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The question of the Pittsburgh Steelers and their future with quarterback Ben Roethlisberger, as well as many other players, seems to get heightened every day as the new league year on March 17, 2021 approaches. Roethlisberger will be due a $15M roster bonus on March 19 and things really could come down to the wire.
What we know: The NFL has already increased the salary cap to $180M from $175M, and there is speculation that it could go higher. Many estimates have this going as high as $185 with substantial increases in 2022 and 2023.
But what does that does that mean towards the Steelers receiving additional cap relief for 2021?
For details, read on:
The NFL is in discussions with its current four existing network partners: Comcast (NBC), Viacom (CBS), FOX, and Disney (ESPN/ABC) with hopes of completing negotiations on new TV deals before the start of the league year on March 17, 2021. The ESPN/Monday Night Football deal expires after 2021 and DirectTV has made it clear it will not continue hosting NFL Sunday Ticket (and its $1.5B price tag) past 2021 either. The NFL is seeking to finalize deals with all their primary broadcast partners before their deals expire in 2022. While tech giants Amazon, Apple, Google and Netflix all have shown interest, the NFL is does not appear ready to go full streaming (although it may have no choice with Sunday Ticket) and may be more comfortable with the existing partnerships they have, although a shake-up is inevitable. Amazon already has a partnership with the NFL and is interested in Sunday Ticket, NBC and ABC may have a bidding war over Sunday Night Football and the conferences may change between FOX and CBS.
Historically speaking, the NFL has proven reluctant to lay out their financial data, but it has been reported the NFL is facing a loss of between $2B to $4B from the 2020 season. Take that with the grain of salt that it is, we will never know for certain. What they do have is a 10-year labor agreement and even in the face of decreased ratings the NFL provided the highest rated broadcasts of 2020. What they are seeking is in effect a 100% increase for the right to broadcast games, something that seems in line for NBC, CBS and FOX. ESPN is another matter.
The landscape has changed drastically for ESPN since they agreed to a 10-year/$152B package to air Monday Night Football in 2011. At the time, ESPN was rapidly growing, and it was the place to tune into for scores and insight. The $1.9B per year deal was nearly twice what any of the other networks paid for because it included the video and highlights rights, the NFL Draft and the Pro Bowl, which were meant to help sustain their numerous programs and platforms — but are nowhere close worth to the same value as they once were.
Today, day-to-day sports coverage can be found through an app or platforms that give better insight than ESPN can as many of these platforms give better insight to their favorite teams and do so much faster. That additional value decreased almost as fast as the subscriber base has declined.
Business Insider
ESPN peaked at 100M subscribers (66% of their revenue) in 2011 and the math pretty much shows that they were only charging $4.69 per subscriber. Simple rounded math: $4.69 x 12 months x 100M subscribers = $5.63B in subscription revenue. By 2017, subscriptions had dropped by 13M, with ESPN raising subscription rates to $7.21 to offset lost subscriptions for $7.55B revenue. To put into context, a cable package in 2017 with ESPN and additional ESPN-brand channels was the most expensive channel in a package. It cost almost $10/month versus majority of other cable channels that fell into a Rough of Magnitude of $1.00 to $2.00. These rising costs can be attributed to the large deals to air other sports content to offset the decreasing subscriptions:
This 2017 Data showed that ESPN sports contracts reached $8B, with subscription revenue at $7.55B = $45B difference. The traditional cable subscriber base has only continued to dwindle in recent years:
Just glancing at the data, it has been little wonder why the once 5,000+ employed ESPN has drastically reduced staff over the last decade:
Number crunching aside, the future of the NFL and ESPN is a very unclear direction. While overall in good financial health, I am betting Disney does not love the future of traditional ESPN. When you consider decrease in value of the rights that it paid for a decade ago, no playoff games or Super Bowls and the lackluster draw of what currently constitutes Monday Night Football, it does not take much to understand why.
Here is where it gets interesting: Disney is still the biggest conglomerate NFL partner and is highly vested in ESPN+ entry into the streaming market. Per their Q1 earnings report: ESPN+ has seen a significant increase in subscriptions since December 2019 (6.6M) to January 2021 (12.1M) with an insignificant increase in revenue as earnings are offset by the higher sports programming costs as well as unclear ties to subscriber totals are related to bundle packages vs. stand-alone subscriptions.
Disney has made no secret that it is aiming at supplanting Direct TV for the rights to NFL Sunday Ticket and place it on ESPN+ in addition to a Super Bowl on ABC. Timing is a lot of things in life and if these negotiations were happening five years ago, it might have been easier on the NFL. Under the previous leadership of CEO Bob Iger, Disney had a growth by acquisition strategy (Marvel, Lucasfilm, 20th Century Fox and Pixar) with deals easily in the billions and faced some scrutiny by financial experts. While that strategy appears discontinued the leadership of new CEO Bob Chapek, who is unwilling to meet the reported $3.8B price tag the NFL is seeking, but does want more in exchange – ESPN/Disney are backed into a corner with the NFL and it is just a matter of how much they will concede.
