The future of sports TV rights fees, and how it could affect the XFL

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MarkNelson
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The future of sports TV rights fees, and how it could affect the XFL

Post by MarkNelson » Sat Oct 24, 2020 12:12 pm

Massive television contracts come at a time when television ratings are down nearly across the board. How will XFL 3.0 fair?

https://xflboard.com/news/the-future-of ... t-the-xfl/

Good article by Greg.

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Re: The future of sports TV rights fees, and how it could affect the XFL

Post by GregParks » Sat Oct 24, 2020 2:03 pm

Couple things I learned while writing the article:

1) We usually look at ratings in the context of what kind of ad revenue can be brought in, but while that's obviously still important, squeezing as much $$ out of cable companies for carriage fees has become more of a priority, especially with so many folks cutting the cord. Therefore, live sports have become even more valuable.

2) The sports rights fee bubble hasn't burst - some had assumed it would because of the pandemic - but the leagues benefitting from it are the ones that have a proven track record. Second-tier leagues or minor leagues may still struggle to be a part of the financial boon. I don't know if we have enough evidence to say for sure yet on the latter, though.
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Re: The future of sports TV rights fees, and how it could affect the XFL

Post by 4th&long » Sat Oct 24, 2020 6:28 pm

GregParks wrote:
Sat Oct 24, 2020 2:03 pm
Couple things I learned while writing the article:

1) We usually look at ratings in the context of what kind of ad revenue can be brought in, but while that's obviously still important, squeezing as much $$ out of cable companies for carriage fees has become more of a priority, especially with so many folks cutting the cord. Therefore, live sports have become even more valuable.

2) The sports rights fee bubble hasn't burst - some had assumed it would because of the pandemic - but the leagues benefitting from it are the ones that have a proven track record. Second-tier leagues or minor leagues may still struggle to be a part of the financial boon. I don't know if we have enough evidence to say for sure yet on the latter, though.
GP -

1) Carriage fees have been the main driver for ESPN (etc...) for years and one of the reasons cable cost so much to the consumer. Network signs big sports deal, Network demands higher carriage fees from cable operators, cable operators pass that cost on to consumers.... like they would a tax. Its why ala cart pricing never happened because networks have muscle over cable operators and force them to pay for all their channels. Consolidation in media also hurts that.
Le's not discount advertising altogether... its still important too.

HOWEVER, streaming may allow them to get somewhat around the cable companies. Yet Cable companies are the primary way the internet is delivered, at least for now.

Streaming may also COST they big networks big over time... as major talent is just bypassing nets and streaming themselves directly. Look at Outkick, Joe Rogan, Bill O'reilly and others. At some point the NFL may stream itself.

Having said all that..... This is all mid-term - in near-term Cable will dominate sports rights deals. Once Amazon and Netflix decide to drop coin.... look out.

2) Agreed that the rights fees haven't burst. Because of what you mentioned and 80-85% of people still use cable.
I disagree with the 'niche' sports being left out. Granted major sports will get more money. But the XFL averaged 1.3million a game. That IS major in actuality.
Also Niche sports will be needed to justify these channels to consumers. They need a menu of sports options. Now low rating sports=non desirable to consumers. Those may suffer.

(from the article)
>> Despite how much has changed in sports over the last several months, one constant is that for the XFL to survive, it will have to get a well-paying television deal. Dany Garcia and Dwayne Johnson know that, and unlike McMahon, are looking for one right off the bat – they’re unlikely to be willing to spend as much as McMahon had planned to make it work. <<

I've stated this as well, and why them not playing a season in 2021 is a major disappointment to me. Its proof they don't have or are unwilling to spend the money. They are going to they be in XFL 3.0 total rebuild and they have lost all momentum. FoxSports is hedging big time by signing a deal with the TSL. They are looking to use the XFL's high ratings success to get a TV deal, they needed to strike while the iron was hot. But the yr delay just muted that potential. VM may be needed as a white knight here.

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Re: The future of sports TV rights fees, and how it could affect the XFL

Post by GregParks » Sat Oct 24, 2020 6:43 pm

You're right of course that carriage fees have always been important - but they're MORE important now because of the cord cutting as well as how important live sports (and thus those networks) have become to cable companies. As you said, if Amazon or Netflix or one of the bigger streaming services decide to get into the game, that could change the landscape significantly. In conversations, including on here, we tend to think of ratings in terms of ad revenue for the network rather than carriage fees, which is why I wanted to include that angle.

