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to pain at contract time
Viewer flight will mean only modest increases
By Gabriel Spitzer
Despite a decade of eroding ratings for most major sports, the networks have come through with wads of cash again and again at contract time.
But with television-contract negotiations set to begin this spring, the National Basketball Association may be the first in years to flat-line on rights fees.
The NBA’s ratings on NBC and the Turner networks have continued to dwindle this season. And with the broadcast networks’ budgets already swollen with rights fees for football, baseball and auto racing, basketball will be lucky to get even a modest increase in its next contract, say observers.
NBC’s coverage began around Christmas, and so far the games have averaged a 3.2 rating, down 19 percent over the same number of games the year before.
On cable, Turner’s slate of NBA games has slid 13 percent from last year, to a 1.1 combined rating for games on TNT and TBS Superstation.
Dogged by those numbers and some highly-publicized off-court player problems, basketball may have little leverage in demanding another fees increase of the kind it has grown accustomed to for the last twenty years.
"There hasn’t been much of a positive story about the NBA this year," says Tim Taylor, vice president and chief operating officer for the Bonham Group Market Research Company. Taylor’s resume includes a stint doing market research for the NBA.
Still, Taylor believes that reports of the NBA’s death have been somewhat exaggerated.
"I’ve heard and read a lot of negative comments and a lot of doom and demise about the NBA. I would categorize it as less of a doomsday scenario and more as a shooting slump. And I think they’ll get out of it eventually," he says.
The NBA’s current contract, which expires after next season, is worth an average $660 million annually from NBC and Turner. It represents a 137 percent increase over the NBA’s previous contract.
This time around, the league may be lucky to get a 25 percent increase.
"There may be a 20 to 25 percent increase, up to $825 million. That isn’t anywhere close to what they’ve been getting, but I think it has pretty much peaked out right now," says Hadrian Shaw, a sports analyst at Paul Kagan Associates.
But several things need to go right for the league in order to get even that much.
"That $825 million is probably a best-case scenario. Maybe they'll stay closer to $650 million or $700 million," adds Shaw.
Perhaps the biggest single factor is whether or not the NBA can fan the flames of a bidding war among the networks.
The league’s best hope is to entice ABC to make a serious offer. Fox and CBS both have over a billion dollars currently tied up in rights fees for other sports, and neither is expected to take an interest in the NBA.
ABC has only $670 million invested in football and hockey, so it seems to be the only other network that could find a home for basketball.
"The NBA really needs ABC in the mix to get the bidding war going," says Shaw.
Still, conventional wisdom holds that the NBA will end up on NBC and Turner once more.
Besides NASCAR and the limping XFL, NBC has no other major sports on its menu.
"The NBA is the cornerstone of our sports properties, and they’re a great partner. We look forward to continuing a long partnership with the NBA," says NBC Sports spokesperson Cameron Blanchard.
Turner, too, is expected to hold on to its portion of the basketball schedule. This season the Turner networks upped their NBA promotional budget by 25-30 percent and altered the regular-season schedule to group the games on Tuesday, Wednesday and Thursday in an attempt to pull ratings back up.
Although the strategy has yet to produce quantifiable results, Turner believes that making the games easier for fans to find will help in the long term.
"I think the Tuesday-Wednesday-Thursday campaign has been great. It’s a great catch phrase. Tuesday and Wednesday have done pretty well, though there’s a lot of competition on Thursdays," says John Vandegrift, vice president, sports program planning for Turner.
"Let’s face it, the NBA is going through some tough times right now, but since the All-Star break we’ve seen a little bit of life. We’ve had some games rating 1.4 and 1.5. And now we’re really getting into the fun part of the season."
The NBA has said that they are willing to discuss all of the league’s properties come negotiation time. Those include a new development league and the women’s basketball league, the WNBA.
"They are not very important by themselves, but they are collectively. Not only do you reach the core NBA male demos, but also the young females, and you tie in family attendance in both the WNBA and the development league. And real NBA tickets cost so much, the smaller leagues could draw in the people priced out of NBA tickets," says the Bonham Group’s Taylor.
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Major sports contracts |
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League: |
Average annual fees: |
Contract length: |
Increase over previous contract: |
Current rights-holders: |
|
NFL |
$2.2 billion |
8 years |
100 percent |
CBS, ABC, Fox, ESPN |
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MLB |
$553 million |
6 years |
60 percent |
Fox, ESPN |
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NASCAR |
$400 million |
6 years |
300 percent |
NBC, Fox |
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NHL |
$120 million |
5 years |
173 percent |
ABC, ESPN |
|
NBA |
$660 million |
4 years |
137 percent |
NBC, Turner Sports |
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Source: Paul Kagan Associates
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Gabriel Spitzer is a staff writer for Media Life.
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