NFL/Network deal on its way

Albert Breer@AlbertBreer
NFL commissioner Roger Goodell says that the league will work with the networks to incorporate legalized sports gambling into the TV deals.

Albert Breer, from https://www.si.com/nfl/2021/03/22/mmqb-nfl-television-contracts-patriots-spend-carson-wentz-matthew-stafford

How the NFL’s New Television Contracts Position the League to Keep Growing

This family might have a younger kid consuming the sport on a Nickelodeon broadcast, a teenager only watching highlights on his phone, a mom keeping track of her office fantasy team through an app and a dad flipping over to a sports gambling show on a Megacast presentation. And then maybe grandpa sitting on the couch watching it the old-fashioned way—from start to finish on an over-the-air network.

How we get there over the next decade is unpredictable. When we get there is unpredictable. What it’ll look like after we get there is unpredictable, too.

But over the last couple months, the NFL made a rather handsome bet that we will get there. You can slice up the NFL’s 11-year, $113 billion set of media rights contracts that were announced last week a bunch of different ways—and we will in the column—but the overriding thing within their details isn’t hard to understand.

The NFL believes the world is going to keep changing.

These new deals allow the league to keep changing with it.

“We know how the market is changing, especially with young people and how they’re just on their phone or their iPad,” Patriots owner Robert Kraft said from his office on Friday. “I think that is the biggest difference in what we’ve done. And it’s interesting, if you look at it, your next big thing will be more interactivity and customization of the product that hadn’t been possible. ESPN has done a customized alternative viewing experience, which was really focused on sports betting. CBS used Nickelodeon to provide a youth-oriented game experience, which was, I don’t know if you saw that, but I watched it, I thought it was great.

“NBC pushed the Next Gen stats to really new levels and Fox has led the way in free-to-play ancillary games that attracted millions of casual fans. And then on Thursday, Amazon experimented with multiple alternative streams of the game, which included a Twitch-like EA Sports environment for those fans who love esports. … Building in these alternatives for the future, it’s pretty cool that we’re able to do this.”

Now, like a lot of you, I’m cool with how it is now.

But I also know my kids might not be. And that’s why these deals are the way they are.

The world of media has never evolved or changed faster than it has over the last 20 years and, with these contracts, the NFL’s telling you to buckle up, because they’re planning to be a part of accelerating what’s already changed the way most people watch games.

Kraft used to own the CBS affiliate in Boston, WHDH, so when he bought the Patriots in 1994, commissioner Paul Tagliabue asked him to join the league’s broadcast committee. At the time, the NFL had just done the groundbreaking set of contracts that brought Fox into the fold—a sea-change development at the time—and those had a total windfall of $4.4 billion over four years.

Which means that over 28 years, the value of the NFL on TV has increased tenfold.

“When I started in the role, it was pretty simple. We just conducted an auction for the fixed packages for the two conferences, and Sunday and Monday [nights],” said Kraft, who now chairs the committee. “And over the last decade and a half, it’s become a much more detailed, customized project, so that we’re looking at each game window, and not just how it is good for us, but how we’re presenting it to the changing tastes of our fans.”

The meat and potatoes of the new deal reflects that. Each legacy network is connected to a streaming service in the deal—Disney to ESPN+, NBC to Peacock, CBS to Paramount+ and Fox to Tubi—and those streaming services will be able to broadcast games, and in some cases do so exclusively (ESPN will have the option to put an international game on ESPN+). Also, as part of this, for the first time in nearly two decades, ABC will get back in the Super Bowl rotation, something Disney had been looking for.

Then, there’s Jeff Bezos’s behemoth, Amazon Prime, entering a room that’s pretty much had the same cast of characters, save for that 1993 addition of Fox, since the NFL first went on television, with Prime becoming the initial streaming-only partner to land an exclusive-rights deal (Thursday Night football).

So that’s the black-and-white, and there is, to be sure, a lot of grey area in the contracts. The NFL held back its gambling rights, because it’s trying to be judicious with those. There are contingencies baked into the deals that’ll allow for change as they go. And for obvious reasons, all of that’s by design—creating the sort of malleability the NFL’s giving itself with the games themselves (with the added ability to flex games to Monday night).

