What Hockey Needs, What Soccer is Getting, and Why Sports Cable Ratings Thrive – ESPN

Monday Night Football on ESPN is up over 20% from last season. College football on ESPN had its best year in over a decade, including its most watched game since the 1990’s. The Heisman Trophy presentation reached new high water marks. Last season’s NBA playoffs finished up. During football season ESPN is consistently the highest rated cable network each week, often by substantial margins.

Yes, sports in general and football in particular, are carrying TV ratings across the board, but much of ESPN’s success should be attributed to the marketing machine it’s created. A daily listener to their morning radio show, a few weeks ago I realized all they day on Monday morning is review Sunday’s games and hype Monday nights game, then on Tuesday they spend most of the show recapping Monday night’s game, bringing in a cavalcade of guests. This is not just a recap, its four hours of national radio smacking you in the face. I noticed it because I got sick of listening to it. Then when you turn on ESPN they are live from the sight of the game, it leads Sportscenter for a full 12-hour cycle at a minimum. Go online, same thing. As a more well-rounded sports fan, I was searching for a crumb of baseball coverage from the winter meetings, but nothing – all football, all the time. Even when the MNF game stinks, they still smack you upside the head with it.

Same thing with the Heisman. Cover stories all week, interviews, enough promotions so that you have the time, date, and tag line memorized. However, given how big the NFL is, maybe this would happen anyway, so its last night that really magnifies what ESPN can do. Broadcaster of roughly 90% of the college bowl games, last night ESPN had the less than illustrious Las Vegas Bowl, pitting BYU and Oregon State in what on paper was a decent matchup, but turned out to be a blowout. They moved the top two teams in college basketball to ESPN2 to put the game on the mother ship, then led Sportscenter with Las Vegas Bowl highlights and full coverage from the sight. The Las Vegas Bowl, a 24-point blowout, the lead on a night with NBA action, almost the entire Top 10 in college basketball on the court, and a significant MLB trade? When you have the control to dictate what people watch like they do, its amazing what is possible. If that game was on Versus, you would get a 30-60 second highlight no earlier than two segments into Sportscenter.

Don’t criticize ESPN for it, they are maximizing value of their assets, and the ratings show that people don’t mind. It shows that any sports property not bigger than ESPN, needs to partner with ESPN, notably hockey. ESPN is planning the white glove treatment for World Cup soccer in 2010, and its almost a guarantee that the ratings will set new records for soccer in the US. In the midst of their coverage, its also a guarantee that the NHL playoffs will get buried as ESPN goes double-barreled with World Cup and NBA playoffs.

It’s not the first time I’ve brought up this subject, but I think its worth noting now as ESPN’s tailored programming and the resulting ratings reached new heights this fall, at a time where hockey is more lost in the media landscape than ever before. They need to get on ESPN, they need to get on now, and they need to let ESPN show them how to market superstar athletes to the public.

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ESPN Should Apply Mid-Major B-Ball Approach to Football

Spurred by increased media coverage, some talent dilution at top programs from players leaving school, and a run of NCAA tournament upsets mid-major hype hit new levels in college basketball the past decade. It led to an increased national platform, more money, improved recruiting, and overall, a more level playing field with the big boys. Mid-majors will never be on equal standing with BCS conferences, but we have reached the point where it’s not unheard of for mid-majors to get 1, 2, or 3 seeds in the tournament, and never mind surprise, its sometimes expected to see them knock of middle tier teams from big conferences.

These leagues fought an uphill battle and come tournament time always faced with defending what amounts to an easier schedule relative to big conference teams. Never one to miss a made-for-TV opportunity during a lull in the annual sports schedule, in stepped ESPN earlier this decade with Bracket Buster weekend. The premise – match up the best mid-majors across the country to help them boost their profile with a strong non-conference game. ESPN clears out the schedule and showcases these games the entire weekend, brands them, posts attention on the website, dedicates the studio and road show to these games, and gives it the 360-degree ESPN white-glove treatment. It guarantees that as a group the mid-majors get an RPI boost to combat a weak conference schedule and a bunch of them get wins.

College football needs this same event now. Mid-majors have followed a similar trajectory the past five years or so, a few teams paving the way into national prominence, not only breaking through to major but winning. Critics continue to point at the weak schedule these teams play and the current BCS system is biased against these teams playing for the national championship and against having multiple non-BCS teams play in major bowls.

