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and pricier. Here's why.
Primer on the economics of jumping jockstraps
By Kevin Downey
When it
comes to sports on TV, something seems out of whack.
It is this: Ratings for sports television have been
declining for years, yet networks have doubled what they are paying for
the TV rights in the past five years, to $4 billion. They've in turn
worked whatever magic they could to pass those costs onto advertisers.
The question: Why do the networks pay more and appear to get
less?
The answer is twofold and pretty simple.
One, the value of sports to the networks goes beyond ratings.
"There’s a cachet to having sports, especially major
sports," says Steve Sternberg, senior vice president and broadcast
research director at TN Media. "They’re like a loss leader. Sports
promote the networks’ primetime lineups and sports are one of the things
that drive people to their internet sites."
Also, he says, a popular team can generate sizable ratings
and ad dollars for local market affiliates.
And two, ratings for sports have not declined as much as
other programs, and they’re still strong enough to generate $7.2 billion
in ad revenue.
"One of the reasons [ratings are down] is because
there are more sports on TV right now," says Sternberg. "Ratings
are fragmenting because with network and cable, there are more
options."
Ratings for last summer’s Olympics, for instance, were down
19 percent compared to the summer of 1988, according to a research report
issued by TN Media.
Ratings on the broadcast networks since 1996 are down
four percent for Major League Baseball, 34 percent for the NBA, 38 percent for
the National Hockey League, and between 12 and 22 percent for the NFL.
"But even though ratings are fragmenting, people are
spending more time watching sports, overall," says Sternberg.
In fact, the average household spends about 201 hours per
year watching sports on TV, compared to 183 just two years ago. Viewing
time is up for network TV and syndication but down slightly for cable.
In a more fragmented environment, some sports are more valued
than others and the amount of money the networks pay for them is a good
clue as to their rank order.
"The Olympics might be the best value," says
Sternberg. "Even though NBC paid so much, they tied it up for so
long. If the Olympics were switching networks every few years, whoever
bought it next would have paid so much more."
NBC paid $715 million for the summer 2000 games. That’s 57
percent more than it paid in 1996, and the cost is going up each year of
the network’s contract to $894 million by the summer 2008 games.
The Olympics are the most costly and also the highest rated
compared to other sports’ regular season ratings.
Of the sports with a regular TV presence, though, football
stands well above the rest, both in terms of the cost for TV rights and
for the regular-season ratings it generates.
On the broadcast networks, football costs over $500 million
per year, per network, for ABC, CBS, and Fox. Those costs have increased
by 139 percent for ABC and by 39 percent for Fox since 1997.
The household ratings are higher than a 12.0, on average, and
are about four times the ratings for most other sports.
Major League Baseball, in comparison, costs Fox about
$417 million per year and averages ratings of 2.6.
The NBA on NBC costs $350 million a year and ratings are down
to a 3.3. Ratings have declined by about 28 percent since Michael Jordan
retired in 1998.
NASCAR auto races on Fox networks, NBC, and TBS cost $200
million per year, and network ratings are up 26 percent since 1996, to an
average 5.9. Golf games are up 12 percent to a 2.9 rating, and the PGA
costs the big-three networks $163 million per year.
The NHL on ABC and ESPN costs $120 million a year and is up 287
percent over the $31 million Fox paid for five years from 1994-98. Ratings for the
games on ABC are just a 1.3.
