DirecTV "Guarantee" Would Likely Reduce Future Payments

The report that the NFL will receive ongoing payments from DirecTV as part of the Sunday Ticket package even if there’s a work stoppage in 2011 seemed too good to be true.
And, apparently, there’s a good reason for that.
An industry source tells us that provisions of this nature are standard practice in broadcast deals relating to pro sports.
“All sports league media deals are structured so payments continue in a lockout or strike,” the source said.  “The money is then deducted off future years. . . .  The news would have been had this not been the case.”
So, if the past practice applies in the present case, DirecTV would earn back its $1 billion for 2011 by reducing the payouts in 2012, 2013, and 2014.
This development bolsters our belief that the league’s current goal is to apply as much pressure on the union as possible, in the hopes of working out a deal and avoiding a work stoppage.
The league has done a good job of creating the impression that it wants one, and the league surely hopes that the posturing will result in a new deal containing significant concessions that favor management.

6 responses to “DirecTV "Guarantee" Would Likely Reduce Future Payments

  1. Kind of off point for this post, but what happens to the draft if there’s a lock out? If they hold a draft and then have a lock out, do the teams still have the rights to the rookies (assuming they aren’t signed for a season they don’t play)? And if the league comes back the next year, would the draft order stay the same or would they mix it up?

  2. Players are too greedy anyway. Seriously, playing in the NFL is a privilege, not a right.
    The issue with retired players not getting quality benefits and health care.. I see that. However, the huge salaries that these guys demand?…. not so much.

    What was the old Doobie Brothers album, “What Were Once Vices Are Now
    Habits”? Directv and NFL started out great: every game, every week for about
    50 cents/game. Now, you get all the bells and whistles and it’s more than double
    that and just plain expensive. Plus, you’re still at the effect of the 24 hour sell-out
    rule, which is so Pete Rozelle.
    Ironwood Communications is an installer that subcontracts from Directv. I
    couldn’t get all the “new” hi-def channels on one set, so they sent out this guy with
    HUGE hoops in his ears, but Ironwood wouldn’t let him wear the hoops. So he just
    looked frightening. Inked up, droopy, wholeful ears, frightening.
    After 45 minutes, all he could offer was a new dish. Fine. Works great. All
    the channels. Next weekend, I’m in the back yard and can see my roof:
    not only did he leave the old dish screwed into my roof (and not removed as
    the courtesy that’s automatically implied by service personnel), there was an
    earlier dish that Directv/Ironwood had left. I had three dishes on my roof!
    If you’ve had dishes replaced, I guaranfriggin-tee you, they’re still on your roof.
    I was hoping to break that NFL/Directv monopoly but Commissioner Gordon,
    errrrrrrrrrrrr, Goddell has more important things to do, like throwback jerseys.

  4. I think even though it’s not unprecedented, this news makes it even better for the owners. If they’re getting paid by TV contracts when there isn’t football, that’s 59% more of the TV pie for those fiscal years. Then when they discount future payments, that’s lower revenue for calculating the salary cap. And if the report is right, you’re not talking about just DirecTV, but all of the TV contracts. DirecTV just went from paying $700M/yr to $1B/yr. That’s a 43% jump in rights fees. Even if the broadcast contracts go up only half that, that’s a lot of money. It will also be a lot of money the player’s don’t get.

  5. I think the deal between the NFL and DirecTV is criminal, in that it forces people who don’t live in the region of their favorite team to get DirecTV in order to see their team’s games. I’ve had DirecTV for the last 3 years and I love being able to see every Eagles game, even though I live 3,000 miles away, but I pay a hefty price for it. If not for this “monopoly” that DirecTV has, they could have the games on, the same way that Major League Baseball has all of the games on I would truly hope that the next time the TV contract renewal comes up for the NFL games that they do something about this injustice.

  6. Mike,
    Another advantage for the league I think you are missing here (or I am wrong) is that the league gets to keep all the money they get paid in 2011 in the event of a lockout because they won’t have to pay the players. So they don’t have to give the players their 59% cut.
    Consequently, Direct TV will then pay $1 Billion less over the next three seasons after the lockout. That means the leagues total revenue will be $1 Billion less during those 3 years then it would have been, so the leagues total revenue in each contract year will be about $333 million less than it would have been. In other words, the players will lose out on getting their 59% cut (or whatever % of league revenue is agreed upon) of that $1 billion paid in 2011. This is huge leverage for the league.

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