ESPN should pick a weekend around this time of year, preceding the conference championship games, and call it BCS Buster. Schedule 3-5 neutral sites (or at least pick the sites in advance of the season) in different regions and create match-ups among the top non-BCS teams. If only TCU or Boise legitimately has a chance, let them play each other to help the winner get a better shot at a top two spot. Besides the wins and losses, it raises the profile of the leagues and adds legitimacy to both teams. If ESPN applies its hype machine – Gameday crew, primetime audience, top story on Sportscenter, commercials and teasers on radio and TV all week, web integration, the whole nine yards, Boise would not need to hire a PR firm. If it’s better for the two best not to play, the likes of Houston, BYU, and Utah still create a formidable lineup. Outside of the primary matchup, it gives each team a chance to improve its bowl standing, helps recruiting, and starts to create momentum for the following season.

Clearly, the college basketball and football postseasons are two completely different animals, and the nature of scheduling a football differs from a basketball game. That said, the key point here is that football is at the point they need to apply this concept and who better than ESPN to make it happen. I can’t tolerate too many more Indiana-Iowa, Florida-Mississippi State Saturday doubleheaders now that baseball is over.

NBA Cinches Critical Cable Carriage Deals

Rumors surfaced last year, following the NBA partnership with Turner about a compromise of lower affiliate fees for expanded coverage on Time Warner Cable. It made sense given the Turner relationship, and as I continue to harp on, is critical as league-owned networks near a make or break tipping point.

In advance of last week’s Opening Night, NBA TV closed carriage deals with Time Warner, Cablevision, and Dish, adding to its distribution roster of Comcast, Cox, DirecTV, and Verizon. The latest additions put NBA TV at 45m homes, a 3x increase from last year’s opening night, and a clear signal the network plans to become a major player.

What the NBA has going for it that none of the other league networks have are the Turner partnership and a strong digital offering that aligns with the on-air product. No, I’m not forgetting the power of MLBAM, but I am accounting for the fact that MLBAM operates in a silo and appears to clash more than integrate with MLB Network – and the league for that matter. However, taking a page from MLBAM’s playbook, NBA Digital recently released a mobile application for its streaming video package and it continues to market and improve the online version. They have done well to leverage TNT talent and production capabilities to create a quality mix of online and broadcast programming.

Thinking bigger picture for a second, while the NFL may command the most demand, the NBA and MLB have the longest season and the most content, two ingredients that work well for media. The demand for the NFL may actually work against NFL Network, since it increases the competition it faces and the event driven nature of football concentrates the competition into certain days and times. Meanwhile, though they have less absolute number of fans, NBA TV has an opportunity to capture a bigger share of the market, and partnering with its top television partner for production and marketing only adds to the possibility.

Long term, if the network can entrench itself with fans, slowly build a stable of exclusive games, grab rights to ancillary basketball events (Olympics, college, overseas, maybe NBA games played overseas), it has a chance to continue to expand that 45m subscriber base and boost its subscriber fees. It’s pulling the right strings hiring solid talent (adding McHale to a cast that include C-Webb) and proliferating digital distribution channels. Within a few years, NBA TV can become a meaningful revenue stream for the league and a serious competitor in the sports television landscape.

Success in media continues to get more difficult with lower barriers driving increased competition and fragmentation. However, NBA TV, and the other league networks have one significant advantage – they own the content. MLBAM has proven on the digital side that managing content correctly can lead to big business, while on the other side the NFL Network shows that just putting games on will not bring customers and providers to their knees.

Similar to my criticism of the NHL Network for not committing to wider carriage and making a strong push, let’s commend the NBA for getting the deals done and putting the resources behind what can become a big future revenue stream for the league that will offset some of the decreases it expects in other business lines.

Can Fans Handle More Fantasy? Teams Should Find Out

Nobody can debate the power of fantasy sports and the value of the marketplace, currently dominated by football. Following typical economics, as customers showed their appetite for more fantasy, competitors have flooded the market with countless products, each claiming a different fantasy experience, or unique prizes. In the end, most of the products are similar and ESPN and Yahoo continue to dominate because of their established brand and unmatched scale.

However, one area I’m surprised content producers have not yet fully exploited is team-based fantasy games or contests linked to in-venue or in-game viewing. Football aside, other major sports have room for growth. In fact, basketball and baseball participation remains flat or down the past few years, so each could use some innovation to invigorate it. Further, the local nature of these sports lends themselves more to team-based games involving their home team and maybe specific opponents or rivals.