“It’s about being additive in those distribution models,” said Hans Schroeder, COO for NFL Media. “The one thing we know is the world’s going to continue to change. It’s gonna continue to evolve. For the fan and consumer that’s a great opportunity. For a content owner, we think it’s really exciting. And I look at a partnership like Disney and what they’ve done, and how quickly they’ve pivoted and grown their business. …

“[ESPN and ABC] are still really big, really broad, really scaled networks, but look at what they’ve done to add new models, what they’ve done with ESPN+, Disney+ has been incredible. For us, in the near-to-medium term, it’s about not being an either/or, but finding ways to add distribution.”

With that in mind, and after I dug around a little the last couple days, here are a bunch of elements that’ll change (or be added) under the new contracts that I figured would matter to all of you who watch the games at home.

• More Monday night doubleheaders are coming, though they can’t quite be called doubleheaders. There will likely be staggered starts to accommodate ABC’s primetime window (likely at 8 p.m. ET). I’m told the contract calls for three of them each season, including the traditional pair of Monday nighters in Week 1. ESPN will get 17 Monday night games, and ABC will broadcast the three additional ones on the nights there are two games.

• There will also be two games on the Saturday of Week 18, ABC will have them, and those games will be flexed in to ensure solid, relevant matchups get into those windows, which will give ABC a total of five regular season games.

• Amazon’s contract was negotiated to start in 2023, but I’m told there have already been talks to move that up year with Fox having signaled it’d be O.K. getting out of the TNF package a year early. So there’s a real possibility Amazon got TNF exclusively starting in 2022.

• The league also has the option to give Amazon a “Black Friday” game—probably some pretty good tie-ins there for them—since Amazon won’t get the Thanksgiving night game that traditionally goes to NBC.

• ESPN will also now get not just a wild-card round game, but a divisional round game as well, and Amazon can earn a wild-card game if it hits certain ratings markers over a period of years, which is a way of the NFL ensuring the audience is coming with it to Prime before a postseason matchup goes there.

• The NFL has maintained a level of flexibility here, too, with an out after seven years (after the 2029 season) in the deal.

The upshot of all this, again, goes back to Schroeder’s word: additive. More games, more screens, more ways to watch the NFL. “It builds on a very wide and broad distribution model that’s been really good to us over a long period of time with broadcast television,” he said. “Across all our partners, they’re adding meaningful digital reach and distribution on top of that.”

So all of this should be interesting on a macro level. And Kraft and Schroeder made a few other points on more specific pieces of this that I thought were worth sharing here.

The future of sports gambling. We all know it’s coming, and the NFL—not far separated from a time in which point spreads were the equivalent of four-letter words on the air—is readying to monetize it. Which will, of course, likely wind up being incorporated into the way the game is presented on television.

But both Kraft and Schroeder emphasized the league needs to make sure it’s done right.

“We’re planning because it’s going to come,” Kraft said. “There’s over 20 states that have legalized gaming and we’d like that to be maximized. But it’ll help so much [for that to continue], first of all, as we all know there’s a big illegal market going on. So why shouldn’t the states take advantage and generate revenue? I think the governor of New Hampshire loves Massachusetts residents because they come up to do their gaming across the border, generating terrific revenue. So eventually it will happen everywhere.

“But I think what it means, especially for younger people, for the interactivity [in game presentation], someone can post some modest amount of money up front and, the first play, is Cam Newton gonna throw or run? Who’s going to catch the first ball? … And then, of course, fantasy football and with the expansion of that, how people view that. We have to be creative but tasteful. And I think that’s what’s important.”

That interactivity is another big key. Kraft owns an esports team in the Overwatch League, so he’s keenly aware of how the younger generation isn’t so content to plop down on the couch and just … watch. So, as he sees it, adding to what people can do while taking in the games is another way the NFL can capitalize (in this case, the upcoming digital deals figure to be an important element).

