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

Tag Archives: NBA

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 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

Why Time Warner’s New NBA Deal Will Keep It From Joining Hulu (For Now)

A few weeks ago, the joint owners of online streaming service Hulu — Disney, Fox, and NBCUniversal — looked to add another big media player to its ranks. Hulu LLC, the streaming service owned by three media companies, is in talks to add Time Warner Inc. as a fourth investor, according to people with knowledge… Continue Reading

Steve Ballmer Seeks A Million True Clippers Fans

Say this much for Los Angeles Clippers owner Steve Ballmer: he’s never been afraid to look silly. The former Microsoft CEO probably looked very silly to a lot of other NBA team owners when he reportedly turned down a $60 million-per-year offer from Fox Sports to keep Clippers games on Prime Ticket, one of Fox’s… Continue Reading

Why Turner’s Hoop Dreams Depend More On Advertising Revenue Than Carriage Fees

From a distance, Time Warner seems to be a corporation at odds with itself. One the one side, you’ve got HBO slowly breaking away from the cable bundle. Not only has HBO launched an over-the-top internet video service that’s already pretty successful, but it’s teamed up with all the major cable companies to create “Internet Plus” bundles… Continue Reading

How Much Could The NBA’s Huge TV Deal Cost You?

Adam Silver is the Michael Jordan of TV contract negotiations. Consider this: the NFL’s current network TV deals, which began this season and are worth nearly $5 billion a year, represent a 60% increase over its previous TV deals. (That does not include CBS’ one-year, $250 million deal for Thursday Night Football and the new $1.5 billion Sunday Ticket… Continue Reading

Forget 23: Lebron James’ Real Number Is 21.5

Lebron James is kind of a big deal. When Lebron James decided to return to the Cleveland Cavaliers after winning two NBA titles in four years with the Miami Heat, Sports Illustrated made sure they got the scoop. When he decided he would wear number 23 again in Cleveland this season, it not only made headlines — it… Continue Reading

How The NBA On TNT Keeps HBO Tied To Cable

Remember when Time Warner CEO Jeff Bewkes suggested a few weeks ago that HBO could possibly, maybe, offer an online-only option if it were, y’know, tied to cable company broadband plans? Yeah, you should forget he brought that up. Bewkes is probably hoping you already have. The reason has less to do with HBO’s relationship… Continue Reading

Why ESPN And Turner Tried To Ditch NASCAR

Have we reached the point in televised sports history where rights fees are so expensive that multiple networks need to exist to pay for them all? Consider the recent attempts by ESPN and Turner Sports to shed their TV deals with NASCAR. After NBC paid $4.4 billion for the rights to the second half of… Continue Reading

Why Major League Soccer’s Average Attendance Figures Are A Poor Measure Of Its Popularity

A few weeks ago, The Atlantic Wire reminded us that Major League Soccer has the third-highest average attendance among professional sports leagues in America. They framed this by calling the NBA “549 Fans Less Popular than” MLS. As lies, damn lies, and statistics go, those average attendance figures are tremendously misleading in terms of determining the… Continue Reading

Filed Under: MLS

     

Site created by Tenth Key Digital Media.