DirecTV pays $1B for NF ST in 2011 - even if there is no football!

[jrbdmb]

I hadn't heard about this before ... from bizoffootball.com:

Securing guaranteed TV money [Direct TV, NBC and others] to fund the lockouts
The NFL can afford to wait for the expiration of the CBA partially because of the significant contracts it signed with various sponsors and partners. For instance, the NFL recently signed a deal with DirecTV that pays the league $1 Billion regardless of whether football is played in 2011. This type of deal provides the NFL with plenty of leverage in dealing with the union. Owners can afford to sit around during a lockout and wait to break the players’ collective spirit.

I'm just trying to figure out why DirecTV would eat $1B in 2011 if the NFL owners decide to lock out the players. This almost encourages the owners to kill the whole season, since they'll get their money but not pay any player salaries. (Don't know what deals are in place for the networks.)

It also makes me wonder why the owners are so intent on killing the NFL golden goose. There is no possible way that the owners aren't making money hand over fist, and a prolonged work stoppage (with the possible loss of a Super Bowl) seems to be the one sure way to set the sport back a decade or so.

 

[meStevo]

Some owners aren't doing as well as you'd think, Google up the Glazer Family...

This is likely just the deal they signed in March, not some new explicit 'omg there's a lockout pay us' deal and is paid out even if the product does not air is all.

 

[SamCdbs]

A "lockout" to keep a salary cap is 100% necessary and certainly something that all fans should support. As in most all strikes it is workers vs. customers at the end of the day. I'm a customer.

If you remember the first millionaire baseball strike, the owners had bought insurance from Lloyd's of London and actually made more money during the strike than they would have playing.

For DirecTV, however, this seems odd. However, I would bet that it has likewise laid this off on the international reinsurance market and really does not have its own money at risk.

 

[meStevo]

No salary cap is going to be bad for a lot of players, potentially worse for many of them than it is good. The teams that made it to the post season will only be able to sign a free agent for every free agent they lose, and many who were to be a FA but have been in the league for less than 6 years will be restricted free agents and might be retained with simple RFA tenders. Teams like the Glazer family's Buccaneers that flirt with the Salary floor (teams have to spend a minimum amount on player salary, the salary cap establishes a floor, not just a cap) will be able to unload people and reduce costs even more as they struggle. All this chaos provides some good reasons to have a lockout rather than an uncapped year, but we'll see happens.

All in all, it's not a good thing, a new CBA is hopefully what happens before anything else though. If they manage to get a rookie pay scale in there too, that'd be spiffy. Raiders would probably dump JaMarcus if he wasn't already a $40m investment. If he had a slotted 2-3 year contract they could let it expire or cut him and part ways with only a fraction of that investment. Same goes for this years first round pick if he ends up bring the next Mike Williams.

 

[Derwin0]

Directv is paying the $1Billion, because it was required to have the exclusive contract for Sunday Ticket.

As for the owners locking the players out. Of course they will if they have to. The owners have a winning record against the players in regards to Strikes and Lockouts, no reason that won't continue.

 

[Ramy]

No salary cap is going to be bad for a lot of players, potentially worse for many of them than it is good.

I agree.

 

[jrbdmb]

A "lockout" to keep a salary cap is 100% necessary and certainly something that all fans should support. As in most all strikes it is workers vs. customers at the end of the day. I'm a customer.

If you remember the first millionaire baseball strike, the owners had bought insurance from Lloyd's of London and actually made more money during the strike than they would have playing.

For DirecTV, however, this seems odd. However, I would bet that it has likewise laid this off on the international reinsurance market and really does not have its own money at risk.

Interestingly, it sounds like some of the owners want to do away with the salary cap and salary floor. This way Jerry Jones can buy whatever players he wants while other teams can spend minimal money on players and pocket the guaranteed TV money.

I agree that is some cases (MLB and NBA) the inmates are running the asylum, but it seems like in the NFL the owners already have the players over a barrel. I suspect that any further concessions the owners get with a lockout will be more than offset by a loss of income in 2011 and beyond. From past history (MLB and NHL lockouts) I wouldn't expect the NFL to fully recover from a season long lockout for at least a decade.

 

[Jimbo]

Directv is paying the $1Billion, because it was required to have the exclusive contract for Sunday Ticket.

I agree and was going to post something like this, but forgot about it while looking at other areas.

Thanks Derwin, now I don't have to

 

[vurbano]

salary caps are unamerican. If owners want to spend money to build a winner then let them! let the cheapskates LOSE!!!

 

[jrbdmb]

salary caps are unamerican. If owners want to spend money to build a winner then let them! let the cheapskates LOSE!!!

But I think the owners are squabbling amongst themselves because the Jerry Jones' of the NFL are tired of sharing TV and stadium revenues with owners who appear to have no interest in putting a viable product on the field. After all, FOX / NBC / CBS / ESPN aren't paying billions to show Lions and Jags games, but those teams get essentially the same money as the Cowboys / Steelers / Patriots.