“My grandkids are pretty much on their phones all the time, they do everything that way,” said Kraft. “The world of TikTok can be consuming. We just have to be hip to that and be able to adjust and make our product viable in the change. Part of it is social media and the access of our players to it. … Look how many followers we have between Instagram, Twitter, Facebook, it’s how we get our messaging out, it’s how we adapt to this new world.

“You’ll see in the next five to seven years how your kids’ tastes evolve in how they consume what they consume, and how people generally will. I think interactivity and gaming coming in with people under 45, they’re always doing something while they’re watching or doing whatever they do. And I think that we will give certain interactivity and gaming alternatives in the future, which should just help to keep our audience.”

The Monday Night flex. Schroder gave me an interesting fact—only 2.5 games per year have been flexed into Sunday night, which he says is a credit to the job Howard Katz and Mike North have done putting the schedule together. But the truth is, flexing a game within a day is not the same as flexing it to a different day. And the league knows that, and it’s part of the reason why it took a while to come around on allowing Monday flexes.

That said, they have experimented some with the late-season Saturday packages. And that’s given them confidence it’ll be manageable.

“This is just more of an evolution,” Schroder said. “A lot of credit goes to the commissioner, a lot of credit goes to Robert as the chair of our media committee, and the work they did with the work we did up front, well in advance of when we even got in the deal cycle, to think about how to evolve our deals in a way that’s better for our fans, better for our partners and better for the league. The commissioner and Robert were particularly focused on taking a longer-term view, pushing us to think about the right model longer term for us.

“And as we thought about that, there was an openness and a recognition that taking an element like flexing Monday night is an opportunity to create that win-win-win for our fans, for our partner, in this case Disney, and then for us, too, making sure the best games every week are getting the best exposure.”

In a lot of ways, this deal reflects one principle that has marked the commissionership of Roger Goodell, who was originally earmarked for the job because of how creative he always has been in generating revenue. Goodell’s focused on growing the league out (adding inventory) with little room left to grow up (with the domestic audience), and you can see that with the return to L.A., London and other international markets, the 17th game and expanded playoffs.

It also reflects Kraft’s vision for the NFL to stay ahead of where media’s going, something that was happening just as he joined the league, with Fox, and now is happening again, with Amazon.

So the two guys who led the deal most certainly have their fingerprints on it, as do league office folks like Schroeder, Brian Rolapp, Kevin LaForce, Will Deng, Janet Nova and Lee Goldsmith, who were in the trenches over the last few months getting a deal in place.

This was not all easy. But in the end, the NFL was able to land the plane with two years left on the existing deals, and plenty of time to turn the focus to ancillary elements like the digital contracts and the future of Sunday Ticket (DirecTV has two years left).

“I’m really happy,” said Kraft. “We worked very hard to have all of the deals land at the same time and come in at the same time. It was really hard to do that. And you think of five major companies. And I’m really happy we were able to keep our four traditional partners and each of them have a package that they deemed to be the most important content to them. And then bringing Amazon in with all its entrepreneurial ways. And they understand.

“A lot of these tech companies, they’ve grown so fast and gotten so much power sometimes, I’m not sure they respect some of the traditional ways of operating. And I think in this case Amazon really sees this as a great opportunity for them and a way for them to be out front and ahead of everyone, the way they’ve been in so many other ways. So I guess for me, I’m proudest that we could keep everyone in and add Amazon.”

And, in the process, give the rest of us a whole lot of football to look forward to.

While I had Kraft on the line, I had to ask about what Bill Belichick and his football operation had just pulled off: committing more than $130 million guaranteed to eight new players coming in (Matthew Judon, Jonnu Smith, Hunter Henry, Nelson Agholor, Jalen Mills, Davon Godchaux, Henry Anderson and Kendrick Bourne). And Kraft confirmed to me that he took in the same way a lot of people on the outside did.

“It was very exciting,” Kraft said. “Look, we want to win. We’re spoiled. We got used to winning all the time. And that’s our objective. It’s a very competitive sport, it’s all geared to having every team be 8–8 over a long balance of time, the way the draft is, the way we all have a salary cap. This was a unique year in the sense that the cap came down, and because we had s