Ever since the big NFL TV deals were announced early this week, I've been trying to get my mind around the $1.1 billion per year ESPN paid for the rights to "Monday Night Football" for eight years. That's twice what ABC, it's corporate sister, had been paying, and almost twice the $600 million a year NBC paid to reenter the NFL business for six years of Sunday nights.
Why was the price for Monday so high, especially given the NFL's apparent opinion that Sunday night games on free TV will outdraw the Monday night games that will stay free for one more year on ABC?
Many in the commentariat, including me, have explained that ESPN can afford to pay more than the broadcast networks for the same program because it collects revenue from subscription fees as well as advertising. That is, cable distributors pay ESPN -- a lot -- for the viewers it delivers. The new deal figures to bring in even more viewers and allow ESPN to charge higher fees.
ESPN is also unique among the big networks in all the different ways it has to make money: subsidiary networks like ESPN Deportes and H-D, a huge Web site, a radio network and so on.
But nobody's explained why ESPN would pay so much more than anybody else. ABC had pulled out of the Monday night bidding after offering $400 million. If the other broadcast networks were considering paying $1 billion or so for something, they'd have outbid NBC for Sunday. So did ESPN overpay?
"The most likely explanation is that ESPN is concerned that if they didn't get those rights than Fox would have gotten the rights," said Andrew Zimbalist, a professor of economics at Smith College who writes extensively about sports economics, "and Fox would have used the rights to lift the status of their national sports channel to be a competitor to ESPN."
"They have to have calculated the return on investment for ESPN-Disney to be greater than the billion they invested," said Matthew Brown, an assistant professor of sports administration at Ohio University who studies and writes about sports business. "ESPN has done a good job of shutting down rivals like Fox nationally."
That's pretty much how ESPN executive vice president Mark Shapiro explained it.
"There's monster competition," he said. "I mean, if you don't think there's another cable player that wants to get in on the action, that'd be foolish. There's a lot of players that want in, not to mention Fox sitting out there, who's been damn obvious and up-front about the sense that they want more football for Fox, and if they can get even more football they would love to launch a new sports network."
Other major players might have included Comcast, the country's largest cable company, which has been rumored to want to start a sports network, and the NFL itself, which has the cable NFL Network, where a still-unsold package of eight late-season Thursday- and Saturday-night games could end up.
Another theory: "Other than they're trying to keep Fox out, the answer might be that they just paid too much," Zimbalist said. Referring to the president of ESPN and ABC Sports, he added, "George Bodenheimer's a nice guy, he's a hard-working guy, but just because he thinks that it's going to be $1.1 billion doesn't mean he's right. Maybe they'll take a loss on this stuff. And maybe Fox wasn't going to go after it anyway."
Shapiro declined to discuss whether ESPN would profit from the Monday night deal. "All I can tell you is that ESPN is going to deliver, year over year, double-digit growth to the Walt Disney Co.," he says, "and we would not be able to do that if this deal wasn't economically sound for us."
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Be right back [PERMALINK]
The NFL draft is this weekend, and I'm celebrating the occasion by going on vacation so I don't have to watch it or write about it. I found this to be a most salubrious gambit last year.
The NFL draft incorporates the two worst features of American life: all-day committee meetings on a weekend and commentary by Chris Berman.
I will return May 2.
Previous column: "The Making of Casey Stengel"
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About the writer
King Kaufman is a senior writer for Salon. Visit his column archive.
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