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NFL and Commissioner Roger Goodell are betting they'll be able to negotiate higher rights fees when four major TV deals expire in 2014. Credit: Mike Stobe / Getty Images


August 19, 2009


The National Football League is making a big bet on 2014.


That's when its four big television deals are set to expire, which means the league will either have incredible leverage or find itself in a deep hole, depending on what the media landscape looks like five years from now.


The league engineered this little coup today by extending NBC's Sunday Night Football deal for two more years, through the 2013 season. Earlier this year, CBS Corp. and News Corp.'s Fox signed similar extensions for their Sunday afternoon packages. Walt Disney Co.'s ESPN Monday night deal is up at that time as well.


The NFL and its commissioner, Roger Goodell, are betting this will put them in the driver's seat when negotiations roll around despite the fact that viewing audiences are eroding. The league gets about $3.1 billion annually from those deals and pulls an additional billion from DirecTV Corp. for its Sunday Ticket package, which gives subscribers access to all NFL games. That deal isn't up until after the 2014 season. The NFL also has a deal with its own TV channel, the NFL Network, that pays the league about $400 million a year, although the money simply goes from one internal pocket to another.


"A vulnerable property would never do this," said David Carter, executive director of USC's Sports Business Institute, of the NFL's strategy.


Though the NFL has always been shrewd at negotiating steady increases in the rights fees it gets from its television partners, having four major deals expire at the same time is not without risk. There's a school of thought that it is better to stagger your renewals as a hedge of protection should the economy go south or there is a big drop in ratings that could make the property less appealing.


There may also be fewer bidders then, as broadcast networks are under extreme pressure to cut costs in the face of declining ratings and greater competition for advertising dollars. And although the NFL is a premiere property that still draws mass audiences, whether CBS, NBC and Fox will be in a position to keep paying exorbitant rights fees remains to be seen. Cable networks are also facing similar pressures and are becoming more niche-focused, which could limit the appeal of a broad-based sports property.


"There are a lot of variables to this going forward," Carter said. "These deals in the past used to be six to eight years in length and we have since learned that length of time is multiple business cycles."


Of course, the league's rationale for wanting to extend these deals now isn't entirely based on future leverage. The bad economy has hit it as well. Fewer corporations are buying luxury boxes and families have less to spend on pricey tickets. Teams and the league have been trimming their own staffs.


On top of that, the league's own labor situation could get cloudy next year. Its contract with its players union is up after the 2010 season and the NFL wants to have its TV revenue locked in for the foreseeable future should there be any unrest.


-- Joe Flint, Los Angeles Times
 

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One thing Joe Flint missed:


When the previous contracts expired, the end of the 2011 season, might have been a tough time for the NFL to negotiate new deals.


Traditionally the league gets its TV deals done at least a year ahead of time, which would have meant negotiating sometime in 2010 -- and with the economy the way it is (and auto makers under particular pressure to tighten their belts) it could have been a very hard sell.


As another bonus for the NFL, now, in a horrible economy, it gets two more years from all its "partners" at sky-high pre-depression rates.


Those who think the late Pete Rozelle and his successoprs have ever left even a nickle on the table haven't been following the NFL through the years.
 

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Given that the 2011 season could face a strike by the players, that's another reason not to renegotiate in 2010.
 

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Quote:
Originally Posted by keenan /forum/post/17036269


I'm guessing this also means there won't be any more games added to the NFL Network channel before 2014, which suits me just fine.

I wouldnt say thats true....what if as rumoured the NFL possibly goes to a 17 or even 18 game season in 2011.
 

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Quote:
Originally Posted by dcowboy7 /forum/post/17036944


I wouldnt say thats true....what if as rumoured the NFL possibly goes to a 17 or even 18 game season in 2011.

That's always a possibility I suppose, but wouldn't that require a TV contract re-negotiation, changing the dynamics of the currently in place deals that has the NFL looking at 2014 as a target year for new contracts?
 

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Not a new negotiation; I believe the parameters have already been set should the schedule expand. The NFL would probably just get some more money, and increase the NFL Network's games by a couple.
 

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Quote:
Originally Posted by fredfa /forum/post/17037148


Not a new negotiation; I believe the parameters have already been set should the schedule expand. The NFL would probably just get some more money, and increase the NFL Network's games by a couple.

That makes sense, personally I think 16 games is plenty, I hope the NFL doesn't get afflicted with the NASCAR "we want to be on TV every weekend of the year" syndrome.
 
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