|
Average
Household Ratings and Hours Spent |
||||||
|
Households |
Men |
Women |
||||
|
Rating |
Hours |
Rating |
Hours |
Rating |
Hours |
|
|
1998 |
||||||
|
Network |
5.0 |
93.9 |
4.1 |
76.4 |
2.4 |
44.2 |
|
Syndication |
6.2 |
6.0 |
4.8 |
4.6 |
2.3 |
2.2 |
|
Basic Cable |
0.5 |
83.2 |
0.4 |
66.3 |
0.2 |
30.4 |
|
Total w/o Olympics |
183.1 |
147.3 |
76.8 |
|||
|
Total w/Olympics |
194.6 |
154.1 |
85.8 |
|||
|
1999 |
||||||
|
Network |
5.0 |
99.2 |
4.1 |
81.8 |
2.3 |
46.0 |
|
Syndication |
6.7 |
24.0 |
5.1 |
18.1 |
2.6 |
9.1 |
|
Basic Cable |
0.5 |
82.5 |
0.4 |
66.2 |
0.2 |
30.4 |
|
Total |
205.7 |
166.1 |
85.5 |
|||
|
2000 |
||||||
|
Network |
4.7 |
103.6 |
3.9 |
85.6 |
2.1 |
47.0 |
|
Syndication |
5.9 |
22.1 |
4.6 |
17.2 |
2.3 |
8.6 |
|
Basic Cable |
0.5 |
74.7 |
0.4 |
61.5 |
0.2 |
27.1 |
|
Total w/o Olympics |
200.4 |
164.3 |
82.7 |
|||
|
Total w/Olympics |
213.5 |
172.5 |
91.5 |
|||
| Source:
TN Media analysis of Nielsen Data
|
||||||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
ABC |
1984 - 1989 |
83.3 |
500 |
|
NBC |
1984 - 1989 |
100 |
600 |
|
CBS |
1990 - 1993 |
265 |
1,060 |
|
ESPN |
1990 - 1993 |
100 |
400 |
|
ABC/NBC |
1994 - 1999 |
0-revenue sharing |
0-revenue sharing |
|
ESPN |
1994 - 1999 |
42.5 |
255 |
|
(1994 baseball strike voided these contracts after the 1995 season) |
|||
|
FOX |
1996 - 2000 |
115 |
575 |
|
NBC |
1996 - 2000 |
80 |
400 |
|
ESPN |
1996 - 2000 |
87 |
435 |
|
FOX Cable |
1997 - 2000 |
40.5 |
162 |
|
FOX |
2001 - 2006 |
417 |
2,500 |
|
ESPN |
2000 - 2005 |
141.8 |
851 |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost |
Total Cost |
|
CBS |
1986/87 - 1989/90 |
47 |
188 |
|
TBS/TNT |
1988/89 - 1989/90 |
25 |
50 |
|
NBC |
1990/91 - 1993/94 |
150 |
600 |
|
TBS/TNT |
1990/91 - 1993/94 |
68.75 |
275 |
|
NBC |
1994/95 - 1997/98 |
187.5 |
750 revenue |
|
TBS/TNT |
1994/95 - 1997/98 |
87.5 |
350 |
|
NBC |
1998/99 - 2002/03 |
350 |
1,750 |
|
TBS/TNT |
1998/99 - 2002/03 |
178 |
890 |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
CBS |
1987/88 - 1989/90 |
55.3 |
166 |
|
ESPN |
1987/88 - 1989/90 |
2 |
6 |
|
CBS |
1990/91 - 1996/97 |
142.9 |
1,000 |
|
CBS |
1995/96 - 2001/02 |
215.6 |
1,725 |
|
CBS |
2002/03-2013/14 |
565 |
6,200 |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
ABC (Mon. Night) |
1987 - 1989 |
147 |
460 |
|
CBS (NFC) |
1987 - 1989 |
150 |
450 |
|
NBC (AFC) |
1987 - 1989 |
120 |
360 |
|
ESPN (Sun. Night) |
1987 - 1989 |
51 |
153 |
|
ABC (Mon. Night) |
1990 - 1993 |
225 |
900 |
|
CBS (NFC) |
1990 - 1993 |
265 |
1,060 |
|
NBC (AFC) |
1990 - 1993 |
188 |
752 |
|
ESPN (Sun. Night) |
1990 - 1993 |
111.25 |
445 |
|
TNT (Sun. Night) |
1990 - 1993 |
111.25 |
445 |
|
NBC (Superbowl) |
1994 |
40 |
40 |
|
ABC (Mon. Night) |
1994 - 1997 |
230 |
920 |
|
FOX (NFC) |
1994 - 1997 |
395 |
1.58 |
|
NBC (AFC) |
1994 - 1997 |
217 |
868 |
|
ESPN (Sun. Night) |
1994 - 1997 |
131 |
524 |
|
TNT (Sun. Night) |
1994 - 1997 |
124 |
496 |
|
ABC (Mon. Night) |
1998 - 2005 |
550 |
4,400 |
|
FOX (NFC) |
1998 - 2005 |
550 |
4,400 |
|
CBS (AFC) |
1998 - 2005 |
500 |
4,000 |
|
ESPN (Sun. Night) |
1998 - 2005 |
600 |
4,800 |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
