Major sports leagues earn BILLIONS of dollars every year. That money comes directly from YOUR cable bill.

How Your Money Fuels The Dominance Of ESPN

Flickr Photo by John Frost

Lots of people have written about how big ESPN has grown in the last decade. A few of them even bother to explain how that happened. But just how big is “The Worldwide Leader in Sports” now?

Like all cable networks, ESPN charges pay TV companies a monthly fee for every subscriber that gets their channels. As ESPN has gotten the rights to more and bigger sports programming over its lifetime, that fee has risen steadily — and in recent years, it’s risen dramatically. At last count, the flagship ESPN channel charges $5.13 per customer per month, while ESPN2 charges $0.68. ESPN’s ancillary channels, such as ESPNEWS, ESPNU and ESPN Classic, get between $0.16 and $0.18 each per month on the average.

100 million people in the U.S. are paying for ESPN and ESPN2. That includes people who only have cable or satellite TV because they can’t get decent over-the-air reception in their homes, or people who want to watch The Daily Show and Mad Men without futzing with that damn computer. Tens of millions of people like this give money to ESPN without realizing they’re doing it.

That’s how ESPN can afford to give so much money to pro sports leagues and college conferences. Take a look at how much ESPN will pay for broadcast rights in 2013:

League
Rights Fee (in millions)
National Football League
$1,100
Major League Baseball
$360
National Basketball Association
$600
Major League Soccer
$9
FIFA (English-Language)
$12.5
Wimbledon
$40
U.S. Open Tennis
$23.3
Bowl Championship Series
$610
NCAA Championships
$42
ACC Sports
$240
SEC Sports
$150
Pac-12 Sports
$125
Big Ten Sports
$100
Big 12 Sports
$110
American Athletic Sports
$18
Mountain West Sports
$9
TOTAL
$3,549

 * – American Athletic Conference is the announced name for the new conference to be formed by the football schools of the old Big East.

Most of the college deals will last well beyond the end of this decade, including a BCS deal that lasts through 2026, because sports talk radio really needed college football fans to call in and complain about the BCS for the next 13 years. Those contracts with the NFL and MLB, however, expire after the 2013 seasons, and ESPN has already signed new deals with both leagues, which will pay $1.9 billion a year to the NFL and $700 million a year to MLB. That’s an additional $1.14 billion that ESPN will be paying in rights fees, starting in 2014.

As you can see, though, ESPN can handle that just fine.

Channel
Monthly Subscriber Fee
Number of Homes
Yearly Revenue (in millions)
ESPN
$5.13
100 million
$6,156
ESPN2
$0.68
100 million
$816
ESPNEWS
$0.18
90 million
$194
ESPNU
$0.18
73 million
$157
TOTAL
$7,323

All of those broadcast rights listed above account for a mere 48.4% of the subscriber fees ESPN charges us for just these four channels. When the new NFL and MLB contracts kick in in 2014, that number will grow to 64% of ESPN’s subscriber fees — not less than half, but still enough for huge profits.

Assuming, of course, those subscriber fees remain static. They won’t.

ESPN’s current deal with Time Warner Cable calls for it to receive more than $5.40 a sub a month starting in the middle of this year; then passing the $7 mark in 2017; and closing in on the $7.50 mark the following year. The deal calls for an annual increase in the 6.5% range.

By the end of this decade, ESPN is set to collect just about $8 a sub a month.

Oh, by the way, ESPN also made $3.3 billion in advertising revenue last year. Much of that, however, is pure profit. It’s your subscriber fees that allow ESPN to throw hundreds of millions of dollars at sports without batting an eye, while your TV bill goes up every year. Little wonder that ESPN is now valued at $40 billion and accounts for nearly one-third of the value of The Walt Disney Company.

ESPN is also the main reason why pay TV services are a terrible deal for anyone who isn’t a sports fan. Whether you watch it or not, ESPN will get roughly $70 of your money every year if you subscribe to cable or satellite TV. You can see how much of that $70 each pro league and college organization will receive this year by using the app on this site’s front page.

***

This article was updated on April 12, 2013, to reflect inaccuracies in ESPN’s yearly payments to the Big 12 Conference.

Are you okay with giving this much money to ESPN every year? Leave a comment below, or contact the author directly by email or Twitter.

One Response to How Your Money Fuels The Dominance Of ESPN

  1. [...] is $71.63/month. $33.06/month per subscriber pays the programming costs. (Incidentally, based on our current numbers, ESPN accounts for about $6 of that $33.06.) That leaves a gap of $38.57 between monthly [...]

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