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

The Sports Tax Charged By Cable TV

CableLast August, Major League Baseball signed a series of new contracts with ESPN, Fox, and Turner Sports that would pay the league roughly $1.5 billion a season, starting in 2014. Those same three networks had been paying MLB about $765 million per season on the previous contract.

When I first saw this news, I immediately thought back to this three-year-old article on All Things D, which published a list of cable channels and how much each subscriber pays for those channels. Even back in 2010, ESPN was getting paid $4.08 a month from every cable or satellite TV subscriber in America that got ESPN. This was just for its flagship channel. ESPN2 was another $0.54 per subscriber. Other ESPN channels, like ESPNEWS and ESPNU, commanded even more money.

Jump forward three years, and the numbers are even higher. Pay TV subscribers that receive ESPN and ESPN2 each pay roughly $5.73 per month, just for those two channels. About 100 million people who pay for TV receive those two channels, and the subscriber fees for those channels alone add up to nearly $6.9 billion per year.

That’s our money. And ESPN is giving $700 million of it per year to Major League Baseball.

That got me to thinking — as a cable subscriber, how much money am I giving to Major League Baseball? And how much am I giving to other sports leagues, just by subscribing to the channels that I do?

This was the inspiration for What You Pay For Sports. This site will show you just how much of your cable bill is being funneled into pro sports leagues and college sports organizations, and it will take a closer look at how your money is changing the landscape of sports as we know it.

This site also aims to highlight one of modern sports’ dirty secrets — the fact that people who don’t like sports and only subscribe to cable to watch Mad Men, Game of Thrones or other such shows are still propping up major sports leagues with their money. As author and former Deadspin editor Will Leitch wrote in this column for Sports on Earth:

My friend, who couldn’t pick Kobe Bryant out of a lineup, who doesn’t even know where ESPN is on her cable dial, gives $60 a year to ESPN. She never watches it. She never even thinks about it. But she pays $60 a year to them, regardless…

What matters, when you really break it down, is that because people like my friend want to have cable TV, and people like me can’t live without sports channels, the entire country is handing ESPN and sports channels money whether they like sports or not. Or whether they even know it.

It could be argued that today’s sports leagues make the bulk of their money from people who don’t watch their games at all. Once upon a time, Blockbuster Video made the bulk of its money off late fees — until Netflix and Redbox showed up to give people something better. So where is the Netflix for sports? Is there one? We’ll examine that issue on this site as well. We’ll also take a closer look at how your money is driving massive changes in sports, including college conference realignment, escalating salaries, and big media consolidation.

Televised sports are big business, and your money is funding it. You should know how your money is being spent.

One Response to The Sports Tax Charged By Cable TV

  1. A longer response…

    I vaguely recall listening to a radio interview last year on this subject (almost certainly on NPR) where the opinion given was that paying ESPN a percentage of you cable bill as a non-sports fan is in fact a good thing. The idea was that ESPN sucks everything you don’t want to watch into a channel (or set of channels) you can easily avoid. I don’t necessarily buy that argument as live sports could be easily separated out into a premium package. A better suggestion was that the sports channels are still a driver to get people to buy cable and benefits the other channels even if their slice of the pie is small (and continually diminishing). The chances are the majority of US households have one member who have a casual interest in sport – be it NFL, college hoops or baseball – and so do not want to to exclude sport entirely. If ESPN was separated out, the potential market for non-networked cable channels would fall. It is a difficult one for the platform owners (TWC, DirecTV etc) as they become increasingly dependent on a sports customer to sustain them. With Netflix and Hulu now investing in providing their own content, the premium non-sport content may find a home other than traditional TV platforms. Whereas most people over 30 say, may remain subscribers out of habit (or inertia), younger customers will have no such problems dropping what they don’t watch. That will mean dropping sports if they don’t feel they get value for money. The future for the cable TV platforms in that context does not look too bright.

    What perhaps interests me is how sports channels in the US are wrapped up in basic cable packages (and therefore inflating the cost of that package) which is different to the models used across UK and Europe. In the UK, the main pay-TV content provider (Sky) only make their content available on premium channels (Don’t like sport? Don’t subscribe to it and you’ll never see it). There is almost certainly cross-subsidy occurring whereby those that don’t subscribe to Sky Sports will still probably find a percentage of their monthly bill ends up in the pockets of Premier League footballers. Sky of course, would never release those figures though. The key difference here in comparison to the US is that the content provider is also owner of the platform delivering it. I would probably say this makes the US system more transparent (just) as at least you get an idea of how much the providers are demanding of the platform. However, as noted, we have reached a point where the content providers can pretty much dictate the price to carry their offering.

    Your basic argument is sound – cable TV is a major rip-off for those who have no interest in sport – though perhaps we should be happy that so many people are happy to subsidise this as ESPN as separately priced premium offering (like HBO) would likely horrify most sports fans as to the tab they may have to pick up. It the cable TV market collapses in on itself, they that may be the future we have to deal with.


     

Site created by Tenth Key Digital Media.