The concept aligns with the current movement for teams to nurture a community. Nothing stimulates engagement more than fantasy, so if teams can steer that engagement to their own websites, broadcasts, and live games, it could lead to indirect benefits in key revenue streams, in addition to creating a new branding platform. Further, teams control the assets (players), the arena, at least have a significant say in television, and have a complementary web presence. With this combination of assets teams could activate fantasy in a compelling manner through multiple distribution channels and have real, coveted prizes (locker room visits, luxury suite, road trip) with access that other fantasy outlets can’t offer.

Thus far, most teams and leagues have taken a backseat, allowing media and retail operations to claim much of the value they create. It’s time for teams to become more progressive, be willing to step out and be innovative. We can think of any number of ways to implement the game, that’s not the hard part. Making the decision to do it, marketing it the right way, and executing well are the keys.

Conversely, if teams don’t act soon, media outlets with focus shifting toward local will jump on it. ESPN <Fill in the City> already possesses the know-how and operations to extend fantasy to city and team levels. CBS can leverage its local radio stations to do so as well. It’s only a matter of time for RSNs finally to move on this opportunity they have sat on for years, especially with the ESPN putting the competitive pressure on.

Maybe the fantasy market truly is saturated, and fans simply can’t handle more. But, if I’m running team marketing or business operations, I’d rather find that out rather than let someone else cash in on my assets once again. A few small shops have started to poke around with Facebook apps (Watercooler), and a rogue game or two has emerged here or there, but when the teams or major media entities make the move, then it becomes serious.

Ticket Sales Problems Magnified in NHL

We have focused on lagging NFL ticket sales putting local games at risk of blackout, a recessionary indicator for what is hands-down the most profitable and popular sport in the country. Recent MLB numbers show significant year over year declines in two-thirds of the markets. Hidden behind these stories is the effect on hockey in the upcoming season.

Unlike MLB, the NBA, and especially the NFL, hockey does not have media contracts in excess of a billion dollars and as many big, long-term sponsorship deals as the three major leagues. Same concept applies at the local level – media deals are insignificant for most teams relative to the other sports. Without these guaranteed cash flows, teams rely for a higher percent of revenue on ticket sales, creating much greater exposure to the market.

Last week the Minnesota Wild, with the current longest sellout streak in market where hockey is popular, announced they still have tickets available for every game this year. Late last season the majority of teams announced ticket price freezes or even reductions, which may help stabilize sales but could hurt margins and will certainly not lead to increased revenues.

Given the ownership situations in Tampa Bay and Phoenix creating a glut of negative publicity in each of those markets, and nationally to an extent, the NHL could see a significant and potentially debilitating drop at the box office this season that puts many teams on alert. Someone will have to explain on Phoenix sold any tickets this off-season given the circumstances. Dallas has an owner facing bankruptcy and a lot of ticket money going towards Cowboys games, Florida has always been a bad hockey market, so its likely to be high on the list of discretionary spending cuts for struggling fans. Take the argument right to NY where unemployment is above the national average, Wall Street money is not at its previous levels, and the Yanks and Mets captured a larger share of sports spending this summer (with the Jets and Giants coming), hockey is at risk of getting squeezed.

Teams have responded by reducing cost structures, notably salaries have slightly retracted the past year or two, but likely not enough. With the CBA coming due it could be time for the league and its players to reevaluate the entire system, bring salaries further in-line with what the sport is relative to the big three (a lot smaller than they think), and look for new revenue streams (which they are trying to do online). More importantly they need to put teams into markets they can succeed in and correct the national media situation.

The NHL needs ESPN now. They need to make the NHL Network relevant. And they need to move teams into markets they can succeed in and then do a better job of selling tickets and promoting the league. Last week’s big preseason marketing push barely scratched the surface. Maybe doing it in NY and getting buried beneath the glut of news is not the best stage.

Something to keep an eye on the next few months.

Versus Needs Big Football Splash

If any doubts remained, football’s booming start on television leaves no doubt that it is arguably the most dominant television franchise. The NFL was up across the board during its first week, even more telling it’s meaningless preseason games ranked near the top of the weekly primetime ratings. The buck doesn’t stop with the NFL though, college football has been on fire as well. Last week’s OSU-USC game was the most watched ever on ESPN (including bowl games), and this week’s UT-Florida game was one of the best on CBS in recent years. Notre Dame has posted solid ratings, as did ESPN’s other big games.

While the NFL’s TV deals are locked up and game packages static for now, college football is not – and it can have a significant impact for a network. We’ve spoke about the upcoming contract negotiations for the ACC, Pac-10, and Big 12. If Versus wants to become a significant player in sports television, it needs to make a big push on one or more of those properties for exclusive basketball and football coverage. Hockey is not and will never be a big enough television property to carry a network. Tour de France and MMA have boosted Versus, but the ratings and revenue will never be mistaken for a Florida State-Miami football game or UNC and Duke basketball games.

