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

Category Archives: ESPN

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

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

How Much Is ESPN Suffering From Losing 7 Million Subscribers In Two Years?

The Walt Disney Company dropped a bomb last month when they admitted in their 10-K filing that ESPN lost 7 million subscribers over the last two years. Everyone from Clay Travis to Ken Fang to Karl Bode has chimed in on the topic, with many pundits suggesting that this is not only clear evidence of… Continue Reading

What The New Premier League TV Deal Says About NBC, ESPN, And The Future Of The Big Ten

A little more than a year ago, I predicted that ESPN would take the Premier League away from NBC in 2016. My reasoning behind this prediction was fairly straightforward: NBC is owned by Comcast, and ESPN cannot allow Comcast to build a competitive sports network because that would give Comcast leverage over ESPN in carriage fee… Continue Reading

Bob Iger Didn’t Say Much About ESPN That We Didn’t Already Know

On Monday, Disney CEO Bob Iger told some Comcast-employed blowhards that ESPN could, at some point down the road, be sold directly to customers outside of the cable bundle. Here’s the bulk of what Iger actually said: “I have very bullish feelings about ESPN [in the] long term, but I’m a realist in terms of… Continue Reading

The Numbers Behind ESPN’s Grim Meathook Future

There’s been quite a bit of talk about the number of subscribers ESPN has lost so far this decade. Some are predicting a bleak future for the boys in Bristol. Others are suggesting that the cord cutting hype is just that, and the self-proclaimed “Worldwide Leader In Sports” will come out of this just fine. What… Continue Reading

How Broadcast TV Networks Could Reclaim Sports

If you’ve tried to get internet service without TV service from any of the big cable companies — and by big, I mean AT&T, Comcast, Time Warner Cable, and Verizon — in the last few years, chances are they tried to strike this deal with you: keep basic cable with just local channels, and you’ll pay… Continue Reading

New Nielsen Estimates Explain Gloom At ESPN

So remember this piece I published on Monday about overestimating the impact cord cutting might be having on ESPN right now? Yeah, forget I wrote any of that. According to the Wall Street Journal, Nielsen has released new estimates on the number of households cable networks reach, and ESPN’s reach appears to have plummeted from… Continue Reading


     

Site created by Tenth Key Digital Media.