What the NFL's new TV deals mean.
On Nov. 12, NBC executives and talent and production crew hosted NFL Broadcast Committee chairman Robert Kraft, and his son, Jonathan and his wife, for dinner at ritzy Park Avenue Autumn. Robert Kraft was in his element, telling stories, reveling in the company of NBC execs Steve Burke and Mark Lazarus, and anticipating the Sunday night game in the Meadowlands between the Patriots and their good friends the Jets.
Afterward, Kraft and NBC Universal CEO Burke went back to Kraft's apartment at the Plaza, near Central Park, to transact some business. Or, Kraft hoped, to start to transact some business. It was that night when Burke heard what the NFL wanted NBC -- paying $600 million in 2012 and 2013 for rights to the NFL Sunday night package of games -- to pay going forward. Kraft told Burke the league would want $950 million a year, on average, for nine years of rights, beginning in 2014.
"Everyone gulped when we told them what we wanted,'' Kraft said last week. "I think [FOX's] Chase Carey and Rupert Murdoch had to pick themselves off the floor. And it was tough for Steve Burke and Mark Lazarus and Brian Roberts, but they understood the value of the package, and they showed great leadership to figure a way to get it done.''
Actually, there was another factor in the negotiations, and that factor surfaced five months ago. With the NFL and its players on the verge of doing a 10-year Collective Bargaining Agreement, at the 11th hour, the players asked for an opt-out clause after the sixth year of the deal. This came after the owners and players had agreed to a strict 10-year deal with no opt-outs, and some player reps not involved in the negotiations thought the union had given away too much by agreeing to a deal for a decade with no ability to get out if the owners' deal was seen as too sweet midway through it.
On the day before the deal was announced in late July, one player source told me he was sure the deal would have an opt-out, and perhaps for both sides. But it was then, on the night of July 24, that some owners, and commissioner Roger Goodell, were adamant that there be no opt-out. Kraft said it. Goodell said it. And the chairman of the labor committee, Carolina's Jerry Richardson, said it.
"It was a huge sticking point with me,'' Richardson told me over the weekend. "I would have voted against the deal if there was an opt-out. To go from having business certainty for 10 years to possibly having the deal interrupted in the middle -- that's obviously a huge difference. I think it's allowed us to begin making some smart long-term business deals.''
The 10 years of uninterrupted football (through 2020) allowed the league to be aggressive in tying up the TV deals while the economy is still a huge question mark. Richardson is right -- had the opt-out been in effect (unless it was such an onerous one and so out of reach that it would never come into play), it's highly unlikely the NFL would have been able to get $6 billion per year, on average, from TV partners CBS, ESPN, FOX, NBC and DirecTV. Think of that. In 2004, the NFL's total gross revenue was $6 billion. A decade later, they'll get that in one year, in stormy economic times, from TV alone. And they'll get it on free TV. "We're proud that we could keep every game on local free TV through 2022,'' Kraft said. "No other sport does that.''
(NFL Network and ESPN aren't free, obviously. But games shown in local markets on those cable outlets are made available to over-the-air channels so local viewers without cable or access to NFL Network can see their home teams.)
The league was going to do an eight-year deal, but that would have left one of the major carriers without a third Super Bowl. The ninth year, 2022, means CBS, FOX and NBC all get three Super Bowls in the deal -- and that's a $250 million to $300 million-per-game boost. "There were a few moments where I doubted we'd find the economic path,'' Lazarus told me. But that's where some of the adjustments to the NBC deal came in.
NBC got the Thanksgiving night game, beginning in 2012, taking it from NFL Network. NBC got one of its Wild Card games changed to a divisional game, beginning in the 2014 postseason. NBC got the ability to add a two-hour pregame show on its new NBC Sports Network in 2014. And this under-the-radar add-on, which could come in handy. In the new contract, NBC will not only have the ability to flex-schedule games in Weeks 10 through 15. In Weeks 5 through 9, NBC will be able to flex out of a bad game; this won't be an unlimited opportunity, I'm told, and it won't be like the regular flex scheduling, when a good game can be flexed for a great one. Call this the Peyton Manning Injury Clause. In Week 7 this year, NBC was stuck with the Saints against the 0-6 Colts, and no one cared. In the future, the league will erase a game like that one and sub something more palatable.
"It's a big risk,'' said Lazarus of the $950 milion per-year tag. "But we got value for it. We improved our package. Our first reaction was, 'That's a lot of money, and we have to have increased value to make that work.' ''
They got it. Now it'll be interesting to see in the coming decade who was smarter: Kraft and the league for getting economic certainty for the next 11 years, or the networks, for locking in programming none of them can live without.
in the Bay Area. Of course, the Niners are pretty entertaining this year. I know why they keep it on Direct TV -- exclusivity increases the price. But for those of us with cable, it would be nice to have the option to buy. As we can with the baseball packaged (so I can watch the O's and the Nats 
