The National Hockey League has agreed to a 10 year, $2 billion U.S. broadcast rights agreement with NBC. The deal has been described by Gary Bettman as "the most significant U.S. media rights partnership". This is true, although the bar wasn't set terribly high with NBC not even paying rights fees last time around.
A few points:
(1) The old deal with Versus was for $77.5M per year, while NBC had a revenue-sharing deal that did not involve a rights fee.
(2) The new deal provides for $200 million a year for 10 years. This translates to about $6.6 million per team every year.
(4) The deal marks the first-ever national distribution of all Stanley Cup Playoffs games, including, for the first time, exclusive coverage starting with the League conference semifinals. Every postseason game will be broadcast in entirety on NBC, Versus or "a major NBC Universal national cable channel."
(5) "The deal will also extend into digital rights-- a lucrative growth area for networks struggling to cope with new PVR technology. There will be integration of rights' deals permitting more access to highlights and games across platforms. But the league continues to control its NHL Center Ice and NHL Network properties."
While the deal is a good indicator of growth for the NHL, it pales in comparison to the other 3 major sports. The NBA generates about $930 million in television revenue, while MLB and the NFL (the latter being the Ari Gold standard) are in the billions.
To put it in perspective, the NFL was able to negotiate a deal worth $4 billion NOT to play football in 2011 (of course, Judge Doty has ruled that the NFL is not entitled to this money).
As well, each NFL team gets about $160 million a year from television revenue. The NHL figure is closer to $6 million (just enough to overpay Tomas Vokoun). Of course it's not fair to compare the NHL to the NFL, the latter being one of the best run and popular businesses in the U.S.
The deal does represent good forward momentum for the NHL. However, a few thoughts:
(1) By agreeing that NBC could match the offers made by other networks, the NHL undermined its own position as far as securing the most revenue possible. By being able to match, the NBC could start low, sit back and just match on a go-forward basis.
(2) What is the opportunity cost of NOT being on ESPN? Getting on ESPN was important for the NHL, and a number of owners preferred ESPN to Comcast. The last time around when ESPN didn't renew its hockey deal, NHL coverage on ESPN was spotty at best.
The exposure the NHL would get through ESPN would be highly beneficial for its brand. Not only games but also news coverage, which is a form of promotion.
And don't forget, ESPN also has the NFL through to 2023. That means lots of people will be watching the network (it has a subscriber of 100 million worth $6 billion). So being on ESPN gets the NHL lots of eyeballs.
The exposure the NHL would get through ESPN would be highly beneficial for its brand. Not only games but also news coverage, which is a form of promotion.
And don't forget, ESPN also has the NFL through to 2023. That means lots of people will be watching the network (it has a subscriber of 100 million worth $6 billion). So being on ESPN gets the NHL lots of eyeballs.
Under the new deal, the NHL isn't on ESPN - and won't be for 10 years. That's an awful long time to not partner with the highly influential network.
(3) Many say that NHL hockey would have been on ESPN 2. So what? It's still available in hotel rooms and across America, along with ESPN, ESPN HD, ESPN Classics, ESPN Hopscotch and ESPN Watch Hosts Brush Their Teeth.
(4) Versus remains television by appointment. It is not available in a lot of hotels, and can be generally harder to find on television than an Oprah Show where she isn't screaming or talking about Gale.
(3) Many say that NHL hockey would have been on ESPN 2. So what? It's still available in hotel rooms and across America, along with ESPN, ESPN HD, ESPN Classics, ESPN Hopscotch and ESPN Watch Hosts Brush Their Teeth.
(5) Ten years is a long time to be exclusive with NBC from a national standpoint. The NFL is on every major network: ABC/ESPN, CBS, NBC and Fox. Ideally, the NHL would have negotiated deals with more than one major national network in the U.S.
(6) Perhaps the NHL is hoping that in 10 years, the NHL brand will be far more attractive and that ESPN will want it then - and be willing to pay for it.
(6) Perhaps the NHL is hoping that in 10 years, the NHL brand will be far more attractive and that ESPN will want it then - and be willing to pay for it.
So for the NHL to be tied exclusively to NBC for 10 years, not to be on ESPN for 10 years, and to share $200 million a year among 30 teams for 10 years suggest that this deal is less than ideal.
One must wonder the impact of giving NBC matching rights on the final outcome.
One more point: wouldn't hockey on ESPN be good for hockey on NBC?
One must wonder the impact of giving NBC matching rights on the final outcome.
One more point: wouldn't hockey on ESPN be good for hockey on NBC?
No comments:
Post a Comment