 

[meStevo]

salary caps are unamerican. If owners want to spend money to build a winner then let them! let the cheapskates LOSE!!!

The NFL isnt for cheapskates, which is why there is a salary floor. Without it, the NFL would be the MLB, with a handful of competitive teams every single year and divisions full of also rans.

This way Jerry Jones can buy whatever players he wants while other teams can spend minimal money on players and pocket the guaranteed TV money.

Jerry would love to do that, but there are restrictions even without a cap that help prevent good teams from opening their wallets and becoming even better unmitigated.

Here's another rundown of what would happen if the CBA expired and we had an uncapped year: (ignore the auto embeding video, click the link if you want to read more) [ame="http://sports.espn.go.com/nfl/columns/story?columnist=clayton_john&id=4841466"]NFL: Uncapped year would be bad news for bad teams - ESPN[/ame]

he uncapped year is the NFL's version of the Texas Hold 'em. Teams with good cards win. Teams with bad cards have limited chances of getting much better. In the weeks ahead, we'll explain exactly what an uncapped year would mean, but here's a basic rundown:

Free agency won't offer much hope for teams trying to improve.

The uncapped year raises the threshold for unrestricted free agency from four to six years. Approximately 212 players -- including Braylon Edwards and Brandon Marshall -- will become restricted free agents instead of unrestricted free agents, severely shrinking the pool of potential starters for teams in need of help. Not only do teams have a franchise tag to prevent top players from leaving, but they will also have an extra transition tag, further watering down the free-agent market.

The playoff teams that make the final four can jump into free agency only if they lose a player. Figuring those teams will protect top players by tagging them, consider those teams out of the main free-agent market. In most years, the top free agents are gone in 10 days. Under these rules, the top free agents could be gone in 10 hours when free agency starts in March.

The 'Final 8' rule is probably the most restrictive: http://www.nfl.com/news/story?id=09000d5d808736ba&template=with-video&confirm=true

The rule will restrict the final eight teams in the playoffs from signing free agents. The final four teams shall not be permitted to negotiate and sign any unrestricted free agent to a player contract except for players who acquired their status by being cut or were on the final four team when their contract expired. Playoff teams five thru eight get a break to sign one player with a salary of $4,925,000 or more and any number of players with a first-year salary of no more than $3,275,000 and an annual increase of no more than 30 percent in the following years.

There is a mechanism to permit the final eight teams to sign an unrestricted free agent for each one of their own unrestricted free agents who sign with another club as long as they don't spend more than what their own lost player received from his new club.

Players like Miles Austin and Brandon Marshall coming off career years would likely miss out on their career payday if they post mediocre numbers (or worse, get injured) after the uncapped year. For a game where the average career is a short 3 years... this is a lose-lose for the players, they need a new CBA.

 

[Go Sox!!]

salary caps are unamerican. If owners want to spend money to build a winner then let them! let the cheapskates LOSE!!!

It will be us that lose. Higher tickets prices and cable/satellite fees go up not to mention the local blackouts that might occur because people are not willing to pay the higher tickets prices.

 

[Jimbo]

Interestingly, it sounds like some of the owners want to do away with the salary cap and salary floor. This way Jerry Jones can buy whatever players he wants while other teams can spend minimal money on players and pocket the guaranteed TV money.

I agree that is some cases (MLB and NBA) the inmates are running the asylum, but it seems like in the NFL the owners already have the players over a barrel. I suspect that any further concessions the owners get with a lockout will be more than offset by a loss of income in 2011 and beyond. From past history (MLB and NHL lockouts) I wouldn't expect the NFL to fully recover from a season long lockout for at least a decade.

I did not know that the NFL had a salary FLOOR .....
Anyone know what it is for sure ?

 

[meStevo]

Yup. From Wiki - The cap was introduced for the 1994 season and was initially $34.6 million. Both the cap and the floor are adjusted annually based on the league's revenues, and they have increased each year. In 2009, the cap will be $128 million per team , while the floor will be 87.6% of the cap, using the formula provided in the league's collective bargaining agreement, the floor will be $112.1 million; the salary floor percentage will increase 1.2% per year until it reaches 90% of the cap in 2011.

Some teams flirt with it every year, I think the Buccaneers do habitually, I think the Chiefs also did this year, going above it with the final couple of signings this year. This isn't because they were being cheap, it's because of how young the team is and how many draft picks from the previous GM were awful and are no longer on the team so they lack the number of inflated post-rookie contracts and veteran players that soak up a good chunk of the annual cap. Others probably did too, I just knew the Chiefs did off the top of my head.

 

[salsadancer7]

A "lockout" to keep a salary cap is 100% necessary and certainly something that all fans should support. As in most all strikes it is workers vs. customers at the end of the day. I'm a customer.

If you remember the first millionaire baseball strike, the owners had bought insurance from Lloyd's of London and actually made more money during the strike than they would have playing.

For DirecTV, however, this seems odd. However, I would bet that it has likewise laid this off on the international reinsurance market and really does not have its own money at risk.

