It’s Time Coach Bezos Turns the Page in His NFL Playbook

Jeff Bezos has sights on more
Cheyne Gateley/VIP

Were it just a renewal of the NFL’s Thursday Night Football streaming package with Amazon, which was announced Wednesday, the deal may not have said much about the tech giant’s ambitions. But the one way the new deal seems different is a tease of sorts to a future in which Amazon founder/CEO Jeff Bezos could choose to really ramp up his company’s stature as a multibillion-dollar U.S. sports rights holder.

The addition of just one Saturday night game that Amazon will get exclusively in the new package raises the prospects of how hungry Bezos will be at the next shot he gets at other rights. Despite the majority of the NFL’s broadcast deals expiring in 2022, 2020 is set to be when the new deals are negotiated.

Below is a breakdown of what’s included in each NFL media package.

Current TV and digital rights nets the NFL $7.86 billion a year. This is 83% higher than the $4.2 billion the league reaped in 2013, the final year of the previous rights agreements. While ~$725 million of this is due to rights that weren’t sold in 2013 (the TV and streaming rights to Thursday Night Football), this still represents a significant increase.

Another big leap in rights value won’t be out of the question.The NFL accounted for over one quarter (27) of 2019’s most-watched broadcasts and can be consistently relied upon to attract an audience–an increasingly rare capability on TV. 

Given the strength of the NFL to consistently deliver viewers, retaining their packages will be imperative for the existing broadcast rights holders. VIP’s analysis found that the NFL’s regular season games deliver between 1.4-3.2x the average audience for the broadcast networks, with this rising to 6.4x the average audience for ESPN. These numbers are likely even higher, as the average network audience figure available was among those watching within 7 days of airing (L+7), and the NFL average is based among those watching within 24 hours (L+SD).

 

Given the magnetic allure that football holds on U.S. viewers, it is not difficult to see how the last package renewals saw increases ranging between 54%-73% for the incumbents, as current holders are desperate to maintain their prime ratings draw. 

Given the rights increases other sports have seen, ranging from 18% to 363%, massive increases are a near certainty for NFL.

The NFL will likely keep the post-season packages on broadcast TV, given this represents the way to reach the largest possible audience, as well as the NFL’s cultural importance to America. Separating the streaming rights for the playoffs from the broadcast rights is a move certainly within the NFL’s wheelhouse, and is something that is likely, as it will yield an additional revenue stream.

What VIP thinks certainly can be anticipated is increased competition between Verizon and Amazon for Verizon’s existing digital rights package. Amazon may well offer an additional premium to make the digital package available across all devices, including TVs, or to revert the deal back to its 2013-17 incarnation, when it was exclusive to Verizon subscribers.

Another heated competition will be the rights to Sunday Ticket. It’s probable that Amazon and sports SVOD DAZN will enter a bidding war for the rights to it. With the current package priced at $1.5 billion a year (a half billion increase from the previous agreement), seeing this top $2 billion annually from 2023 is a real possibility.

It’s likely this won’t be with DirecTV. AT&T’s spending was already under pressure from minority stake owner Elliot Management before COVID-19 impacted cash flows. Given Elliot’s hostility toward DirecTV, there is a real chance that Sunday Ticket will move to a new home for its 30th season.

Amazon would find Sunday Ticket a very attractive proposition, as it would open up the possibility of selling merchandise in-game for dozens of teams a week, versus the two it currently has access to. To that end, Sunday Ticket could end up heavily subsidized by Amazon in an effort to reach the maximum possible audience, something Amazon has proven it is willing to do with its Prime product in an effort to ultimately drive up spending on the platform.

One final scenario would be Amazon making a huge offer to get streaming rights for the primetime Thanksgiving game, which NBC hold broadcast rights for. With this one of the biggest shopping periods in the year, having the ability to run ads to a large audience over the course of hours could offer a windfall.

What is certain is that the rights will increase again. Who ends up paying for some of them just might be Bezos.