NHL's new TV deal is a winner
By Stu Hackel
The NHL's new 10-year U.S. TV deal with NBC and the soon-to-be-renamed Versus is a triumph for Gary Bettman and his negotiators, Bill Daly and John Collins. And while some observers tried to make the case that any new deal that didn't include ESPN would not be in the game's best interests, the fact is that this one will be good for the NHL and good for fans.
When we first wrote in February that the newly formed NBC Sports Group would be the likely winner in the negotiations, the process was in its early stages. At one point, a source said, the NHL sought $250 million per year from the networks that were bidding for their rights. In the end, the winning bid was below that amount. It's been widely reported that the final figure is $200 million annually, although Richard Sandomir in The New York Times pegs it at $190 million.
Regardless, it is, in Bettman's words during yesterday conference call announcing the deal, "the most significant U.S. media rights partnership in the league's history."
What does this deal mean for fans? For one thing, starting next season, there will be more regular season games available on Versus, an increase from the 50 offered this season to as many as 100.
Additionally, every playoff game will be exclusively available on TV either on NBC or one of the NBC-owned channels, be it Versus (or NBC Sport Net or Vs.NBC or whatever it will be called), CNBC, MSNBC or another channel like USA Network, as was the model during the Vancouver Winter Olympics. The only way to follow all the playoff action now is to buy the NHL's Center Ice package or one of its other digital platforms.
NBC will also create a new national showcase game, like the Winter Classic (although probably not outdoors), to be played each season on the Friday following Thanksgiving. There are also supposedly plans in the works for special programming in March as the playoff races heat up, perhaps conceived as counter-programming to the NCAA men's basketball tournament.
The spirit of innovation that NBC has shown during its tenure with the NHL is an under-appreciated development that helped make the league's decision to stay with it easier -- along with the fact that, as Sandomir reported, ESPN's bid was 15 to 20 percent below what the NBC Sports Group offered. But NBC was the prime force behind the creation of the Winter Classic.
Through Executive Producer Sam Flood, who has a hockey background, NBC also pioneered the "Inside The Glass" position with Pierre McGuire (who remains the best at it), which truly brings fans closer to the action than ever.
And since the Comcast-NBC merger in February, with better announcers, improved production and a much nicer studio, it has been accelerating the improvement of Versus's NHL coverage, which had grown modestly on its own from its rugged beginnings on what was first called OLN, the Outdoor Life Network.
Clearly, the NHL is of increasing importance to the NBC Sports Group, and those who believe that ABC-ESPN would have been the preferable choice don't recognize that the arc of the league's last tenure with the Worldwide Leader went in the opposite direction. As it maintained and acquired important rights to the NFL, NBA and MLB, ESPN marginalized the NHL. "ESPN in my opinion is the strongest sports operation not only today in the United States; it's the strongest sports operation that's ever existed on earth," Dick Ebersol, the chairman of NBC Sports, said yesterday. "But they have a lot of properties."
As a consequence, ESPN's track record with the NHL was marked by a gradually diminished importance as significant games were shifted off ESPN to ESPN2. The nightly Hockey2Night highlights show was cut back and then canceled. And finally, ESPN offered a decreased amount for the rights to the product, down from the $120 million contract the NHL had with it from 1999-2004 and there were some harsh words coming from Bristol as well.
Considering the wider scope of the new NBC Sports Group deal, it's very uncertain whether ESPN could have created space for the same amount of programming inventory that we'll see on the NBC channels going forward.
Ebersol pledged that what the NHL experienced on ESPN would not happen to the league if and when NBC acquires more sports properties. "Gary (Bettman) and Bill (Daly) and John (Collins) know what our commitment is to their sport, and when we have brothers and sisters for the National Hockey League, which will be soon, we are really never going to lessen our support and our commitment to the National Hockey League," he said.
As for the supposed boost the NHL would get from an ESPN deal by having more of its highlights prominently shown on SportsCenter, that was never the case when they previously had the league's rights, and there was no reason to believe that would change had it gotten the rights back. Just how much those highlights would help the NHL is questionable in any event.
There was some thought that ESPN might carve out a shared cable deal with Versus, and perhaps take on a small package for a Game of the Week. But if that was ever on the table, it obviously didn't interest the NHL enough to finalize it, either because the dollars offered for such an arrangement weren't enough or the league felt it would damage the good relationship that has developed between it and NBC/Versus during the last six years.
Ebersol and his negotiating team wanted a high degree of exclusivity for this product. They feel they can best maximize its value by not having to compete in the advertising marketplace with the teams' local rights-holders in the playoffs and with another national cable network for weekly games. That's what they are paying the NHL for, and one reason the rights fee is as high as it is.
The price may also have been inflated by the possibility of potential work stoppages in the NFL and NBA next season, which made the NHL more desirable to all who considered bidding on it, and that group included Fox and Turner in addition to ESPN and NBC.
For each NHL team, this deal means their increase in league-generated revenue from U.S. TV will rise from the neighborhood of $2.5 million to between $6.3 and $6.7 million per season. Over half of that is what Versus will pay for the U.S. national cable TV rights, and the rest is for the games to be shown on NBC, which previously paid no money up front for the rights to air NHL games, but divided revenue with the league after paying its production costs.
The $1.9-$2 billion deal still falls far short of the 10-year $20.4 billion the NFL rakes in. The NBA’s current eight-year deal brings in $7.4 billion. The NHL's new contract does draw surprisingly close to MLB's current seven-year deals that are worth a combined $3 billion, although baseball teams' local broadcasting revenues can be extremely high. The NHL's local rights fees are not close by comparison.
As we wrote in February, within the TV industry the thinking is that NBC’s retaining the rights to the NHL was crucial, not just to its effort to upgrade Versus, but also for the prestige of NBC-Universal’s new corporate structure and the then-brand new NBC Sports Group, as the contract was their first deal to be negotiated.
A source said at the time that Flyers owner Ed Snider “won’t let the NHL leave” Versus and NBC. “And I’d be very surprised if he would devalue the brand by letting ESPN have even a secondary national cable package.” In addition to his position as a powerful NHL team owner and member of the league’s Board of Governors Executive Committee, Snider is American Chairman of Comcast Spectacor.
""This is good stuff," Edmonton Oilers President Patrick Laforge told Jim Matheson of The Edmonton Journal. "Take the NFL out of it. If you run us up against the NBA, I don't think we're that far away. It's a step forward. You can't go from zero to 60 without taking steps. Everybody was hoping this new contract would have cash in it. This is a good first step.
"It's good for growing the fans in the United States. We've been working to improve our TV exposure."