LIVE SPORTS AND THE COSTS OF CUSTOMIZATION.
In December of 1988, the New York Yankees became the first Major League Baseball team to sell all of its television rights to a cable network when they announced a 12-year (YIKES!) deal with the Madison Square Garden Network. I didn’t really get into the sport until 1990 when I tore up the Queens Little League baseball circuit as a left fielder for St. Adalbert’s team. (I think I hit .371 one year and was written up in the Queens Ledger…but I digress.) By that time, the Yankees were going to broadcast 150 of their games on MSG, and as a new immigrant family, my parents sure as shit weren’t going to pay for cable so that I could watch grown men try to hit a ball with a stick during the summer.
To me, this was a betrayal by the Yankees organization.
Scandal.
Disloyalty.
Treachery.
A team that was rolling out Tim Leary as an Opening Day starter, and Steve Balboni as a power threat, was going to charge me money to watch their games on an every-day basis. There was no way that would work.
Of course, it did. And we started learning REALLY quickly what we, in the media and advertising world, already know. Sports rights are the golden goose. When our media team at Hudson Rouge was strategizing how to launch the Lincoln Matthew McConnaughey campaign, it was a no-brainer to go with live sports. Notre Dame Football and Sunday Night Football were the kick-off tentpoles (pun intended). Despite chord cutting trends, those two events were still watercooler talk at the office, and did huge numbers.
In 2020, the value of sports, even college sports, was put front and center, as ESPN signed a $3B dollar deal with the SEC for broadcasting rights. A 5x increase on the $55M/year it receives currently from CBS.
ESPN also pays $470 million a YEAR for the College Football Playoff, and according to Front Office Sports, that number might jump to $2.2 BILLION a YEAR!
The sham of the amateur sports athlete was officially over.
Cut to last week, when The Wall Street Journal reported that Disney is “actively preparing” to make ESPN a stand-alone streaming service, available only to subscribers.
What would that mean? Well, if you’re a sports fan in New York, it would mean that you would have to pay:
$29.99 for ESPN’s new “Flagship” streaming network
$24.00 for YES Network’s app
$29.99 for MSG’s app
And if you’re a football fan, you’ll need a HULU Live or YouTube TV subscription to watch your home teams + Red Zone or Sunday Ticket for $249 - $349.
All in, you’re somewhere in the $200 - $300 per month, depending on which sports season we’re in.
Remember how cord cutting was supposed to be a way to save on television costs? Not so much.
What does it mean for other cable networks, who, in many regards depend on ESPN and other sports properties to get people to actually turn on the system? It’s a death knell.
Everyone in the industry knows this…it’s why Discovery merged with HBO or Warner Bros or MAX, or whatever they want to be called now.
It’s why Peacock and Paramount+ are actively building out their portfolios, and why the value of properties like the WWE and AEW are so significant.
For cable networks who don’t have any sports properties (or aren’t major news properities, which are their own outliers) and are currently unaffiliated with a major streamer, it might be too late. Or, for some entrepreneurial spirit, it might be a great opportunity to put together an “Everything Else” streamer, and charge $9.99/month while selling targeted advertising on those properties.
Speaking of advertisers…you will have incredible opportunities (as you already do) to hyper target your ads to the perfect audience. But scale is going to start to become an issue for the mid-level and smaller advertiser. As everything becomes even more fragmented, bigger brands will be able to scale by creating multiple pieces of content targeted to the appropriate audience and buying all those audiences. But for those without a robust budget, the cost of achieving tipping point critical mass is going to get more expensive. The onus is going to be put even more on creative, which will need to become meme-worthy and socially shareable. (Even more so than it already does.) Marketers will have to take more chances, which will hopefully create better work, and not just safe brand representations.
I’ll leave you with one last thought…two months ago, former ESPN president John Skipper brought up the idea of a Pay Per View Super Bowl on Meadowlark Media’s Dan Lebatard Show.
When I first heard the idea, I thought it was one of the most insane things that I had ever heard. But when you get into the math behind it, all of a sudden it’s not so crazy. 113 million people tuned into all of Fox’s properties during this year’s Super Bowl. If you even cut that number in half and charge $20 - $40 for the day, it starts looking A LOT less crazy than the $20 cable cost in 1990 to allow me the pleasure of watching Tim Leary lose a league-high 19 games.
