The National Football League and ESPN have reportedly finalized a deal extending their existing media rights agreement--and ESPN has the sticky end of it, paying 65-70% more than it does now: That's up to $2 billion a year. Which is about the same figure being kicked around as Facebook's annual revenue. Higher cable fees loom.
According to some reports, ESPN (Disney owned) and the NFL started having serious discussions about their deal around Labor Day 2010, initially agreeing to extend their existing deal, which allowed the negotiations to proceed past the original Thanksgiving expiration date. At the heart of the new deal, other than the NFL's evident hunger for raw, hard cash in large quantities, was ESPN's drive toward "TV Everywhere," which would permit broadcasting over broadband systems and streaming onto mobile devices like tablets and smartphones.
ESPN will apparently hang on to the rights to broadcast key moments, including highlights and the NFL Draft. But neither ESPN nor ABC seems to have landed the rights to carry the Super Bowl--which one could reasonably think might be part of a $2 billion-a-year deal.
ESPN is forking over some 70% more per annum because the NFL is increasingly aware of how valuable its content is, particularly in the digital broadcast era where TV content is increasingly diluted across different platforms. In 2010 the league demonstrated this by signing a $720 million sponsorship deal with Verizon, giving Verizon exclusive mobile access to Sunday Night Football and NFL Network games.
But there may be unpleasant side effects to the NFL's price hike: Players may want a slice of the action, and their agents could easily use this moment as the time to ask their teams for more pay. Game tickets may hedge upwards, along with the cost of hot dogs and beers. And the cost of cable packages that cover ESPN may also rise. Essentially the NFL's deal will, indirectly, over time, siphon ever more cash from the wallets of football fans across the U.S.--and the world.
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