Tim Leiweke predicts a doubling of TV rights fees

Posted by Mike Florio on April 11, 2011, 3:39 PM EDT
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Unlike most members of the media, I’ve been feeling optimistic about the resumption of mediation in the NFL’s labor dispute.

But then I read the latest SportsBusiness Journal, which includes an article from John Ourand regarding a topic discussed at the recent World Congress of Sports.

AEG president and CEO Tim Leiweke is spearheading an effort to put the NFL back in L.A.  And Leiweke sees an obscenely bright future for the NFL when it comes to TV rights.

“You can look at the NFL and bet the house they’re going to double their rights fees in the next negotiation,” Leiweke said.

Reminded of comments from CBS president and CEO Les Moonves from eight years earlier indicating that the “days of networks paying ever-escalating rights fees may be over,” Leiweke said, “That’s because he’s the guy paying.”

If the NFLPA* takes Leiweke’s words to heart, the NFLPA* will want far more than $161 million per team in salary and benefits for 2014, the first year of the next TV deal.  At a minimum, the NFLPA* will want assurances that they’ll share in the revenues over and above the league’s paltry estimate of 2.5-percent growth for 2014.

Also, we can’t imagine the NFL being thrilled with Leiweke’s speculation.  Really, why would Leiweke speak so candidly about a looming explosion in TV revenues, given that the finalization of a CBA will be, as a practical matter, essential to the completion of the labor deal?

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24 responses to “Tim Leiweke predicts a doubling of TV rights fees”

  1. Lol. Look like the cats out the bag. Wonder how the owners are going to spin this new revelation. Tim Leiweke is not part of the owners yet, so he’s not on their same page of pleading poverty. Think the owners are going to punish him? No…they want that entry fee and being back in the # 2 T.V. market.

  3. What this means is simple: It runs downhill to all of the fans who pay. Increased cable bills.

    Also increased costs of TV means higher costs for airing commercials means more expensive products. So EVERYONE gets screwed.

    The more I hear about the owners and players the more I don’t want anything to do with being a fan of football.

    GREED IS RUINING A GREAT SPORT

    Way to go guys. Way to go…

  4. He’s trolling for a buyer for the non-existent LA franchise. The NFL likes talking up new construction and they want the LA card back in their arsenal but would undoubtedly rather this kind of silly talk resume AFTER the new CBA is signed.

  5. The players should just fight for a yearly % increase that is somewhat linked to the TV deal. If they get more TV revenue as a league their share goes up, if they get a worse deal it goes down.

  6. The more I hear about the owners and players the more I don’t want anything to do with being a fan of football.

    _____________________________

    From what I can see the players have done nothing wrong here besides saying “prove it” when the owners tried to cry poor and stick them to the tune of 1 billion dollars.

  7. I’ll think I see where we’re heading. Sooner, rather than later, the NFL and probably most other sports, will only be available on a PPV basis.

    The NFL already has there own network, as do most major sports.
    Fans have already set the precedent, that they’re willing to pay to watch sports on TV – DirecTV has the NFL Sunday Ticket, and last year they started selling individual games.
    Blackouts in the NFL are increasing, with fans opting to stay home and watch games on their big screens.

    Pretty soon, teams won’t care if they don’t sell their stadiums out, once their legal teams figure out how to sidestep their anti-trust exemptions.

    Want to see a game on TV? DirecTV will let you watch for $45 a pop. How long can it be before all games are this way?

  8. Why people should go out and support the UFL, boycott everything NFL, and force it to die enough that it has to re-remember and return to competing for the fans dollars.

    The NFL in the last decade has been ruined by the growing wealth in the game. The bigger a monster something becomes, the more greed shown by the owners and players, who all give lip-service to the whole “think of the fans” line only because that’s who butters everyone’s bread.

    We’re just the pig on a spit-roast, sweetened up with false words to keep us there.

  10. Ok, so a new team in LA adds dollars but I clearly recall someone from Fox or CBS saying at the last contract, “….there’s no way we can make money on this contract”. Now they’re gonna get double?

    I know a bag of potato chips wasn’t $4 before the last contract. In the end, as you already know, it’s us that will pay for all this.

    Making Al Davis more money; just what I wanted to do.

