Football Fan or Not--The NFL is Getting Your Money
by Norm Hitzges    Sun, Jan 29, 2006, 12:08 AM

For years, “the experts” have been predicting that one day, the NFL will resort to pay per view broadcasts. Well, you may not realize it but the NFL has been a pay per view league for quite some time. They are just very savvy about the way they’ve gone about it. And, today the league has made an announcement that just takes their pay per view status to another level.

It’s official. The NFL has announced that it has sold the highly coveted 8 game, primetime Thursday and Saturday package. That’s not big news. The NFL has always had success in creating bidding wars for its product.

The big news is that:

-- the NFL did not sell this package to any of the major networks.

--they didn’t sell the package to ESPN or OLN as had been speculated

--they didn’t sell the package to a major internet company as also had been speculated.

The NFL sold this package to itself. That’s right. Beginning next season, the NFL Network will carry 8 primetime games…including a possible Thanksgiving Night matchup between the Cowboys and the Redskins.

In the span of 30 months, the NFL Network has grown much faster than anyone anticipated. But even with the rapid growth, only about 30 million homes nationwide receive the channel on their satellite or cable package. For this reason, these games will also be made available to local over the air stations in the markets of each team participating in these games.

This is just another example of how the NFL walks a fine line between evil empire and brilliant marketer. They are not looked upon as a pay per view league yet the revenue generated from their TV contracts continues to be astounding.

ESPN has paid plenty of money for the rights to carry NFL games. And, yes they attempt to recoup most of that money through advertising. But, the NFL has also given ESPN a valuable property that makes them more attractive to cable and satellite operators thus increasing the fees they can charge. Your bill reflects the increased fees and you are indirectly paying to watch the NFL.

This new NFL Network package will have the same effect. While the NFL Network is now offered on most cable and satellite services, it is considered a premium service. If you want to receive the NFL Network, you are going to pay above and beyond the fees for basic service. And now that the network has an attractive asset and those fees are sure to increase even more.

This is where the NFL is either very savvy or very tricky depending on the way you look at it. Most people do not look at the NFL as pay per view because they are not ordering individual games. It’s not like a $49.95 pay per view title fight that you have to purchase. But you are paying the price for the NFL every month when you get your cable or satellite bill.

Here’s where it gets tricky: whether you are a fan of the NFL or not, you are paying for the product. Let’s say that you are not a fan of the NFL and you have no intention of ever watching an NFL game on ESPN but you are a newshound and you want to have access to all the news channels (CNN, Fox News, MSNBC, etc…). In order to receive these channels you have to buy an “extended basic” subscription package that includes ESPN. By the way, for most cable companies the extended basic package is about $15-$20/month more than the basic package. Even though you have no interest in the NFL, you are now paying for the product. It just doesn’t seem fair, does it?

And, yes it does work both ways. Plenty of football fans who have upgraded their cable service so they can watch the NFL Network are also paying for channels that they have no intention of watching (ie…Oxygen, Lifetime, etc…). But, I think it is fairly safe to say that the NFL and ESPN drive more demand for premium cable subscriptions than any other cable network.

This gives ESPN (and now the NFL Network) even more ammunition when they negotiate their fees. They will tell you that without their products it would be much harder for the cable companies to sell their extended packages. And they are probably right. So cable companies are forced to pay the price to keep these networks.

As the NFL collects more and more revenue from these rights fees, you will continue to pay to watch (or in some cases not watch) the games. And as long as the NFL continues to offer it’s games in some way, shape or form on local, over the air, free TV, they will not ever be looked upon as a pay per view league.

What a genius plan. They get all the cash of a pay per view entity but none of the bad reputation.
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