CBS (CFA) |
1987 - 1990 |
16 |
64 |
|
ESPN (CFA) |
1987 - 1990 |
16 |
64 |
|
ABC (Big/Pac 10) |
1988 - 1996 |
13 |
117 |
|
ABC (Rose Bowl) |
1989 - 1997 |
10 |
90 |
|
ABC (CFA) |
1991 - 1995 |
35 |
175 |
|
NBC (Notre Dame) |
1991 - 1995 |
7.5 |
37.5 |
|
ESPN (CFA) |
1991 - 1995 |
25 |
125 |
|
ABC/Liberty (Big 8) |
1996 - 2000 |
20 |
100 |
|
NBC (Notre Dame) |
1996 - 2000 |
8 |
40 |
|
CBS (SEC) |
1996 - 2000 |
17 |
85 |
|
CBS (Big East) |
1996 - 2000 |
11 |
55 |
|
ABC (Sugar Bowl) |
1996 - 2001 |
16.6 |
100 |
|
CBS (Fiesta Bowl) |
1996 - 2001 |
19.3 |
116 |
|
CBS (Orange Bowl) |
1996 - 2001 |
16.8 |
101 |
|
NBC (Notre Dame) |
1998 - 2004 |
6.43 |
45 |
|
ABC (Rose, Sugar, |
1999 - 2005 |
71.43 |
500 |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
SportsChannel |
1989 - 1991 |
17 |
51 |
|
ESPN |
1992 - 1996 |
16 |
80 |
|
FOX |
1994 - 1998 |
31 |
155 |
|
ESPN (ABC, |
1999 - 2003 |
120 |
600 |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
Lifetime |
1997- |
% of profits after NBA takes its cut |
% of profits after NBA takes its cut |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
NASCAR |
|||
|
ABC, CBS, ESPN, |
-2000 |
110 |
N/A |
|
FOX/FX/ |
2001-2008 |
200 |
1,600 |
|
NBC/TBS |
2001-2006 |
200 |
1,200 |
|
IRL |
|||
|
ABC |
1999-2004 |
13 |
65 |
|
ABC - Indianapolis 500 |
-2002 |
15+ |
N/A |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
PGA - CBS 15 events |
1999 - 2002 |
162.5 |
650 |
|
CBS - The Masters |
Year-to-year |
3 |
3 |
|
NBC - U.S. Open |
-2003 |
||
|
NBC - Ryder Cup |
-2005 |
||
|
CNBC - PGA Senior Tour |
2001 - 2004 |
3 |
12 |
|
ABC - British Open |
|||
|
FOX - 10 PGA events |
|||
|
ESPN, USA, Golf Channel |
2001 - 2004 |
||
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
U.S. OPEN |
|||
|
CBS (semis and finals) |
1997 - 2001 |
33 |
165 |
|
USA (early rounds) |
|||
|
CBS (semis and finals) |
2001 - 2004 |
38 |
152 |
|
WIMBLEDON |
|||
|
NBC |
2000 - 2002 |
22 |
66 |
|
Turner |
2000 - 2002 |
8 |
24 |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
ABC - U.S. Figure |
1999 - 2006 |
12 |
96 |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
Triple Crown - NBC |
2001 - 2005 |
10.3 |
51.5 |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Sports
Rights Fees |
|||
|
Network |
Years Covered |
Avg. Cost Per Year |
Total Cost |
|
CBS |
Winter 1992 |
243 |
243 |
|
TNT |
Winter 1992 |
25 |
25 |
|
NBC |
Summer 1992 |
401 |
401 |
|
Sports |
Summer 1992 |
75 |
75 |
|
CBS |
Winter 1994 |
300 |
300 |
|
TNT |
Winter 1994 |
25 |
25 |
|
NBC |
Summer 1996 |
456 |
456 |
|
CBS |
Winter 1998 |
375 |
375 |
|
NBC/CNBC/ |
Summer 2000 |
715 |
715 |
|
NBC/CNBC/ |
Winter 2002 |
555 |
555 |
|
NBC/CNBC/ |
Summer 2004 |
793 |
793 |
|
NBC/CNBC/ |
Winter 2006 |
613 |
613 |
|
NBC/CNBC/ |
Summer 2008 |
894 |
894 |
| Source:
TN Media analysis of Nielsen Data
|
|||
|
Median Ages
of Broadcast and Cable Sports (2000) |
||
|
Sport |
Broadcast |
Basic Cable |
|
Wrestling |
24 |
30 |
|
NHL Hockey - playoffs |
37 |
35 |
|
Soccer |
37 |
36 |
|
NHL Hockey - regular season |
37 |
33 |
|
NHL Hockey - Stanley Cup |
39 |
37 |
|
NBA Basketball - playoffs |
39 |
41 |
|
NBA Basketball - regular season |
