TORONTO – The sheer numbers some sports produce are staggering – and we’re not talking about the ones you see on the scoreboards in the stadiums or arenas.
When it comes to sports television, the National Football League is the big kahuna. The league’s current $20 billion U.S. broadcast contracts with Fox, CBS, NBC and ESPN end in 2013, and the new deals, worth almost $40 billion over eight years will kick in for 2014.
Speaking at The Cable Show in Boston on May 23rd, NBA Commissioner David Stern told delegates that between the league, its teams and players, the league has tallied nearly 300 million followers and “likes” on Twitter and Facebook. Plus, the league, NBA.com and YouTube, will stream over a billion video highlight clips this year.
Clearly, sports is central to our culture. It was in that context that CTAM Canada convened a top notch panel Tuesday entitled: Sports Television: Will the Goose stop laying its golden eggs” which featured (pictured from left to right): moderator and Cartt.ca editor and publisher, yours truly; The Score chairman and CEO John Levy, CBC executive director of sports properties Jeffrey Orridge, Rogers Communications senior vice-president of content David Purdy, senior vice-president of Fox Networks Sean Riley, and Maple Leafs Sports and Entertainment COO Tom Anselmi. (CTAM members can go to www.ctamlive.ca to watch the whole hour.)
Despite the wild numbers we see coming from the world of professional sports (Joey Votto, the Cincinnati Reds’ Canadian first baseman this year signed a $225 million contract, for example), none of the guests on the panel said they can foresee the end to the growth in the costs for sports rights on television.
“We obviously have bet that sports are not fully valued,” said Purdy to about 100 CTAM members who gathered on the set of Hockey Night in Canada at the CBC’s Toronto headquarters for the panel. “Networks that rebroadcast CSI or movies ad infinitum, that’s the type of thing that seems to be under pressure from Netflix and over the top disruptors, but live sports, local sports, that seems to have real value for the customer.”
Fox’s Riley noted that back in 1991 when he was with Sports Channel New York and then again in 2001 when baseballer Alex Rodriguez first signed a $200-million-plus contract, many predicted doom. “I’ve been hearing for 20 years there’s this bubble in rights fees and they can’t possibly go any higher,” he said. “Everyone said ‘oh my gosh, it can’t go any higher,’ but it’s just gone higher and higher and higher.”
There is just nothing else like sports (pro or amateur) in the TV lineup. People are passionate about their games and about their teams (how many people will paint their faces with the Big Bang Theory’s logo?) and want to see it all live. The best part for the broadcasters and their sponsors is sports reaches the elusive 18-25 year-old male. “(Sports is) one of the only places where you can deliver them consistently night after night. You can rely on sports. People are home when the game is on and it delivers,” explained Riley. “That’s only going to become more valuable as time goes on. I don’t really see it levelling off or slowing down or anything because the demand is just there.”
“Sports is the ultimate reality show, except the talent costs a bit more,” added Anselmi. “It’s aspirationally important to people, it’s culturally important, it’s transactionally important. It has so much going for it that a lot of the conventional content doesn’t.”
However as costs go up and as teams, leagues, associations and even amateur groups who were once happy just to get on TV charge more, broadcasters pay more and pass the costs onto their advertisers and distributors, who of course must pass them on to paying customers. Now though, some consumers, especially the non sports fans, are starting to chafe at paying so much for content they don’t want.
Taking his content and team cap off and replacing it with his distributor hat, Purdy noted the entry level price for cable is closing in on $40 a month, with “a huge portion of that is attributed to the local or national sports that are in those packages… The problem we have as a cable industry is we’re fearful that the entry level price point for subscription television is going to be so high, predicated on the need to have sports in the package, that we’re going to start having people bypass that” and find other ways to get to the content they want.
“If you’re loading that much cost in your basic package, are you running the risk of over-the-top disruption? That’s the negative side of this story,” added Purdy.
“I think that sports should be free over-the-air,” chimed in Orridge, espousing the OTA line.
“What you’re saying is it should be in front of the widest audience possible. And that’s how we feel it should be on basic cable, which is the same argument,” said Riley, reacting to Orridge. “I suppose I could x-out some of the kids channels I don’t watch and I could x-out Lifetime and a bunch of other channels but if we look at our cable bills that way, then it’s leading you down the road of some weird a-la-carte offering where now you’re ruling out different networks for different reasons and then the average cost to the consumer actually goes up for the same number of channels. Then the model just breaks down.
“It’s important for cable operators to remind their customers they are getting a heck of a value,” he added.
What’s really, dramatically, boosting the popularity of sports is the new multiplatform world. Stern said in Boston the NBA’s liberal online video highlights policy “just makes fans hungrier” for the games and their favourite teams and players.
Anselmi and Purdy said the entire Canadian sports industry learned a lesson from the Canadian Football League’s disastrous blackout policy in the 1980s and 1990s where the league preferred one platform (the stadium) over another (the television). If games weren’t sold out, they were blacked out, locally, on TV. That helped raise a generation of Canadians (Torontonians especially) who care little about the CFL because they rarely saw the Argonauts on television.
That policy “basically killed their brand and killed their product,” said Anselmi. That is, until TSN stepped in and basically saved the league with Friday Night Football, building the league into the centrepiece of its summer programming.
That lesson has been carried through to today where sports teams and broadcasters want to be in front of their fans, or in their hands, however and whenever possible on whatever platform possible. The MLSE COO noted that at last count there were 150 YouTube channels dedicated to the Toronto Maple Leafs, just one of which is run by the team, and “it’s probably in the top 10 in quality, but there’s at least nine others that are just as good or better,” he said. Heck, the Leafs even hired one of the YouTubers. “We hired this crazy kid who… was producing this stuff on a little camera in a basement and he had developed a following.”
Non-stop talk via texting, Twitter, Facebook and other comment boards take a very prominent place on The Score, which doesn’t have the same amount of live content as the likes of TSN and Sportsnet. However, it has been able to take that news and information niche, brand it, make it edgy and build an audience in Canada as well as sports news apps used around the world, on a level at or near the biggest global sports media brands.
This type of constant and instant interactivity “is clearly the future of sports,” said Levy.
However, with those television rights, as we’ve repeated, constantly on the rise, can these new levels of engagement be monetized and help defray the costs? Not sure yet, said the panellists. “We don’t have to worry that we haven’t figured all of this out yet,” Levy continued. “A lot of it is incremental. We’re not talking about taking away, we’re talking about additional levels of interest.”
And with an increasingly growing level of interest, the rights costs go up (good for the teams), ad rates and sub fees go up (good for the broadcasters) and monthly cable/satellite/telco TV rates go up (good for the distributors). Not so good, perhaps though, for the consumer.
Plus, people will look at who owns all these sports brands, broadcast outlets and distributors (especially when it comes to Rogers and Bell) and wonder if they are being dealt with fairly. “A lot of people do have two hats on, and now you have three hats on,” said Levy to Purdy, pointing out his company is a team owner, broadcaster and distributor. “and that creates some of the animosity we have to face.”