I HOPE that niche sports or leagues (of which for the purpose of this conversation I'll consider the XFL) aren't left hanging out to dry in all the big money being thrown around. But it's not a good sign that Vince McMahon couldn't get the XFL a paying deal initially, even for as effusive as ESPN was in its praise of McMahon in their court filing to get their TV contract left out of the bankruptcy purchase. Maybe the viewership numbers for the five weeks were enough for someone to take a chance and back up that dump truck full of money for the league, but that's an awful small sample size to use as reference.
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Re: The future of sports TV rights fees, and how it could affect the XFL

Post by 4th&long » Sat Oct 24, 2020 7:07 pm

GregParks wrote:
Sat Oct 24, 2020 6:43 pm
You're right of course that carriage fees have always been important - but they're MORE important now because of the cord cutting as well as how important live sports (and thus those networks) have become to cable companies. As you said, if Amazon or Netflix or one of the bigger streaming services decide to get into the game, that could change the landscape significantly. In conversations, including on here, we tend to think of ratings in terms of ad revenue for the network rather than carriage fees, which is why I wanted to include that angle.

I HOPE that niche sports or leagues (of which for the purpose of this conversation I'll consider the XFL) aren't left hanging out to dry in all the big money being thrown around. But it's not a good sign that Vince McMahon couldn't get the XFL a paying deal initially, even for as effusive as ESPN was in its praise of McMahon in their court filing to get their TV contract left out of the bankruptcy purchase. Maybe the viewership numbers for the five weeks were enough for someone to take a chance and back up that dump truck full of money for the league, but that's an awful small sample size to use as reference.
BTW good article.

I don't think so GP. XFL at 1.3million a game is huge in sports. And FB itself is not a niche - its the league that's new.

This is where it gets interesting in your comments above - you say VM could not get a paying deal... out of the chute. Perhaps or perhaps not. His strategy all along was to spend $300mm, 3yrs on the 2 major nets / 4 channels and get the league established in a HUGE way. Now was it OL who made the deal or VM ? OL may have pushed the deal knowing VM offered up $300mm. But I'm not sure VM liked that deal.

Either way I totally understand why the Nets wanted to see first before signing. Its very possible the Bankruptcy was to get out of the non-paying deal after seeing the beyond expectations TV ratings and attendance. Then he could renegotiate for a paying deal in 2021. But some jackasses didn't want VM back. The new owners seemed to be thinking the same but the nets weren't buying into the new group like they did VM. And here we are.

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Re: The future of sports TV rights fees, and how it could affect the XFL

Post by laxtreme56 » Sat Oct 24, 2020 10:29 pm

I don't see niche/2nd tier sports getting any relevant TV money for at least 5 years. The Arena League averaged over a million its 4 years on NBC and the Peacock network never paid the league a penny even with the large amount of advertisers it received. If the XFL or any new league is going to get paid, it will need to look outside of the broadcast nets. If I'm the Rock and co. I'd be talking to DAZN, Amazon Prime, and other that are willing to fork over $20 million+ for exclusive rights to 2 games a week, with the rest being on cable.

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Re: The future of sports TV rights fees, and how it could affect the XFL

Post by 4th&long » Sun Oct 25, 2020 12:55 am

laxtreme56 wrote:
Sat Oct 24, 2020 10:29 pm
I don't see niche/2nd tier sports getting any relevant TV money for at least 5 years. The Arena League averaged over a million its 4 years on NBC and the Peacock network never paid the league a penny even with the large amount of advertisers it received. If the XFL or any new league is going to get paid, it will need to look outside of the broadcast nets. If I'm the Rock and co. I'd be talking to DAZN, Amazon Prime, and other that are willing to fork over $20 million+ for exclusive rights to 2 games a week, with the rest being on cable.


Arena getting 1mm (actually dropping under 1mm) on NBC at that time was under performing (2003-2006). XFL getting 1.3mm on mixed Broadcast/Cable in 2020 was way over performing. Different times different expectations.

