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As we enter 2017, the sports rights bubble continues to burst and we continue to come to terms with the fact that many of these sports rights deals are untenable in the modern marketplace. Particularly those deals that are rooted in a rapidly declining cable and satellite market. Unfortunately for many media companies their sports television contracts were signed in brighter days, days like the ones before ESPN lost 1.4 million cable and satellite subscribers in the past three months. Or ten million cable and satellite subscribers in the past three years.
But what’s the worst television contract in all of sports? I thought it was the recent deal that the NBA signed with ESPN and Turner, but I was wrong. Turns out that it’s actually ESPN’s deal with the NFL which allows ESPN to carry one wild card game each year. This year ESPN will be televising the worst wild card game of the bunch in the worst time slot on the worst day for NFL football, the Oakland Raiders at the Houston Texans on Saturday afternoon.
It’s a battle between Matt McGloin/Connor Cook and Tom Savage/Brock Osweiler for the right to advance to play the New England Patriots and be executed on live television.
But until today I thought that at least ESPN was getting this wild card game as part of the $1.9 billion a year it pays for Monday Night Football and assorted other NFL studio shows. That Monday Night Football package just hit the lowest ratings in nearly a decade and narrowly avoided becoming the worst rated package of games in over forty years of Monday Night Football. But I was wrong about this game being included in that deal.
It turns out, and this is positively mind boggling, that ESPN pays $100 million dollars just to air this single wild card game.
Seriously, ESPN is paying $100 million to televise Raiders at Texans on Saturday.
Every other network that carries the NFL — NBC, CBS, and Fox — has their playoff games or the Super Bowl, which rotates between NBC, CBS and Fox each three years, included within their yearly rights fee. Except for ESPN, which pays an extra $100 million for one crappy wild card game.
But, wait, it gets worse.
ESPN can only make around $25 million airing this wild card game.
So ESPN will lose $75 million televising one playoff football game.
Putting this wild card cost into context, the best deal in televised sports right now is CBS’s to carry the top game in the SEC every week. CBS pays $55 million a year for this right, or an average of $3.5 million per game. This means that the SEC title game, which is also included in this package, costs $96.5 million less than the NFL Wild Card game on ESPN. And that the entire SEC on CBS package costs $45 million less than the single NFL wild card game airing on ESPN.
Not surprisingly, the SEC on CBS is wildly profitable.
This means the wild card game on ESPN is the worst contract in the history of American sports on television and I’m not sure there’s even a close second. Between now and 2021, when this contract runs out, ESPN will lose over $600 million airing this one crappy wild card game a year.
And here’s the kicker, the game is also simulcast for free on ABC. So you don’t even need a cable package to watch this game. That is, ESPN derives no benefit whatsoever from airing this game exclusively on cable. At least with other television properties it has overpaid for, like the college football playoff, the NBA and the major bowl games, ESPN can point out that the only way you can watch these games is with a satellite or cable subscription.
In theory that ensures that ESPN remains on the primary tier for cable and satellite companies.
But not with this game.
Even if you don’t have ESPN, you can watch the game on ABC.
Think that’s bad? It gets worse.
The NFL assigns ESPN the worst wild card game in the worst time slot on the worst day possible and then decides whether or not it wants to take the $100 million each year. That is, ESPN doesn’t even get to choose whether it wants to air the game or not. The NFL just says, “You’re airing it, give us $100 million.”
Putting this contract into terms that everyone can easily understand, the NFL is the guy telling ESPN to squeal like a pig in Deliverance.
So the next time you hear someone criticize ESPN talent as being overpaid, remember that ESPN’s problem isn’t talent costs, it’s these bloated television contracts which are costing them billions a year in losses. Every hour that ESPN airs of the Raiders-Texans game on Saturday will cost it $25 million. From a business perspective, Raiders-Texans, which is a dumpster fire of a game, is actually a dumpster fire of burning cash for ESPN.
Remember when everyone thought the Texans made a mistake signing Brock Osweiler for $37 million guaranteed? At least the Texans get Osweiler for 32 games at that rate. Hell, that’s just over a million a game. ESPN is going to lose $75 million just televising one of Osweiler’s games.
We need to update the worst free agent deals of all time. Move over Dan Snyder, your signing of Albert Haynesworth looks like a bargain compared to ESPN’s signing of the NFL wild card game.
Turns out the pants business is not so bad after all, at least I didn’t go into business televising the NFL wild card games.