Networks break bank for NFL New deal could net league $6-8 billion

December 16, 1997|By Milton Kent | Milton Kent,SUN SPORTS MEDIA CRITIC

New York Mayor Rudolph Giuliani has proudly crowed about his skill in reducing crime in the Big Apple, but at some point in the next few weeks, a group of network television executives is going to get mugged in his city.

Between now and the Super Bowl, the next NFL television contract likely will be settled, and when it is, the league and its owners will pocket between $6 billion and $8 billion, probably over a four-year period, for the rights to telecast their games, more than a 50 percent boost from the $4.4 billion pact that will expire at season's end.

Of course, the league no longer has teams in Los Angeles, Houston and Cleveland, three of the nation's 13 largest television markets, regularly experiences blackouts in a number of its cities and is experiencing a downward trend in Super Bowl ratings as well as a fall in this season's numbers.

And none of it matters, for every one of those top network officials would willingly fork over his wallet, car and the keys to the executive washroom for an NFL telecast package because to be without one would be worse than actually getting mugged.

"I am happily outside the process. These are anxious times for the networks," said Neal Pilson, president of Pilson Communications.

This is very important stuff to television types, so much so that no network official, regardless the level, will allow himself to be quoted on the record for fear of offending the NFL.

This is also very important stuff to the owners and to you, the fan/viewer.

Because NFL teams under the collective bargaining agreement have to give up 62 percent of all gross revenues to the players, a television contract that pays $2 billion per season could bring a $67 million check each year to an owner -- like, for instance, the Ravens' Art Modell -- which in theory goes to getting better players.

Even a deal that pays $1.75 billion per year, which seems more likely, would pay out about $58 million per team per year, a hefty boost from this year's $41 million.

Despite the very real prospect that they'll lose money on the proposition -- perhaps as much as $100 million a year by some estimates -- all the broadcast networks (ABC, CBS, Fox and NBC) and some cable outlets (ESPN, Turner and Fox Sports Net) probably will pay whatever is necessary to get the NFL, in negotiations that probably won't heat up until next month.

The reason? Of all the major team sports, none delivers the kind of audience the NFL does.

On any given fall Sunday afternoon, nearly 28 million men aged 18-49 -- the most important demographic of all as far as advertisers are concerned -- plop down in their easy chairs to watch NFL games. While the NBA's numbers are rising, they still don't approach those of football, and hockey and baseball can only dream of football's ratings.

And that's important because a CBS, NBC, Fox or ABC can use football games to tell those 28 million men that there are other shows worth watching on the network, which brings up the entire value of the network.

The NFL's negotiating party works differently than most other television rights fee negotiations, in that the league sets the agenda by going to its incumbents with a figure that it desires on its various packages and then waiting for responses.

When the differences between the figures are too great, the league looks for other suitors. That's what happened in 1993, when it took the more valuable NFC package from CBS where it had been for more than 35 years to Fox, which offered $100 million more per year.

Pilson, who was CBS Sports president at that time, recalls being at a Christmas party where he and 10 other network executives persuaded then-CBS owner Lawrence Tisch to raise the network's bid to $290 million per year.

"We were sitting in [former CBS chief programmer] Howard Stringer's bedroom and a group of us finally got permission to go to $290 million," Pilson said. "At that point, the phone rang and it was [NFL president] Neil Austrian, telling us that the number was no longer $290 million, but $390 million. At that point, it was time to go downstairs to the party."

Pilson, who left the network not long after that, now jokes that he visits his therapist and he's now comfortable with what happened, but the loss of football helped propel CBS into a downward spiral that is only began to reverse itself this year.

Indeed, the only certainties in this year's negotiations that everyone will cop to are that Fox will emerge with some package -- whether it's the NFC slate it currently has, or the AFC schedule that NBC holds, or ABC's "Monday Night Football" -- and that CBS will scramble to get a package.

In snatching the NFC away from CBS four years ago with a $1.58 billion bid, Fox chairman Rupert Murdoch set an impossibly high bar, fully realizing that the fledgling network could not make money on the deal. Indeed, the network acknowledged that it would likely lose $350 million over four years, but some believe its losses are as high as $600 million.

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