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Re: The future of sports TV rights fees, and how it could affect the XFL

Post by laxtreme56 » Sun Oct 25, 2020 12:18 pm

4th&long wrote:
Sun Oct 25, 2020 12:55 am
laxtreme56 wrote:
Sat Oct 24, 2020 10:29 pm
I don't see niche/2nd tier sports getting any relevant TV money for at least 5 years. The Arena League averaged over a million its 4 years on NBC and the Peacock network never paid the league a penny even with the large amount of advertisers it received. If the XFL or any new league is going to get paid, it will need to look outside of the broadcast nets. If I'm the Rock and co. I'd be talking to DAZN, Amazon Prime, and other that are willing to fork over $20 million+ for exclusive rights to 2 games a week, with the rest being on cable.


Arena getting 1mm (actually dropping under 1mm) on NBC at that time was under performing (2003-2006). XFL getting 1.3mm on mixed Broadcast/Cable in 2020 was way over performing. Different times different expectations.
We're also looking at a very small sample and the trend was going downward. March Madness hadn't even started nor the NBA/NHL playoffs. If it took the XFL 1.0 trajectory week 8 could have seen some disastrous numbers. Had the ratings stabilized in week 3 and climbed thereon out, I'd completely agree with you. However, the trend was not too promising

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Re: The future of sports TV rights fees, and how it could affect the XFL

Post by johnnyangryfuzzball » Sun Oct 25, 2020 1:17 pm

The XFL had the benefit of good ratings. Better than the NHL's (which NBC paid hundreds of millions per year) and competitive with the NBA (which gets billions).

The fact is that any first-year league is going to have doubts as to whether it can draw an audience. The networks prefer something proven. The XFL, thankfully, has a good track record at this point.

Now, as for this other theory that they shouldn't bother with traditional TV and should just try to get money from a streaming service: McMahon had originally suggested that when the league launched. They weren't buying. Big Tech, even more than the linear networks (who have 24-hour linear schedules to fill), demands proven product if they're going to pay for it. The rest of what I'm about to say, I know I've said before, but I'll reiterate it to prove my point:

Amazon Prime paid only a tenth of what Fox did for Thursday Night Football, with very little hand (or expense) in production. Amazon is one of the big players in Big Tech, bigger than Twitter. Yet their viewers are typically under a million. The only one with a bigger reach and a logistical fits are Facebook/Instagram and Youtube/Google. How many sports rights has Facebook Inc. bought? None. And YouTubers are just going to pirate the games anyway.

DAZN is a non-factor. The XFL shouldn't want anything to do with an online pay-per-view streamer like DAZN or FloSports. They may work for niches: college sports where the fans are personally invested with the teams, and will pay to see their family members and classmates play. But a broad-appeal league like the XFL needs a broad audience, which is exactly what those sites DON'T provide. Even if Lenny Blavatnik (DAZN's owner) did fork over tens of millions for exclusive XFL rights, languishing on a platform nobody uses would be deadly to the league as a whole. The Oakland Athletics learned that earlier this year with their radio contract. Apple's about to learn that with the Charlie Brown library (even though that's not sports, unless you consider Lucy pulling the football away a sport).

The best option the XFL has remains a broadcast contract with an audience as broad as possible. This is still an upstart brand in its early stages. I think with one more season of proof that it can draw and keep an audience on par with the NHL or NBA, then we can talk about paying deals. But the league isn't there yet.

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Re: The future of sports TV rights fees, and how it could affect the XFL

Post by Tank55 » Sun Oct 25, 2020 2:12 pm

johnnyangryfuzzball wrote:
Sun Oct 25, 2020 1:17 pm
DAZN is a non-factor. The XFL shouldn't want anything to do with an online pay-per-view streamer like DAZN or FloSports. They may work for niches: college sports where the fans are personally invested with the teams, and will pay to see their family members and classmates play. But a broad-appeal league like the XFL needs a broad audience, which is exactly what those sites DON'T provide.
Totally agree. Something that a lot of people already have, like Netflix or Amazon Prime might work for the back end of the inventory, but if you're basically asking fans to sign up for a new service just to watch the XFL, you're no longer trying to expand your audience. That's a death sentence for a product in its infancy.
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