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TV To Sports: The Bucks Stop Here
William Taaffe
February 24, 1986
The networks say they no longer can afford to pay high rights fees, and the sports world could soon be the poorer for it
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February 24, 1986

Tv To Sports: The Bucks Stop Here

The networks say they no longer can afford to pay high rights fees, and the sports world could soon be the poorer for it

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Rising Rights Fees: NFL

Years

Millions of dollars

'70

50

'71

50

'72

50

'73

50

'74

60

'75

60

'76

60

'77

60

'78

170

'79

170

'80

170

'81

170

'82

200

'83

300

'84

400+

'85

400+

Source: Broadcasting Magazine

There's a dagger aimed at the hearts of the NFL, major league baseball, the Sugar Bowl, the Kentucky Derby and other sports leagues and events we've come to know and love. The dagger isn't drugs or alcohol or under-the-table payments to college athletes. It is the financial problems besetting network television, the sugar daddy that has allowed owners, promoters and athletes to reap fortunes that 20 years ago would have seemed unfathomable. All of a sudden things are changing.

In 1985 the three networks lost $45 million on the NFL. NBC Sports stood to lose $15 million overall before deferring some rights payments until this year. CBS Sports, largely on the strength of NBA and NCAA basketball tournament telecasts, made a narrow profit of $10 million, although it lost $15 million on the NFL. ABC Sports, mainly because of its deal with the NFL, ran a staggering $30 to $50 million in the red, this following a record $70 million profit in the Olympic year of 1984—in short, a $100 million-plus Wrong Way Corrigan.

After years of paying ever-increasing millions for the rights to broadcast sports events, the networks now say that the gravy train has ground to a halt. The party's over. Some sports will have to live with less or take a walk, a situation fraught with peril for owners, athletes and fans, who may be asked to pay more for tickets if the TV spigot taps out.

Here's a synopsis of the turmoil:

•Last year, Capital Cities Communications, a media conglomerate renowned for its lean, bottom-line management approach, bought ABC. Out of the sports division he had led for 25 years went Roone Arledge. In as the division's president came Dennis Swanson, a former marine and sportscaster who said that ABC Sports will be "looking for relief on all rights contracts it negotiates. Swanson leaves open the possibility that Monday Night Football may be canceled after next season, and he is also paring costs in other ways (see box, page 27).

NFL commissioner Pete Rozelle, sobered by the harsher climate and faced with a lawsuit from the USFL that challenges the NFL's right to have its games televised on all three networks, is examining such TV alternatives as syndication and pay cable for 1987 and beyond. A month ago Rozelle said he expected a modest increase over the average $414 million per year—$65 million per team—the networks now pay the NFL when a new package is negotiated next year. Today, he won't go even that far.

•Last September, NBC, CBS and ABC all low-balled the Seoul Olympic Organizing Committee, which once expected to get as much as $1 billion for the U.S. TV rights to the 1988 Summer Games. NBC's winning bid was an unexpectedly modest $300 million (with the possibility of more under a revenue-sharing arrangement), and even at that price the network could lose millions.

•Last year, ABC's award-winning SportsBeat with Howard Cosell followed American Sportsman to the undertakers. CBS jettisoned the Belmont Stakes, the third leg of horse racing's Triple Crown. On Feb. 4, ABC refused to renew the Gator Bowl, and its coverage of the Sugar Bowl may end after 1987.

•Other traditional events may fade from network screens within a few years, predict sports presidents Arthur Watson of NBC and Peter Lund of CBS. Possible casualties: major horse races, auto races, including the Daytona 500, other postseason college football games such as the Peach and Fiesta bowls and regular-season college football packages.

Network sports programming has become less profitable largely because demand among advertisers for commercial time on those telecasts has slackened considerably. In the past, the networks paid big money for the rights to broadcast sports events because they could pass the costs along to advertisers who were only too willing to shell out, say, $185,000 for a 30-second commercial on Monday Night Football. Network salesmen snapped their fingers and the advertisers came running. But now, suddenly, the networks have to beg Madison Avenue to buy time—and often at considerably reduced prices.

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