« Archive for December, 2009

Piracy — specifically people streaming games that are supposed to be behind a pay wall — is already an issue for the NFL, boxing, UFC, and any other sport that charges a lot of money to watch their events. My dad, who is in his 60s and doesn’t know how to type, has figured out that he can watch every Steelers game and PPV fight for free if he checks enough shady streaming sites.

How do sports leagues deal with this? Remember, paid streaming is supposed to be a huge business for sports leagues in the next ten years, perhaps even big enough to replace some of the television deals that will inevitably get smaller or disappear as that business changes. MLB.tv is already a very popular product, and MLBAM is pushing it out in as many places as possible.

They need to use the Apple model of media: lower the price to the point where it’s easier to buy it than to pirate it. Watching Steelers games on justin.tv streams is annoying; the quality sucks, it goes in and out a lot, and half the time it gets shut down in the middle of the game once the NFL cops find it. But the NFL’s legal streaming package (which is only available to DirecTV subscribers, or people in Manhattan that can’t get DirecTV, such as myself) is prohibitively expensive — about $400, which comes out to $50 per game when you consider that half of the Steelers’ games are usually on in New York anyway. So we deal with the terrible service, and use NFL.com radio as a backup.

Compare that price to the other services we buy: NHL Center Ice, which is about $150, and MLB Extra Innings, which I believe went up to $200 last year. In other words, we would pay $50 less for both the NHL and MLB than we would for 8 Steelers games. If it was our only option, we’d probably do it — the Steelers are religion, after all. But it’s not our only option — we can watch those 8 games for free, albeit in a suboptimal way.

All the sports leagues, and ESPN for that matter, need to take note of this. Piracy is only going to become more prevalent in the coming years, as the quality and quantity improve. If you want to charge for your games, you need to recognize that you’re charging for convenience, not the games themselves, and it also helps to have value-add features like those you’ll find on MLB.tv (i.e. multiple games at once, highlights from other games, etc). Otherwise, you might as well give it away and pray the advertising dollars will be there.

Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com

Another way to phrase it would be, “What happens when nobody is reading physical newspapers, and sports are no longer guaranteed a disproportionate amount of space in people’s daily reading?”

But even while physical newspapers still exist, it’s becoming too expensive for companies to fly their reporters around the country to report on their beats in person. Teams are worried this (Mark Cuban writes about it all the time), and rightfully so; lots of newspapers have already cut their first-hand sports coverage, especially for NHL teams.

In LA, the local papers almost never send their beat writers to Kings road games anymore. So the team actually hired one of the LADN’s beat reporters to cover the games for the team’s web site. That works, in some senses. But it’s still an entirely different dynamic; whereas people used to discover the Kings in the local paper, because it was always there in front of them, now they’ll need to seek the team out, and that puts the Kings on the same plane as just about any other form of local entertainment.

Yes, sites like SB Nation will help fill this void — I don’t think we’ll ever reach a point where you can’t find coverage of your local team. But it may never be the same. Sports has had an incredible setup for the past hundred plus years; relative to their size and scope, they received a hugely disproportionate share of newspapers’ space and resources. The question is, was it more of a supply or a demand issue? Did newspapers cover sports because it was easy and fun and filled lots of pages, or was there actual consumer demand for sports news? And did it at some point become a self-fulfilling cycle — i.e. did people become more interested in sports because it was in the newspaper, and therefore demanded more sports coverage?

This is an incredibly important issue, and I wouldn’t be surprised if it becomes a major topic of conversation over the next couple years, particularly in regards to the NHL and NBA. But even for MLB and the NFL, it’s something to pay attention to — there are a lot of casual fans who could drop off if the information isn’t put in front of them everyday. I’m not sure there’s really a solution either — sports leagues and teams might simply have to become like any other marketer, and, like anybody else, they’ll either execute well and continue to succeed, or fall into the abyss.

Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com

Let’s play guess-the-projected-FIP, using the Bill James projections on FanGraphs:

3.67, 3.77, 3.84, 4.05, 4.21, 4.23

In order, that’s Rich Harden, Andy Pettitte, John Lackey, Brad Penny, Randy Wolf, and Carl Pavano. All of these guys have already signed for 2010 (or in Pavano’s case, accepted arbitration).

Now how about this group:

3.60, 3.67, 4.22, 4.39, 4.56, 4.59, 4.60, 4.70

These are some of the unsigned guys still on the market: Erik Bedard, Pedro Martinez, Joel Pineiro, Doug Davis, Jon Garland, Brett Myers, Jarrod Washburn, and Jason Marquis. Some good, some bad, mostly just a lot of adequacy in this group.

