Here's a look at the intersection of the business of sports and business by Rick Horrow and Brian Finkel of Horrow Sports Ventures.
NFL’s Big New TV Deal
As NFL fans eagerly flocked back to their big screen TVs on yesterday, so too did advertisers. The league is seeing some of the heaviest activation around NFL football in many seasons, with ESPN providing one of its biggest platforms.
The NFL and ESPN announced an eight-year extension to their existing media rights agreement that is worth $1.8 billion per year, an astounding 63% increase over the average amount of the current deal. The agreement will keep “Monday Night Football” on ESPN through 2021, and gives ESPN an increased array of digital rights that will allow the cable network to stream live games via broadband, tablets, and hand-held devices.
NBC, the NFL’s partner for “Football Night in America” every Sunday, is certainly not left out in the cold. The network announced that it has just five spots left for February’s Super Bowl broadcast, despite a record price tag of $3.5 million on average for a 30-second spot. Last season’s game on Fox averaged $3.0 million per spot, but did not sell out until late October.
U.S. Open Wrap Up
We know the U.S. Open means millions of dollars for the greater New York economy, but how much might shock you. According to a study a commissioned and released by the USTA, the U.S. Open generates $750 million in annual economic impact for New York. The total dwarfs the projected $550 million the 2014 Super Bowl could bring to the region, though it isn’t exactly apples-to-apples when comparing a two-week tournament to a one-night game. The Open’s economic impact was last measured at $420 million in 2001.
With an event that big, some companies inevitably try to capitalize on the influx of people. The USTA is particularly mad about blatant ambush marketing by Stella Artois around the Open. Stella had 15 prominent ads posted just off the Long Island Rail Road, which services thousands of people daily. Heineken has been the Open’s official beer sponsor since 1992.
League TV Networks
Apparently, sports entities aren’t big-time unless they have their own TV network. The newest organization in the TV space is World Wrestling Entertainment, which plans to launch its own channel sometime next year. The WWE Network will offer 24/7 programming of its greatest matches, moments and superstars. WWE’s Monday Night Raw consistently is one of the highest-rated TV shows on cable.
NFL Network grew to 60 million subscribers this summer signing a carriage agreement with Charter Communications. The network now is on seven of the top eight U.S. TV providers. League officials continue negotiating with Time Warner Cable, which could increase NFL Network’s carriage by another 12.5 million households.
Meanwhile, Cablevision and Verizon pulled the Tennis Channel from its systems amidst a carriage dispute. The decision couldn’t have come at a worse time for the Tennis Channel, which was midway through the U.S. Open when the decision was made.
League Sponsorship Deals
PepsiCo signed a 10-year extension of its NFL sponsorship reportedly worth a total of $2.3 billion. The deal, which runs through the 2022 playoffs, includes Pepsi brands Gatorade, Pepsi MAX, Frito Lay, Quaker Oats and Tropicana. Pepsi also has league-wide deals with MLB, MLS and the NHL.
In the NBA, the league signed Sprint Nextel to a four-year, $250 million sponsorship deal despite the ongoing lockout. Sprint reportedly is paying 15-20% more than the league’s previous wireless sponsor T-Mobile did. Sprint subsidiary Boost Mobile recently signed a big sponsorship with the WNBA.
These two deals indicate two things. First, they show how great the disparity in value is between the NFL and everyone else. And second, sponsors continue to view sports as a prime way to reach and engage consumers.
Rick Horrow is the "Sports Professor," and is the Sports Business Analyst for Fox Sports. He has been the Visiting Expert on Sports Law at the Harvard Law School, and has authored "When the Game Is on the Line" and "Beyond the Scoreboard: An Insider's Guide to the $750 Billion Business of Sports." His show "Beyond the Box Score" is posted on a weekly basis on FoxSports.com, and the latest emerging trends in sports business can be found at www.horrowsports.com.