all licensing fees are packaged together, according to Sports Business Daily.com.

There is one collegiate network ESPN is ready to move forward on.  ESPN is ready to launch its latest installment of college networks for the Southeastern Conference (SEC).  According to Chris Smith of Forbes.com, the SEC was previously under a 2008 contract receiving $205 million annually for media rights.  Now, the SEC just signed a 20-year contract extension with ESPN worth $289 million to become the richest partner in college programming, according to Alicia Jessop of Forbes.com.

Media Rights Issue Conclusion
In conclusion, media rights issues have caused major headaches for sports organizations and TV networks.  Professional sports entities like the NFL and NBA’s media rights issues involve CBA renegotiations.  The NFL and NBA renegotiated to have their league receive more revenue from TV rights.  This helps to safeguard smaller market teams from loosing overall shared revenue.

MLB sees a greater future in media rights deals while the New York Yankees have found a way to cash in on media rights success as well.  The NHL has seen media rights success slowly rise while preparing for national playoff recognition.

For years, professional golf had a difficult time sustaining media rights contracts, but enter Tiger Woods and the game changed.  Tiger has allowed lucrative media rights deals that were never available previously.  Every golfer and media sponsor has been thanking Tiger ever since 1997.

According to Sports Business Daily.com, media consultant, Chris Bevilacqua felt ESPN had an opportunity to create a network prior to the RSN existing media rights contract.  Additionally, the SEC seemed to wait so long to renegotiate their TV contract, due to the media right issues revolving around how much they could receive.  According to Forbes.com, the Pac 12 and Big 10 both receive over $250 million annually from ESPN.  The SEC waited for the right time to renegotiate and made the deal the most lucrative as possible.  However, the ACC moved forward and created a media distribution deal with RSN and a sublicensing deal with FSN.     

The rights to broadcast sporting events have every sports station clamoring for bigger and bigger contracts or long-term contract extensions.  This spike in media rights prices bodes well for sports organizations and networks.  The long-term question I have is…what price will fans start paying at the arenas and in their living rooms to watch these events?

I am not too sure what the prices will be at arenas and stadiums, but I will be paying the price to watch the sporting events at home!