And then there are these two:

3.25, 3.72

That’s Roy Halladay and Cliff Lee. I would bet the under on Lee’s projection, and the fans on FG overwhelmingly agree. These guys are obviously the two best pitchers that will move this offseason. But there’s also this guy:


Any guesses? That’s a pretty robust projection, right up there with Halladay, Zack Greinke (3.31), Johan Santana (3.42), C.C. Sabathia (3.44), and a bunch of relievers. He’s also a future Hall of Famer, which you would think would make him less under the radar.

Yeah, it’s John Smoltz. The guy who put up a 3.87 FIP and 3.84 xFIP in what was considered a pretty crappy season. Sure, he’s had injury problems the last two years. And whether it was just blind luck or not, he did flame out pretty quickly in the AL East.

But I don’t think there’s any question that he’s the best pitcher left on the market. If he’s healthy, he might even be this year’s best free agent pitcher, period. For NL teams that expect to contend, here’s your lottery ticket.

Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com

I’m sure people will be confused when ESPN outbids NBC (by a wide margin) for a property that can’t pay for itself in advertising on a broadcast network, let alone a cable station. From MediaPost, via TBI:

General Electric CEO Jeff Immelt said Tuesday that NBC Universal will lose an estimated $200 million on the February Olympics. GE is “counting on a tough economy around the Olympics,” Immelt said.

“It’s just a tough time for an event like that,” he said, referring to the Olympics as a “no-margin” business.

So then why does ESPN have such a crush on the Olympics? For one thing, it’s about status. But it also makes plenty of sense business-wise, even though they’ll never make enough in advertising to fully “pay for” the games.

Instead, they’ll probably just jack up their monthly subscription fees a few more cents, and… tada, they’ve made money on the Olympics. Even more importantly, though, they’ve become that much more of a necessity in your life. Like I talked about yesterday, when cable inevitably goes a la carte (or when people start pulling their plugs entirely), only the most indispensable networks will survive. Instead of charging $4 a month to everybody, ESPN will have to charge $10-20 to some — but in the end, they’ll probably be fine, because you’re going to need ESPN.

Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com

SBJ had it right last year; not so much this year. I guess it would be boring to have Bodenheimer at number one every year, but until further notice, that’s what he is.

First, lets put this into perspective, in terms of dollars. NBC is paying $2.2 billion for the American broadcast rights to the 2010 and 2012 Olympics. In other words, $550 million per year, if we’re averaging it out over the entire four year Olympic cycle. In comparison, ESPN pays $1.1 billion per year (i.e. twice as much) just for Monday Night Football. Even considering the global reach of the Olympics, it’s still a drop in the bucket in the overall scheme of sports broadcasting, which ESPN more or less owns at this point.

So why did SBJ pick Rogge? Well, because he made news recently, I guess:

It’s what Jacques Rogge didn’t do for the American sports industry rather than what he did that shows the extent of his influence. Working quietly behind the scenes, Rogge steered the International Olympic Committee’s selection of Rio de Janeiro as the host city for the 2016 Olympics. The selection of Rio and rejection of Chicago cost the U.S. sports industry hundreds — if not thousands — of jobs, $1.2 billion in sponsorship deals and approximately $250 million in U.S. media rights.

Right. Now consider that ESPN is contemplating a bid for the 2014 and 2016 Olympics, which would have a far greater impact on the business-of-the-Olympics — not to mention the business of cable and internet streaming — than anything Rogge or the IOC could ever do.

And that’s really the point. ESPN has become the sports world’s kingmaker — not only do they choose which sports get marketed to the world’s largest cable audience, they also reward those sports much more generously than any other network. Unlike the broadcast networks, which rely solely on advertising and therefore need a constant stream of eyeballs, ESPN simply needs to become too invaluable for you to lose, so that you’ll keep your cable plugged in, and keep paying that $4/month sub fee. Even if you only watch it for the NBA playoffs, or MNF, or college football, ESPN doesn’t really care, as long as there’s something you can’t live without.

That’s why they were willing to pay such a premium for the BCS. And MNF. And eventually the Olympics. ESPN sees the writing on the wall: eventually, the current cable model will die, and people will either have an a la carte service, or watch everything via the internet. ESPN can’t afford to be a luxury in your life; they need you to need them, even if it means paying $10-20/month eventually, once you no longer have to pay for the 500 other channels that you never watch.

In taking on this strategy, they’ve become far more powerful than anyone could have ever imagined, even five or ten years ago. Maybe Comcast — with NBC in tow at some point next year — will try to challenge them with Versus, or some new NBC-branded network. But ESPN has such a huge head start, it will be extraordinarily difficult for Comcast to catch up. And as long as ESPN is eating up the vast majority of the profits in the sports broadcasting industry, they’ll be able to keep playing kingmaker, and George Bodenheimer will remain, by far, the most powerful man in sports business.

Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com

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