  11. Peter King reported in his column today that you can get a tuna sandwich at the Masters tournament for $1.50. That’s right… a buck and a half.

    You couldn’t even buy a match to light a cigar for $1.50 in an NFL stadium while watching a game. Shoot, you’d probably have to pay $20 at Jerry World for one bubble gum cigarette.

    I too think the trend is to eventually charge all TV viewers to watch any and all NFL games.

    Well, when that day comes, that’s the day I give up football watching and go back to playing poker on Sunday afternoons.

  12. Duh.

    This fight is ALL about sharing the explosive growth in NFL revenue that’s coming.

    The owners don’t want to.

    Always has been and always will be the core issue.

    The top earning franchises want to keep the future gold mine for themselves. They don’t want to share with the players. They don’t want to share with small market teams.

    Maybe PFT will figure it out one of these days.

    Once the players have been dealt with, the next big issue will be the owners fighting among themselves. Last thing Bob Kraft & his pal Jurry wants to do is give away revenue their teams earn to such NFL lowlifes like Carolina or Jacksonville.

  13. @knightringonow

    Don’t forget Mr Davis is against this lockout & CBA fight.

    He’s not your enemy. He just wants his team to play football.

  15. I’ve gotta agree with TTommytom, and add that even though people are able to pay $45 per game PPV, few will do it. Many casual fans will be lost, which is huge. How many of the kids wearing the jerseys actually watch those games? It’ll be far less. How many are pissed and leaving for a few years? Some. How many are cancelling their DirectV Sunday Ticket like myself? More.
    Not siding with the owners nor the players. Way too complex for me to care, and so much money does matter ,but this is entertainment. And I have a choice. Iron Maiden’s touring in Europe this summer and fall. I’ll go see them instead of a few games.

  16. The tv revenue may go up, but there won’t be the same gate revenues. It’s now/soon to be better to watch the game from home. Only hardcores will go to games, they will sell out less games, meaning cheaper ticket prices.

  17. Want to see a game on TV? DirecTV will let you watch for $45 a pop. How long can it be before all games are this way?

    This has been discussed for the last few years and you can bet that we are heading there sooner, rather than later. I have heard 50 dollars ppv for reg.season games and 100 dollars for playoffs. When it comes….I AM ALL DONE !!

  19. The only people dumber than the players in this whole debacle is us fans. All I know is that before the last contract, when I was a kid, my dad used to be able to be able to take the entire family to multiple NFL games each season. Now, I can only afford to take my family to one game each season!!!! (and I make much more money than my dad did!!)…. I have no doubt that after this new contract, I wont be able to afford to take my family to a game anymore. sad. Hope your happy players! Greedy bastards….

  20. This is why I love pirated streams. The NFL won’t be getting any revenue from me because I’m usually busy on Sundays and TIVO my games to watch on Monday. GO BRONCOS

  21. Shifting to full PPV (if/when it happens) would be detrimental for the sport and the fans IMO. However, if the league shifts to full PPV I wonder what happens to the teams that have benefited from public funding, taxes, etc. to help build infrastructure, stadiums, and so on? If the league shifts to PPV, then will all public investment in the product end? Moreover, for the localities that have helped finance the NFL, will the teams/league return/refund some of these benefits to the localities? What kind of new agreements would be required w/ the localities? Sure, you can make an argument about broader tax revenues going to localities from game day and related football operations, but if the league/teams move to further privatize the benefits of operation and broadcast rights (narrower benefits for the public that helped fund them), then they better be prepared to privatize the costs and absorb the hit to their bottom line without creating additional externalities.

  22. No matter who is right in this war between the NFL and the players, both sides do not have any concern for us, the fans. They are killing the fan interest that produces ticket and merchandise sales, but most importantly the television audience they sell to advertisers. The NFL is expected to enter into TV contracts worth 46 Billion dollars as soon as the next CBA is signed. The NFL just assumes we will once again slip back into old modes of behavior, and they have no fear we will not. Let’s just put some fear in them.

