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

Author Archives: Dave Warner

Steph Curry’s Super-max Contract Was Made Possible By The Cable Bundle

Two headlines stood out last week that we should discuss.

The first one comes courtesy of Streaming Observer, who posted this gem last Wednesday:

Streaming Observer

The article details a recent survey, which found that 53% of people choosing a pay TV service don’t see the inclusion of live sports channels in their package as an important consideration. Streaming Observer then reminds us that 87,349,000 homes pay for ESPN and ESPN2 — which, according to the latest SNL Kagan data reported by Variety, is $8.84 per household per month. That’s more than $772 million per month. (Streaming Observer reported old SNL Kagan estimates of $7.21 and $0.90.)

Streaming Observer continues:

Given that 53% of pay TV subscribers don’t care if they have ESPN or other live sports channels, that means 46,294,970 of ESPN/ESPN2’s subscribers don’t really want the channels.

If we presume that figure is accurate, ESPN is actually collecting $4.9 billion per year from people who don’t watch sports — many of whom don’t even realize they’re paying for sports.

Fast forward two days later, and the headline of the basketball world is that Steph Curry, who led the Golden State Warriors to their second NBA title in three years, signed a five-year, $201 million “super-max” contract with the Warriors — by far, the richest contract in NBA history.

Most people still fail to see how intertwined these two headlines are.

Steph Curry Money

Whenever an athlete signs a record-breaking sports contract, questions inevitably arise about whether any athlete is worth that much. Newspaper columnists typically ask this question:

Other players, who are more tuned in to the business side of the game than ever, make their own arguments:

What all of these arguments fail to address is where all this money is coming from — because a lot of it is coming from millions of pay TV subscribers who still don’t realize they’re paying for sports they don’t watch.

In October of 2014, ESPN and Turner Sports agreed to a 9-year, $25 billion TV contract extension with the NBA. That deal kicked in last season. ESPN will pay $1.46 billion per year for the right to broadcast NBA games, while TNT will pay an average of $1.2 billion per year.

All of that money comes from pay TV carriage fees. If you get ESPN as part of your cable or satellite package, $7.86 of your monthly TV bill goes to ESPN, while $2.09 goes to TNT. That money gets funneled to the NBA through that $25 billion TV deal. So if 87,349,000 pay for ESPN, each ESPN subscriber pays $16.77/year to the NBA. Likewise, if 90,332,000 million pay for TNT, each TNT subscriber pays $13.16/year to the NBA.

You can see just how much money gets funneled to various sports leagues through your cable bill by using the app on What You Pay For Sports’ home page.

Each NBA team receives roughly $88.89 million per year from the ESPN/Turner TV deal, which means all those ESPN and TNT subscribers are contributing nearly $1 to the Warriors’ bottom line.

Now take into account Streaming Observer‘s conclusion that more than 46 million people who don’t actually watch live sports are paying for sports channels they neither want nor need. That’s nearly $46 million being funneled to the Warriors from people who don’t care a lick about the NBA — and that fully covers Steph Curry’s $40 million salary for the 2017-2018 season.

So what happens to the next NBA superstar’s salary when those 46 million people decide they don’t want to pay for ESPN and TNT anymore?

That’s a question very few people are asking, despite the fact that cord-cutting seems to be accelerating and some pay TV networks are attempting to build a cheaper, sports-free pay TV package. ESPN and TNT, meanwhile, continue to increase their carriage fees 6.5% each year. So far, those increases have outpaced customer losses, but will that still be the case by 2025, when the current TV deal expires? Will sports fans be willing to pay twice as much for sports channels? Or will there simply be much less money to go around?

Take nothing away from Steph Curry, of course; he’s earning what the market will pay him. The bigger picture, though, is that much of the money that pays Curry, LeBron James, Kevin Durant, and many other NBA stars, comes from millions of people who are victims of a massive scam perpetrated by greedy corporations concerned for nothing more than their profit margins and stock prices. As more people realize this, more people will refuse to pay. We should still see a few more $200 million-plus player contracts before 2025 — most likely for James and Durant, actually — but if the TV market continues in its current direction, don’t count on any after that.

How Amazon Could Use Prime To Change The Sports Rights Game

Amazon made waves in the sports rights game earlier this month when they struck a $50 million deal with the NFL to stream Thursday Night Football, outbidding Twitter, Facebook, and whatever’s left of Yahoo. The deal is Amazon’s first major sports deal after the NBA rejected its bid to be the exclusive home of NBA… Continue Reading

Comcast Prepares For Market In Which They Can’t Be Comcast Anymore

Comcast has made it more difficult than ever for their customers to dump cable TV. Last year, the cable behemoth slapped one-terabyte data caps on its broadband internet service in most of its markets, then zero-rated its own streaming video service so that it wouldn’t count against those caps. Comcast customers could get unlimited internet and not have… Continue Reading

How March Madness Directs Your Money To Big College Conferences

Let’s talk about this guy for a moment. He’s a North Carolina Tar Heels fan. Tar Heels fans hate the Duke Blue Devils, and vice versa. It’s unquestionably the best rivalry in college basketball, and it produced three highly entertaining (and highly watched) contests this year. Duke won two of them. So when Duke faltered… Continue Reading

How Ajit Pai Will Help Comcast And AT&T Strangle TV Competition

Three years ago, comedian John Oliver brought a ton of attention to his HBO show Last Week Tonight by discussing Net Neutrality and calling the appointment of a former cable company lobbyist as chairman of the FCC “the equivalent of needing a babysitter and hiring a dingo.” After Oliver’s campaign to flood the FCC web site… Continue Reading

How ESPN’s Rising Carriage Fees Offset Its Subscriber Losses

When we last looked in on ESPN’s struggles with cord cutting in December of 2015, ESPN had lost seven million subscribers in a two-year span from 2013 to 2015. Fast forward 16 months later, and it’s clear that this trend has not abated. As of March 2017, ESPN now has only 87,437,000 subscribers. That’s a loss of… Continue Reading

How Kevin Durant Will Get 2.47 Cents From Your Monthly Cable TV Bill

You might have noticed in the last few weeks that NBA players are getting huge contracts this offseason. Even role players are getting upwards of $10 million per year. The biggest free agent signing so far this summer has been All-Star forward Kevin Durant, who left the Oklahoma City Thunder today to sign a 2-year, $54.3… Continue Reading

Hulu’s Endgame: Eliminate The Middle Man And Become Cable TV

In 2013, Netflix Chief Content Officer Ted Sarandos told GQ writer Nancy Hass exactly what the plan was for the DVD-mailing company-turned-streaming giant: “The goal is to become HBO faster than HBO can become us.” Three years after that statement, Netflix has nearly 47 million subscribers in the U.S. and an original content budget of $5 billion for this… Continue Reading

Fox Prepares 6-Year, $1.5 Billion Deal With Big Ten

Fox Sports is putting the finishing touches on a new TV rights deal with the Big Ten Conference, which would begin in 2017, according to Sports Business Daily. The six-year deal is reportedly worth $250 million per year and would include half of the Big Ten’s Tier 1 rights package, which would include 25 college football… Continue Reading

Why Time Warner Cable Must Convince The Dodgers and Lakers That They Need Each Other

The folly that is SportsNet LA continues apace. Last week, in a last-ditch attempt to get carriage for the Los Angeles Dodgers’ regional sports network (RSN) on TV services other than its own — and Charter’s, for obvious reasons — Time Warner Cable announced that it would lower the carriage fee of SportsNet LA for one year,… Continue Reading


     

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