40 |
40 |
|
NBA Basketball - finals |
40 |
---- |
|
WNBA Basketball |
40 |
46 |
|
Super Bowl |
41 |
---- |
|
NFL Monday Night Football (Sun Cable) |
44 |
42 |
|
Boxing |
44 |
54 |
|
Auto Racing |
44 |
43 |
|
NFL Football - playoffs |
44 |
---- |
|
NFL - weekend regular season |
45 |
---- |
|
College Basketball - regular season |
45 |
46 |
|
Summer Olympics |
45 |
---- |
|
Anthologies |
45 |
---- |
|
College Basketball Tournament |
45 |
---- |
|
World Series |
46 |
---- |
|
College Football Bowls |
47 |
48 |
|
College Football - regular season |
47 |
46 |
|
Major League Baseball - regular season |
48 |
53 |
|
Tennis |
48 |
50 |
|
Major League Baseball Playoffs |
48 |
50 |
|
Figure Skating |
53 |
56 |
|
Golf |
55 |
54 |
|
Horse Racing |
56 |
48 |
| Source:
TN Media analysis of Nielsen Data
|
||
|
NFL Broadcast Network Household Rating Trends (Regular Season) |
|||||
|
1996 |
1997 |
1998 |
1999 |
2000 |
|
|
ABC (Monday Night) |
16.2 |
15.0 |
13.9 |
13.7 |
12.6 |
|
FOX Sun. National |
15.1 |
13.4 |
13.7 |
14.1 |
12.7 |
|
FOX Sun. Regional |
8.4 |
7.5 |
7.6 |
7.6 |
8.8 |
|
FOX Sun. Single |
10.9 |
12.1 |
10.9 |
11.7 |
10.9 |
|
CBS Sun. National * |
13.8 |
12.9 |
13.1 |
13.3 |
12.1 |
|
CBS Sun. Regional * |
7.9 |
8.0 |
7.1 |
7.7 |
7.4 |
|
CBS Sun. Single * |
10.6 |
10.5 |
10.3 |
10.3 |
9.2 |
|
All Regular Season |
12.3 |
11.8 |
11.3 |
11.4 |
10.7 |
| *
NBC prior to 1998 Source: TN Media analysis of Nielsen Data |
|||||
|
Network
Major League Baseball Regular Season Rating Trends |
||||||
|
HH |
M18+ |
M18-34 |
M18-49 |
M25-54 |
M50+ |
|
|
1996 |
2.7 |
2.0 |
1.4 |
1.4 |
1.5 |
3.2 |
|
1997 |
2.7 |
2.0 |
1.5 |
1.6 |
1.7 |
2.9 |
|
1998 |
3.1 |
2.3 |
1.6 |
1.7 |
1.8 |
3.6 |
|
1999 |
2.9 |
2.1 |
1.5 |
1.5 |
1.5 |
3.3 |
|
2000 |
2.6 |
2.0 |
1.6 |
1.6 |
1.6 |
2.8 |
| Source:
TN Media analysis of Nielsen Data
|
||||||
|
NBA
Basketball Regular Season Rating Trends |
||||||
|
Season |
HH |
M18+ |
M18-34 |
M18-49 |
M25-54 |
M50+ |
|
1996 |
5.0 |
4.0 |
4.8 |
4.2 |
4.1 |
3.5 |
|
1997 |
4.7 |
3.6 |
4.1 |
3.8 |
3.7 |
3.1 |
|
1998 |
4.6 |
3.7 |
4.2 |
3.9 |
3.9 |
3.1 |
|
1999 |
4.3 |
3.2 |
3.3 |
3.4 |
3.5 |
3.0 |
|
2000 |
3.3 |
2.4 |
2.5 |
2.5 |
2.5 |
2.4 |
| Source:
TN Media analysis of Nielsen Data
|
||||||
|
NHL Hockey
Broadcast Network |
||||||
|
1994/5 |
1995/6 |
1996/97 |
1997/98 |
1998/99 |
1999/00 |
|
|
FOX |
FOX |
FOX |
FOX |
FOX |
ABC |
|
|
Regular Season |
2.0 |
2.1 |
1.9 |
1.4 |
1.4 |
1.3 |
|
Playoffs |
1.9 |
2.4 |
2.1 |
1.8 |
1.5 |
1.5 |
|
Stanley Cup |
3.4 |
3.6 |
4.0 |
3.3 |
3.4 |
3.7 |
| Source:
TN Media analysis of Nielsen Data
|
||||||
|
Auto Racing
by Division |
||||
|
1998 |
1999 |
2000 |
2001-March |
|
|
NASCAR |
2.6 |
2.9 |
2.4 |
3.5 |
|
Network |
4.7 |
4.6 |
3.7 |
5.9 |
|
Cable |
2.2 |
2.3 |
1.9 |
1.0 |
|
Indy Racing League |
1.9 |
2.0 |
1.7 |
0.2 |
|
Network |
2.7 |
2.9 |
2.3 |
--- |
|
Cable |
0.5 |
0.2 |
0.3 |
0.2 |
|
CART |
1.2 |
1.1 |
0.8 |
1.0 |
|
Network |
1.6 |
1.4 |
1.2 |
1.0 |
|
Cable |
0.6 |
0.7 |
0.5 |
--- |
| Ratings
are for Day and Date of races only. 2001 data is through 1st Quarter
2001. Source: TN Media analysis of Nielsen Data |
||||
|
Golf Broadcast Network |
|||||
|
1996 |
1997 |
1998 |
|||