Thankfully, we are halfway through the NFL Exhibition Season. Watching the second half of an NFL exhibition game is like panning for gold; you are going to see a whole lot of dross before you come across a small speck that gives you some hope. The scrubs in the games at that point will not play much in the NFL this year – or any other probably – and so you are watching the teams play out the string merely so the owners can justify selling tickets to this nonsense at full price. The fourth quarter of many NFL exhibition games is less interesting than Celebrity Poker. Believe me, that is not a sentence Paul Tagliabue ever wanted to have written and under no circumstances would he and his cronies want it spread around.
The real NFL games are entertaining television and they are the engine that drives the sport. There is a cycle here. People gamble on football games; when they bet on the games, they like to watch them on TV; many people extrapolate this to the point where they want to bet on any game on TV and then watch it. This increases audiences and revenues. It is the underbelly of the game that Tags and company prefer not to speak about publicly, but they know all about it.
The current NFL TV deal with all the networks will expire at the end of the 2005 season. Normally, the league waits until the middle of the final season to entertain discussions about which networks will have the privilege of overpaying the league for the rights to the NFL games for the next several years. The current deal will have been in place for five years when it expires and it pitched $17.6B into the NFL coffers. The owners and the players and the league administrators and lots of other straphangers are making a lot of money here; the problem is that the networks that are paying out the billions of dollars are losing money on the deal.
Uncharacteristically, the NFL wants to begin exploratory discussions with current and potential broadcast partners – doesn’t that kind of management newspeak make you feel all tingly inside? – starting next month even though the current deal will have seventeen months to run at the beginning of such talks. My conclusion from that deviation from the norm is that the league has some ideas in mind that will alter the way that they put games on the air and they expect to have to sell these new ideas to the networks. If the discussions are going to be protracted, you need a lot of time to reach some kind of deal; but if all you are doing is deciding on the price of the new deal and not how or when the games will be telecast, it shouldn’t take very long at all. So, I suspect that the league is looking to change things up.
Interestingly, Disney has balked at opening the discussions at this time. And Disney (they own ABC and ESPN) is beginning its own PR spin campaign by pointing out that they have lost money on this current deal – and the one before it too by the way – and that they too might want to make some serious changes in the way they telecast football. Since Disney has a history of overpaying for every sports property that it buys for ABC and/or ESPN, that cannot be good news for the NFL mavens. My suspicion is the Disney is beginning its posturing for the Kabuki Dance that must happen prior to any serious negotiations on NFL rights fees; but their message is not one the league wants to hear.
ABC has hinted that it might want to move MNF to ESPN and they claim to have lost $100M on MNF despite the high ratings that the show commands. I take that with a grain of salt because I remember just how much money Enron was making just a few years ago and it all turned out to be accounting legerdemain. But FOX and CBS also claim to be losing money on their deals. I suspect they are correct, but once again, I am skeptical about anything anyone says about this topic as they posture prior to negotiations. But if ABC is losing money on MNF in anything near the amount that it claims, then this should be a warning siren for everyone in this business. Oh, and Disney has been silent on whether or not a move of MNF to ESPN would mean that the Sunday night games currently on ESPN would be “up for grabs” by someone else.
Just a short aside here, but I really wonder if any of these networks actually make money on any of the major sports deals that they sign. Baseball? I doubt it. NBA? Surely, you jest. NHL? Well, at least NBC won’t lose much in its new contract with the league. So why are sports properties so desirable to networks? In the programming world, they are like trophy wives; you have them because you can…
Here are some things I suspect the NFL might want to do with its TV presentation. I think they want to talk about moving the season start to late September and to push the Super Bowl back to the end of February. Networks should like that because February is a sweeps month and that should help the ones that get the games. But I suspect there might be an alternate agenda in the NFL wanting to push the season back. I think that the league would like to go to an 18 game schedule and cut down the exhibition games. They aren’t going to be able to do that easily until they can bargain for this with the NFLPA. So one way to do that is to push the season back and “cede” the field to baseball and college football in early to mid-September. Then if the players agree to an 18 game schedule – gaining things like an increased roster size in the bargaining – the NFL can reinstate the games in September after people have gotten used to games in February. It would be a way of doing this without all the carping from people who are spring loaded to be pissed off at nearly anything.
I look for lots more games on Saturdays after the college football season is over and maybe more Thursday night games too – even though coaches tend not to like Thursday games a whole lot. Expanding the playoffs to 16 teams was voted down last time it was proposed with the justification that the NFL did not want to be like the NHL or the NBA where “everybody gets into the playoffs”. However, if the price is right for four extra playoff games on TV, don’t be too surprised to hear this idea come back from the dead.
There is also talk that the NFL might want the games to start just a bit later on Sundays. Supposedly, CBS is not happy about that because they don’t like having to start 60 Minutes late on Sundays between September and January. And for some reason, they are adamant about not moving its time slot. So there are lots of issues involved here and all of them play into the bottom line, which is: how much will the TV deal bring into the league’s exchequer.
Why is that important, you ask? After all the NFL seems to have a license to print money; why do they need more? Well the league really doesn’t need more except for the ego gratification of getting more this time that last time. However, some of the individual teams need for the TV rights fees to rise significantly. Some teams have structured their salary commitments to jump significantly in 2006 given the way their contract bonuses are structured because they have banked on a spike in the salary cap, which is tied directly to league revenues. If that does not happen, players will have to take cuts in contracts or become “cap casualties” and the NFLPA does not want that to happen any more than the teams’ GMs want that to happen. But the driver for all of this is the TV revenue.
The current deal brings in an average of just about $3.5B. If every network is really losing money, how much higher will they be willing to go to use NFL football as a promotional platform for its other programming? [Aside: FOX has raised this aspect of NFL telecasting to an art form; ABC merely annoys the hell out of everyone by bringing the stars of their insipid shows into the booth to yak at us during games.] There will be lots of issues bouncing around during the negotiations no matter when they start but remember to do what “Deep Throat” supposedly told Woodward and Bernstein to do in the Watergate mess; follow the money. The rest of the stuff might be interesting and might add to or diminish ever so slightly your viewing experience. But the real deal here is the money. Believe it or not, the behemoth that is the NFL needs an increase in revenues.
But don’t get me wrong, I love sports