Versus tried to make a splash bidding on the NFL Thursday night package, losing out to NFL Network thanks to some extenuating circumstances. That made it clear they want to be a player. More importantly, with deep-pocketed Comcast running the show, Versus has the money it would take to lock up these rights. If Versus can partner with two of these conferences its subscriber fees immediately become more valuable, its distribution would reach the next level, and Ad Sales would receive a jolt.

The conferences also have a lot at stake, mainly they need revenues to match the SEC and Big 10 in order to compete, and they need the marketing machine that ESPN provides its properties. Without other sports to steal the spotlight (i.e. MLB, NBA, NFL, golf, tennis, etc.), Versus can put a conference like the Pac-10 front and center on a national stage, providing the exposure new commissioner Larry Scott seeks.

Down the road, if the plan succeeds Versus would position itself to make serious runs at the NBA, MLB, and maybe even NFL in the future. At some point, though, if Versus wants to be a serious player in ESPN’s world, Comcast needs to push the chips to the middle and go for it. The NHL and bike racing is hardly coveted sports programming. Big college football and basketball – Top 25 games and historically powerhouse schools can move the needle. Add a conference tournament, some bowl games, and suddenly the 1-2 ratings the NHL gets for playoff games move to 3-4 ratings for big college games.

Ancillary to television, additional content and presumably some sports personalities, would make the web property more valuable (though not a hard task given the lack of web presence the network currently has). Destination programming would also make the network more valuable in Comcast’s TV Everywhere push and network of online TV content, providing synergy value across the company. College sports programming also opens the door for content licensing in local markets – another revenue stream to cover programming costs.

It carries risk, but the ratings show football is about as steadfast as you can get with programming and college fans have shown they will find their teams on television. College can take the network to the next echelon, and possibly help get to the tipping point of national prominence where it can get better channel placement and better affiliate deals.

ESPN Mobile Strategy Hitting Stride

After waiting out its Verizon partnership before entering the smartphone application world with its Scorecenter app earlier this summer, ESPN is about to go full throttle with its mobile strategy. Announced this week, the Worldwide Leader will debut a Fantasy Football iPhone app and an ESPN Radio app for the iPhone and Blackberry, along with an MVP service for Blackberry.

The key factor – all will generate subscription revenue. Put the MVP service aside for now, it will charge a recurring monthly fee, since details of the service remain sketchy. Fantasy football is one of the most deeply engaging products on the web and attracts an avid user base that is more likely willing to pay for an application than an average user, making it a perfect candidate for a revenue generating application. Finding the right price is a trickier proposition, but if they bundle enough value it should warrant more than the median price of $1-$2. Likewise, the ESPN Radio application – assuming it includes podcasts and radio shows – leverages an already established national audience and specific personalities (i.e. Bill Simmons, Mike & Mike, etc.) that have rabid followings. Build in the on-demand ability to access content wherever, whenever, on-the-go and its an automatic value add for listeners.

If ESPN simply converts a percentage of current Fantasy players and radio listeners, they can easily generate $10mm (that is a conservative 5mm total users at an average price of $2). Even without free, ESPN should find new sponsors for each app to earn incremental revenue, something they have integrated well into most of their mobile ventures. Further, by integrating Mobile Web into applications it indirectly lifts traffic to the mobile website, as does the constant bottom line and the simple brand extension of ESPN to the mobile device. All this amounts to additional mobile web ad revenue. Add in the opportunity to steal market share by providing a differentiator over the competition, and the lifetime value of the new customers it may attract, not to mention the revenue they gain by increasing engagement with their platform and having users view more pages and use more services.

Two key notes that content owners should take. First, while this has not proven itself out yet, though I feel strongly it will, don’t give away the house for free. Scores are a commodity, so they made Scorecenter sponsor-supported, but Fantasy and Radio content are premium services where ESPN can add value and provide a unique offering. Users User’s will pay for that – or at least we’ll find out. Second, it’s not necessary to develop the most innovative, groundbreaking product to capitalize in mobile. Reinventing the wheel with slight changes is more likely to succeed. ESPN is taking proven content and simply repackaging it for mobile, adding a few new features that cater to the distribution channel, and maybe bundling the content together in a unique way, but in the end its Fantasy and Radio two of ESPN’s core competencies.

It’s harder to see these lessons given ESPN’s scale and breadth of success. However, for a smaller entity or a struggling entity, leveraging these concepts can yield significant benefits in digital media