TV Broadcast Revenue VS Gate Revenue: Part I

Hello again folks! April is almost in the books, which means we're in the real business end of many sporting leagues (EPL, UEFA, NBA, NHL) However, Major League Soccer is still finding its legs as the season is a mere 2 months old (AND ONLY TWO Galaxy home games, NOT COOL!)

The last Galaxy home game saw a second half Robbie Keane goal see off those pesky Canucks...err...Whitecaps. Yours truly was at the Stub to take in some Major League Soccer atmosphere in my newly upgraded seats! (Shout out to my season ticket rep Hans Huschitt, if ya'll need tickets, give him a call, he's a Gaucho and the Man!).

As I purchased my Budweiser Black Crowns and hot dogs, the concession stands and team stores got me thinking about match day revenue. Are these hot dog, beer, and jersey sales making a difference for my beloved Galaxy? Or is the real money in "lavish" TV contracts?

This article is Part I of a two part piece in which I will look at both TV broadcast revenue and match day revenue. This piece will focus on TV contracts.

The NFL has 30 of its 32 teams in the Forbe's list of 50 most valuable sports teams for the year 2013(So riddle me this, who are the two ugly stepchildren of the NFL not on this list? I'll give you a hint, the owners also own Arsenal and Fulham respectively), check out the full list here, http://www.forbes.com/pictures/mli45edmjk/1-real-madrid/. Why, you might ask? How about $4.95 BILLION a year in national TV broadcast revenue! I'll say that again, the NFL as a league gets paid $4.95 BILLION A YEAR for the rights to broadcast its games.

Now get your sad face ready. Major League Soccer will get paid roughly $18 million by NBC Sports and ESPN to broadcast soccer games for the year 2014(HUGE side note, this includes the USMNT games). So carry the 7, subtract the three and the NFL still gets roughly $4.93 BILLION more. This slight financial advantage allows the NFL to attract top physical talent, coaching talent, and just about any other kind of talent that's attracted to almost $5 billion a year, to their game, go figure!

With that in mind, here is a chart of some of the recent TV broadcast deals struck by the NFL, MLB, NBA, NHL, MLS and the EPL (US Broadcast rights)

Honestly, after compiling this data, I was genuinely surprised to learn that Major League Baseball brings in more cash than the NBA. (Side note, one possible reason for this is that little deal the NBA cut with the Silnas brothers in 1976, just Google NBA and Silnas). There were also a few other things I found interesting.

• Even in the United States, the EPL broadcasting rights are more valuable than Major League Soccer. Obviously the quality of play is better in England, but it would be nice to see this gap close a little in the coming years.
• You will notice that the NFL has more broadcasting partners than any other sport;
• Each league's broadcast deals usually have the same ending dates as to allow more leverage in negotiating new deals
• The MLS contract with ESPN includes the US Men's National Team. This is a very important little wrinkle in the value of Major League Soccer broadcasting rights, and it also dilutes the revenue share that goes directly to MLS. (This is a topic for another time)
• HOLY COW THE NFL GETS A LOT OF FREAKING MONEY!!!!

This list is not a complete list of broadcasted sporting events. It does not include NASCAR, golf, the Olympics, UFC, or heck, even the NCAA, which is its own beast entirely. The list also does not include the Spanish language broadcasts, for example Telemundo or Unimas. This list also does not include the regional broadcast channels like Time Warner Cable Sportsnet broadcasting the Dodgers. Collectively the broadcasting of live sporting events in the United States is worth quite a bit of money, and in the era of DVR and on demand television, live broadcasts will get even more expensive. Advertisers will find more value in live events than in TV shows and series that can be recorded thus allowing viewers to skip right over that new Toyota Highlander commercial. BORING!

Going forward, Major League Soccer must get more money in its TV broadcasting deal (PS the current deal expires at the end of the 2014 season, that's this year! Stay tuned). Granted, MLS will not come close to even the NHL, but they need to increase the annual amount from the current amount of $18 million. This means making any possible new deal more attractive to broadcasters. I am talking specifically about allowing for flex scheduling. The NFL introduced Flex scheduling in 2006 and well, I think the NFL knows what they're doing. If you are unfamiliar with the concept of flex scheduling, please refer to the following (http://www.nfl.com/flexible-schedules).

Not everyone is a fan of flex scheduling though, as it allows broadcasters to change game times and game days without much notice. While this is good for TV ratings, its not so good for fans going to the games, who may or may not be able to go the game if it suddenly changes times or even days. Critics of flex scheduling feel as though it devalues the game day experience, and they may be right. But that brings up the question of the game day experience. How valuable is the game day experience and how much do teams really care about the revenue generated from each game day? But that's a question for Part 2: Game Day Revenue.

Until next time, I'll see you guys later!