1. Broadcast Rights and Revenue
Chapter 4
The Commercial Relationship Between Sports and Media Industries

2. Let’s Identify The 4 Key players
1 - Sports Organizations
Most of their revenue comes from media coverage
Product licensing is the second largest source for NFL
Some comes from organizationally controlled web sites and league sponsorship deals
2 - Media Organizations
Sports one of the most valuable properties for media to hold
Almost always put competitive bids in for sport rights
Not having them could have adverse effect

3. Players Continued… 3 - Corporate Sponsors 4 - Advertisers
Partner with media organization to provide production money up front
In exchange for money, receive prominent advertising and branding
May receive some of the profits
4 - Advertisers
Purchase commercial time on broadcast
Purchase signage or branding that is shown on broadcast
Price they pay depends on projected ratings/ actual ratings numbers

4. Commercial Dimensions
The Sports Organization put on the event, tournament, series, or tour.
Provides governance and structure
Provides content and access for broadcast effectiveness
The Media Organization partners with or bids for rights to broadcast the sports event
Provide money directly to Organization and eventually the $ is distributed to individual teams/owners
In exchange for the broadcast rights, the media organization seeks a return on their investment (ROI)

5. Return on Investment
Media Companies will seek to recapture their investment and earn a profit on the production and broadcast, coverage of sports events/leagues
“Competitive bids” for broadcast rights (they bid based on projected profit)
Renegotiations of current rights held (make sure it is still a good value)
Corporate sponsor partnerships
Advertising revenue (commercials, static ads, signage, broadcast component branding
Self-promotion during broadcast
Service charge fee sent back to cable networks
Pay-per-view options
Expanded coverage options
On-line coverage or live streaming rights
Post game highlight packages sold to other outlets
Re-broadcasts
Pre and Post game shows and productions

6. College Corporate Signage Example

7. Amounts of Broadcast Rights Paid
NFL
ESPN 1.9 bil
NBC 950 mil
CBS 1 bill
NFL Network 200 mil
MLB
Fox 500 mil
Turner 300 mil
NBA
930 mil Total
Split between ESPN and ESPN 2 (75 games), ABC (15 games)
Turner/TNT (52 games)

8. FIFA World Cup
American Rights – ESPN 325 mil
World Wide rights estimate – 2.5 bil
810.1 mil people watched 2014 finals (1/8th the population of the planet)
Olympics
American Rights – NBC 2 bill for both summer and winter
World Wide rights estimate - 4 bil for both games

9. What sellers (Sports Organizations) of sports rights Should consider
The Size of the Bid
Competitive bid environment
Can it offer financial security to the sport
Must not give up too much control!
2) Broad Media Coverage – Maximum exposure for sports, league, event
Will the deal utilize all forms of media?
Multiple rights may be granted to different forms of media (TV, Radio, internet streaming)
3) Financial Solvency of Bidder
Kirch Media and FIFA
Can the media company afford this bid?

10. What buyers of rights consider
Potential Audience Size
Helps formulate bid by estimating advertising revenue
Can be difficult if rival networks competitively program
Must consider other audience robbing factors
Potential Audience Demographic – does this sport have limited or broad appeal?
3) Fixed Revenue Basis – Avoid profit sharing
4) Exclusivity
Scope and duration of rights
Avoid “Churn” – channel surfing to other sports options

11. A competitive Arena
Competition is an important element of broadcast rights
1) Leagues want to negotiate as a whole not in individual deals with teams
Minimize internal competition and maximize external competition
Longhorn Network a good example
2) Bidding Wars
Multiple bidders makes for aggressive competition
3) Navigate seasonal competition with other sports
NFL and NCAA Football

12. Rights Segmentation
Segmenting the market refers to two primary approaches by sports organizations in selling broadcast rights to sports events and games.
1) Broadcast Rights to Multiple Providers
Sell to a single media entity in each form: Free-to-air, pay television, internet, radio
Can be split by live broadcast, delayed broadcast, or highlights packages
2) Broadcast Rights to Multiple Providers in Multiple territories or regions
Big 10, Longhorn, SEC Networks
FOX Regional Sports
Regional Coverages of MLB games

13. Largest TV Audiences of all time
Sporting Events have been among the most viewed televsion shows of all time.
with-the-biggest-audience

14. How Nielson Ratings are gathered

15. Top 10 rated Super Bowl commercials “Humorous” Division
52 million dollars paid to air these 6 minutes of commercials

16. Corporate Sponsorships
Depth/Top-25-Sports-Spenders-Their-Ad-Spending-Key-Executives-Agencies-And- Sponsorships.aspx