Sports Media Contracts: Evaluating Revenue to Leagues and Universities

Media contracts are HUGE in all of sports.

We see a lot of professional teams and various universities benefit from these big television rights contracts. This is a very huge source of revenue to rely on as opposed to raising ticket prices or attempting to sell more merchandise. 

The most notable media contract in all of sports would be the NFL. The NFL has a contract with ESPN, FOX, CBS, NBC and DirecTV. They combined to pay around $20.4 billion to have games aired on their channels. Two-thirds of the total revenue from the NFL season comes from the NFL TV contract and the majority of this money goes to the players' salaries.

The money from this media contract involves revenue sharing, so teams from all the markets get identical amounts of money. This is no disparity between a larger market like the Dallas Cowboys and a smaller market in the Buffalo Bills, so this allows the small-market teams to establish a sense of competitive balance. This is extremely big for networks because it allows for greater visibility of other shows on that channel, but at an extremely high cost. 

The MLB and NBA have pretty sound coverage as well. MLB uses FOX, TBS and ESPN to cover the baseball season. The NBA receives approximately $930 billion a year from ESPN, TNT, NBA TV and ABC. I strongly believe that the NHL has a lot of catching up to do amongst the leagues. Gary Bettman, the NHL Commissioner, promised a bigger TV contract. The NHL uses Versus and NBC, sparingly. This would be the only league that has a lot of improving to do with Versus only bringing in about $72.5 million annually. 

Looking at many universities, we see a lot of conference affiliation with certain networks. We are seeing universities earn a vast amount of money from media contracts to highlight their sports and serve as a great source of revenue. The Big Ten has a great setup with the Big Ten Network and allows for exclusive marketing of academics to increase enrollment. This was a huge reason why Nebraska joined the Big Ten, because of the money the conference generates from television rights and the affiliation with a greater academic powerhouse of schools. 

The SEC gets coverage from CBS as well as the ESPN channels. ESPN on ABC is used quite frequently as well and highlights the Big 12, ACC, Big Ten, Big East and Pac-10. The ACC is trying to form its own network using Raycom Sports and the Mountain West. While the Mountain West uses Versus primarily, they created their own Mountain West Network. 

One school that does not need to join a conference for a big media contract for a very long time will be Notre Dame. The Fighting Irish can remain independent for football for a long time as their media contract with NBC has very big benefits and they never have to worry about their games not being shown on a national stage. I think that Notre Dame, arguably, has it better than any other university in the country.

Thus, we see that a lot of this conference realignment revolves around the TV rights for that conference. We see schools shifting to a conference they may have no reason being in geographically for extra millions of dollars in revenue. Ultimately, TV rights allow greater marketability of a team or university as well as provide a big source of revenue.