    The NFL will be watching their draft very closely for any signs of slippage in its viewing audience. Remember last year, when they so proudly announced that the television ratings had increased by 18%, it was a sign that the NFL reached new levels of popularity. Now imagine how they would react if the rating declined by 50%. And if you intend to go to the draft in person, don’t go, let the auditorium be half filled. Support your fellow fans by not acting like a fan. You can watch the results of the Draft on your late night sports report, and these blogs will be filled chatter about the selections. You will know who they are, you will lose nothing, but maybe gain a season. Send a message that the sleeping giant is starting to awaken, and he can not be taken for granted, or ignored any longer. This is only the first step.

    Pass this message on, post it to your Facebook page and other blogs, Tweet “Join Fan Boycott of NFL Draft on TV”. Spread the word,

  23. But why did the owners terminate the contract a year early, bringing on this whole mess. It is not that the owners broke the contract, they opted out as they had the right to do under the CBA, but why did they do so? It is all about the money that will be paid in the new contract between the NFL and the TV networks. The TV networks need to know their budgets before they make their commitment for the pilots of new shows. Therefore they want to know what they will paying for the NFL rights as soon as possible. However if the deal is done while the current CBA is in effect, the expected players share will be known. The owners did not want that to happen. The NFL will be too successful to make arguments for economic relief. They would rather negotiate while the real numbers are unknown.

    The TV trade newspaper “The Hollywood Reporter” reports that TV industry analysts expect the NFL will attain its next set of TV agreements for the period beginning in 2014 right after it signs a new collective bargaining agreement with the players association. They estimated that the new long-term NFL rights agreements with ESPN, CBS, Fox and NBC could add $46 billion in additional sports commitments for the TV industry, more then an additional 4.5 Billion per year above what they presently pay. Sports Business Daily reported that ESPN alone would pay $1.8 billion to 1.9 billion annually, up from $1.1 billion, for a new contract. According to the Players Association when they rejected owners proposal, they stated “Your proposal also would have given the owners 100% of all revenues above the low projections, including the first year of new TV contracts in 2014. Your offer did NOT meet the players halfway when it would have given 100% of the additional revenues to the owners.” In two years, there would be no question about what kind of money they were talking about, it would no longer be a low projection by the owner, the numbers would be known.

    The TV money is a given – and the NFL has other revenue streams. Fans filled stadiums to 95% capacity last season and according to “Forbes”, the widely respected business magazine, “sponsors are banging down the NFL’s door to do business. Anheuser-Busch inked a six-year, $1.2 billion deal with the NFL last year to make Bud Light the league’s official beer replacing Coors Light.” How many items do you see that are “official NFL” products? Each of them adds to the NFL’s revenue. Again “Forbes” estimates “if the owners are successful in getting players to lop $1 billion from the shared pool with players, team values will rise a cumulative $15 billion.”

    The NFL salary cap, prior to the present CBA extension was based on a percentage of “Defined Gross Revenue” (DGR). This was the revenue shared by the 32 NFL teams. The biggest pieces of DGR were the multibillion dollar television contracts. The DGR also included ticket sales and team and NFL branded merchandise sales. What DGR didn’t include was local revenue, which includes local sponsorships like stadium naming rights and radio broadcasts. However, those local revenue streams are now included into the common and salary cap pool, called “Total Revenue.”

    This was done at the last extension of the CBA at the suggestion of the owners in order to resolve a conflict between the large market owners and the small market owners. The teams in New York, for example, received much more local revenue then the team in Kansas City. Since the pool of money was larger the Union was willing to take a smaller percentage of it, because the actual dollars the players received was increased. However, it must be remembered the pool to be shared was expanded at the owners request, not to satisfy a Union demand. Currently, the players take home approximately 55% share of Total Revenue. The share was higher – in the low to mid 60’s – when using the DGR system prior to the 2006 CBA, but even with a lower percentage, it results in an increased salary cap due to the larger starting revenue pool.

    The owners argue they need to reduce the Cap share of the players because many new stadiums need to be built, and they are no longer getting help from the state. While I don’t know how many stadiums “need” to be built, since many average Jet and Giant fans report very little difference in their actual experience of games as compared between the old and new stadiums. However, it is true, the cost of building a new stadium for the owners is going up, as municipalities no longer fund them. Yet, the owners already have sources of revenue, much of which is not shared with the players, that can be used to offset this lost. Some examples:

    1) The naming rights to their new stadiums. Among others, Reliant Energy paid the Houston Texans 400 million dollars for those rights for 32 years, Fed Ex is paying the Washington Redskins 200 million for the rights for the 27 years. Not a bad start for paying off a new stadium, however since 2006 it has been a part of the Cap.