I understand that you are anti-union, but if you think for one second that IF the owners bust the union...they won't jack up your prices....your are in La-La land. I will never side with the owners because every time one cries poverty, he goes and signs a overhyped or over the hill players 5 times over he is true worth. THEN they cry how they are having a tough time running their team. These owners are MULTI millionaire...and in some cases 100 times over!! Holding cities and fans hostages for new stadiums on tax payer money. :rant:

Nope...no pitty on this end! As for the NFL ST.....I am all little confused by the NFL...would they make more money selling it to EVERYONE instead one provider?

 

[meStevo]

Theoretically no. If more providers offered Sunday Ticket and it was offered for less as a result by those providers, the large bag of money they get for the NBC/CBS/FOX deals would be signifigantly smaller because ratings on networks would be worse, and the value of those contracts is based on the advertising money NBC/CBS/FOX can bring in as a result. The NFL won't be getting a billion/year from each provider, so hard to say the sum of all of the signed up providers will equal what they're getting from DirecTV as well.

There's no way to prove that one way or the other, it's hard to say they would make more or less, there are a lot of moving parts to it most of which we can only speculate about.

 

[Jimbo]

Theoretically no. If more providers offered Sunday Ticket and it was offered for less as a result by those providers, the large bag of money they get for the NBC/CBS/FOX deals would be signifigantly smaller because ratings on networks would be worse, and the value of those contracts is based on the advertising money NBC/CBS/FOX can bring in as a result. The NFL won't be getting a billion/year from each provider, so hard to say the sum of all of the signed up providers will equal what they're getting from DirecTV as well.

There's no way to prove that one way or the other, it's hard to say they would make more or less, there are a lot of moving parts to it most of which we can only speculate about.

I hope your not insinuating that IF they sold the ST to all companies that want it.... that the price to the customer would go down because THAT'S not happening.

D* has established the price point for all potential providers, so they already know what it will allow.
Sure there would be some cable companies that might be $10-20 cheaper, but thats just to get the sub's attention, it would still be in the $ 300 + range.

 

[SamCdbs]

I understand that you are anti-union, but if you think for one second that IF the owners bust the union...they won't jack up your prices....your are in La-La land. I will never side with the owners because every time one cries poverty, he goes and signs a overhyped or over the hill players 5 times over he is true worth. THEN they cry how they are having a tough time running their team. These owners are MULTI millionaire...and in some cases 100 times over!! Holding cities and fans hostages for new stadiums on tax payer money. :rant:

Nope...no pitty on this end! As for the NFL ST.....I am all little confused by the NFL...would they make more money selling it to EVERYONE instead one provider?

The proof of how owners would treat fans is in the history of how owners treated fans. Before these so-called unions, when players made nice middle class saleries, the owners simply charged less. Tickets were (accounting for inflation) far less, the TV networks were charged far less, and most baseball and hockey games were on free TV. The idea that the players are taking money from the owners, rather than from customers and taxpayers, is simply wrong.

As to the "sign five players and pleed poverty" line, the owners, at least the baseball owners, tried to be reasonable and were found guilty of "collusion" even though they did not collude.

Lastly as to NFLST, the economics of this are simple. DirecTV loses money on this directly (no pun intended). It pays $X and sells significantly less than $X in subscriptions. It thinks, and it is a big company that hopefully knows what it is doing, that it makes this back on the back side by converting customers from other providers. If it were simply available to all providers willing to participate, the most likely rights fee that the NFL would get would be zero. Rather it would get some percentage of the subscribers' fee. The 5%age of that fee would be less than DirecTV pays now, with no risk to the NFL.

 

[SandraC]

The NFL does not want Sunday Ticket available to everybody. As mstevo said, the NFL is protecting the networks.


Sandra

 

[jrbdmb]

The proof of how owners would treat fans is in the history of how owners treated fans. Before these so-called unions, when players made nice middle class saleries, the owners simply charged less. Tickets were (accounting for inflation) far less, the TV networks were charged far less, and most baseball and hockey games were on free TV. The idea that the players are taking money from the owners, rather than from customers and taxpayers, is simply wrong.

I guess you just give owners more credit than most of us would. As Sandra said above, do you think for one second that owners would lower ticket prices, lower other fees to attend games (beer/parking/etc.), or lower TV rights fees if they were able to substantially lower player salaries? By your logic big time college football tickets should be close to free since the only salaries those players make is room and board and tuition (and a few million for the coach).

As an example, I'd like to see how much successful NHL teams (Bruins, Flyers, Rangers) lowered their ticket prices after the 2004 lockout lowered player salaries from 76 percent of revenues to 54 percent of revenues (per Wiki). I couldn't find much info in a quick search, but I don't recall hearing that the Flyers cut ticket prices 30% after the lockout ...

Simple economics ... teams will charge what they can for tickets / TV rights to maximize profit. Changing costs will not substantially affect this. Tickets to Yankees games in the 30's cost 25 cents because that's what fans would pay. The Yankees tried to charge $2500 a game for some seats last year because they thought fans would pay it. Not enough did, and it appears that those seats will now sell for $1500 in 2010.