18 March 2016

The Sports Industry and Television Rights

Guest Post by Kyle Artus
The average American will spend 9 years of their life watching television. [1] Months, or perhaps years, will be spent watching sports. Sports are becoming a bigger and bigger part of everyday life in America. Parents bring their kids to practice or games, athletes play, train, or practice, and fans will watch games and support their team every day. Due to the huge businesses that both sports and television have become, they now have a huge overlap. Sports teams and leagues make billions of dollars just by selling the right to play their games on television. Television stations engage in bidding wars to get these rights. More and more every year, the biggest product coming out of the sports industry is their television rights.

Television networks spend a tremendous amount of money every year to put major league sports on their network. For example, Fox, CBS, and NBC combined pay upwards of 2 billion dollars a year to broadcast NFL games. [2] ESPN and TNT pay about $2.66 billion every year for NBA games. [3] Fox and Turner Sports pay about $800 million annually for MLB games. [4] This is a huge source of revenue for teams and sports leagues. As this revenue source increases, it becomes more and more of a focus for the team owners. Teams and leagues are going to want to make their sports more TV friendly in order to maximize their potential for TV money. This is becoming evident in many professional sports leagues in America. The NFL has more stoppage of plays and commercial breaks than ever before, with an average of 20 commercial breaks and over 100 total advertisements. [5] The NFL game is prime for television, and this is one of the reasons that their TV rights cost so much. Millions of people watch every game and there is plenty of time for the television stations to make money by selling commercial slots.

In the NBA, the league is considering placing advertisements on their jerseys. [6] Now this is not directly related to their TV rights, but it could affect them in the future. With advertisements on the jerseys, and millions of people watching the games on television, the price for a company to place an ad on jersey could be astronomical. It is being reported that these ads would bring in approximately $100 million. [6] This could impact future deals with the NBA’s TV rights. If they get a new deal that expands their TV presence, more games on more nights on a more nationwide basis, these ads could become even more valuable. More people will see them and therefore, the NBA could charge more for them. In the not-so-distant future, I believe seeing jerseys like the one in the picture below will be unavoidable.

Major League Baseball has started experimenting with ways to speed up their games and make it more TV friendly. They have implemented rules such as strictly timed commercial breaks, requiring batters to keep at least one foot in the batter’s box between pitches, and making the managers stay in the dugout during replay reviews. Additionally, they implemented a pitch clock in the minor leagues to ensure that a pitch is throw in a reasonable amount of time. [8] This comes as perhaps a way to make the game more exciting and quick to appeal to a new generation of fans. This will make it easier for people to sit down and watch a game on television as a large complaint against baseball was the pace and how long games can be. This can only increase their appeal to television stations and could increase the value of the MLB’s television rights.

As teams and leagues make more money off of television, the games change to reflect this. It is smart business to try and make your product more appealing. As TV rights become a larger part of the revenue stream, the product that the sports industry is selling becomes more about the appeal the sport has for television. This could be great for sports fans as they could have a more accessible game to watch on TV. But it could also cause problems for traditionalists and sports purists. As the game is changed to becoming more appealing for television, some of the culture and what made the game so popular to begin with could be lost. It will be important for professional sports leagues to try and balance the changes that they do or do not make. They will need to consider how much they can change before the game becomes unrecognizable. They need to find a balance between making small changes that may help the game, and selling out to advertisers and wherever the money is coming from.

[1] http://www.statisticbrain.com/television-watching-statistics/
[2] http://espn.go.com/nfl/story/_/id/7353238/nfl-re-ups-tv-pacts-expand-thursday-schedule
[3] http://espn.go.com/nba/story/_/id/11652297/nba-extends-television-deals-espn-tnt
[4] http://espn.go.com/mlb/story/_/id/8453054/major-league-baseball-completes-eight-year-deal-fox-turner-sports
[5] http://qz.com/150577/an-average-nfl-game-more-than-100-commercials-and-just-11-minutes-of-play/
[6] http://www.forbes.com/sites/mattpowell/2014/06/20/sneakernomics-coming-soon-ads-on-nba-jerseys/#76998712263e
[7] http://phillysportslive.com/wp-content/uploads/2012/07/nba-jerseys.jpg (PHOTO CREDIT)
[8] http://espn.go.com/mlb/story/_/id/12351883/major-league-baseball-announce-pace-play-rules

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