    2) The newer stadiums have large club box seats and private suites, which are leased to corporations for thousands and 10’s of thousands of dollars. The money, in excess to the price of a normal seat, is not shared with either the players or other owners. It is imperative to distinguish between “ticket revenue” from luxury boxes, which is “subject to gate receipt sharing among NFL teams and the players,” and non-ticket luxury box revenue, which is not subject to revenue sharing. The fancier, more expensive the box, the lower the proportion that needs to be shared. Thus the owners have a big incentive to get a new stadium with fewer normal seats and more corporate seats. The owners will be getting a lot more money from these seats as this report suggests: “Cowboys Stadium has about 320 suites, and now the Dallas Cowboys have gone to court to force 10 luxury suite holders to honor their 20-year leases. The leaseholders put down deposits of $15,000 to $210,000, but stopped paying. Under the terms of the agreement, if a payment is missed, the entire balance becomes due. In the case of the current lawsuits, $82.3 million is at stake.” Assuming this is a representative sample, the Cowboys could expect more then 2.6 Billion dollars over the next 20 years from just those 320 suites. This alone would pay the total cost of the construction of the stadium, with a billion dollars left over.

    3) The Personal Seat License (PSL) which is a one time payment of $5k, $10k, $15k to have the right (?) to pay another $60 – $150 per ticket per game. If you don’t have a PSL, you can’t buy your annual season ticket, no matter how many years you have had your tickets. This is not considered revenue, subject to sharing. According to reports the NY Giants stood to make some 340 million from the sale of their PSL’s, that are sold for $5,000 to $20,000 per seat, depending upon seat location. The Jets will sell PSL’s for their games in the same stadium, and presumably make the same amount. It is only after they have put this money in the bank, do the teams sell their Tickets for the games. Of course since everything is bigger in Texas, the Cowboys’ PSL’s range from $15,000 to $150,000. If you’re building a billion dollar stadium, someone has to pay. In both cases the PSL’s offset a substantial part of the cost of the new stadium.

    4) Concession revenue, such as $5 Hot Dogs, $14 Deli Sandwiches, $8 Beers, are not shared with the players nor the other owners. In the past this revenue stream represented peanuts, but now with the growth of auxiliary services found in the new stadiums, it can be a very significant amount. The new stadiums now include restaurants, gift and clothing shops, and game arcades. The NFL is about tailgating, first paying 25 to thirty dollars for your parking spot in a enormous lot, and then partying with fellow fans. It is not about people wandering through an local area to spend money before and after a game. The owners don’t want fans to spend their money anywhere except at team-licensed or owned facilities within or adjacent to the stadium.

    The owners want customers, not fans. Customers can spend money for very expensive personnel seat licenses, club seats, luxury boxes and dine in expensive stadium eateries. Customers can also take off the cost of sports tickets as a business expense. This is why so many owners are pushing for very expensive luxurious new stadiums, not aimed at fans who can seldom afford the five to six hundred dollars, on average, for a family of four to attend a game. The stadiums must be big and luxurious, so that for the “Average Joe Fan” who attends one game, it is an event to be remembered. For their every game customers, their season ticket holder, it is a happening which is mostly a chance to social network.

  24. The owners want customers, not fans. Customers can spend money for very expensive personnel seat licenses, club seats, luxury boxes and dine in expensive stadium eateries.

    Your treasties is a well written piece…but…it all hinges upon [ in my humble opinion] one very important consideration….that there is absolutely no limit to the amount of money that corporations and indviduals will spend on NFL football. I believe that, as the cost of EVERYTHING associated with NFL football continues to rise, out of control, this entertainment package is going to experiance a proverbial, hole in the dyke, that well burst the dam ! I do not believe that personal and corporate entertainment budgets are going to be able to survive this exponential growth in spending, as money and income sources are decreasing in most areas, save for some key growth areas. I hope I am wrong but time will tell. Stadium ticket and concession prices have outstripped my ability to pay, which is sad, because I did enjoy the experiance.

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