Even with a malleable Salary Cap, it’s unlikely the Cap Floor will increase significantly past the $180 mark this year. This leaves teams with two options, shedding salaries or kicking the can down the road with extensions, albeit they can do so with a financial strategy. On the slight chance there is any significant increase to the cap this year, it will depend on the size of the TV deals and it will still come off future salary caps. In essence, the NFL will be loaning the players money from future caps and then collect it back. With less than a week of February left, deadlines creep closer on the inevitable clock. Disney, with its investment in ESPN/ABC cannot back out of airing football games and the NFL knows it (as does Disney). However, they have overpaid for some of their recent acquisitions (Lucasfilm) and the pandemic has hit their theme parks hard. Negotiations will not be simple — but it really can all come down to the NFL’s negotiations with Disney.
If you are looking for a guarantee, I’ll guarantee that you’ll see a constant series of “reports” about speculation but zero facts. My advice is to not get worked up by them. No talking head is going to have “insider information” outside a guess.
My prediction is this: The Steelers are preparing to play 2021 with Roethlisberger under center and will, for better or worse, even if it means borrowing from the future. It’s more likely to happen than not happen and TV deals will be done. The only TV partner with anything approaching true uncertainty is Disney and whether they move on Sunday Ticket (this year) but the NFL is about to go up $3B from three networks and it is about how much Disney will agree to.
Comments or thoughts? Please share in comments below.
#SteelerNation
Support SteelerNation by clicking here to read the story..
What we know: The NFL has already increased the salary cap to $180M from $175M, and there is speculation that it could go higher. Many estimates have this going as high as $185 with substantial increases in 2022 and 2023.
But what does that does that mean towards the Steelers receiving additional cap relief for 2021?
For those who prefer TL;DR – scroll to the bottom.
For details, read on:
The NFL is in discussions with its current four existing network partners: Comcast (NBC), Viacom (CBS), FOX, and Disney (ESPN/ABC) with hopes of completing negotiations on new TV deals before the start of the league year on March 17, 2021. The ESPN/Monday Night Football deal expires after 2021 and DirectTV has made it clear it will not continue hosting NFL Sunday Ticket (and its $1.5B price tag) past 2021 either. The NFL is seeking to finalize deals with all their primary broadcast partners before their deals expire in 2022. While tech giants Amazon, Apple, Google and Netflix all have shown interest, the NFL is does not appear ready to go full streaming (although it may have no choice with Sunday Ticket) and may be more comfortable with the existing partnerships they have, although a shake-up is inevitable. Amazon already has a partnership with the NFL and is interested in Sunday Ticket, NBC and ABC may have a bidding war over Sunday Night Football and the conferences may change between FOX and CBS.
Historically speaking, the NFL has proven reluctant to lay out their financial data, but it has been reported the NFL is facing a loss of between $2B to $4B from the 2020 season. Take that with the grain of salt that it is, we will never know for certain. What they do have is a 10-year labor agreement and even in the face of decreased ratings the NFL provided the highest rated broadcasts of 2020. What they are seeking is in effect a 100% increase for the right to broadcast games, something that seems in line for NBC, CBS and FOX. ESPN is another matter.
The landscape has changed drastically for ESPN since they agreed to a 10-year/$152B package to air Monday Night Football in 2011. At the time, ESPN was rapidly growing, and it was the place to tune into for scores and insight. The $1.9B per year deal was nearly twice what any of the other networks paid for because it included the video and highlights rights, the NFL Draft and the Pro Bowl, which were meant to help sustain their numerous programs and platforms — but are nowhere close worth to the same value as they once were.
Today, day-to-day sports coverage can be found through an app or platforms that give better insight than ESPN can as many of these platforms give better insight to their favorite teams and do so much faster. That additional value decreased almost as fast as the subscriber base has declined.
Business Insider
ESPN peaked at 100M subscribers (66% of their revenue) in 2011 and the math pretty much shows that they were only charging $4.69 per subscriber. Simple rounded math: $4.69 x 12 months x 100M subscribers = $5.63B in subscription revenue. By 2017, subscriptions had dropped by 13M, with ESPN raising subscription rates to $7.21 to offset lost subscriptions for $7.55B revenue. To put into context, a cable package in 2017 with ESPN and additional ESPN-brand channels was the most expensive channel in a package. It cost almost $10/month versus majority of other cable channels that fell into a Rough of Magnitude of $1.00 to $2.00. These rising costs can be attributed to the large deals to air other sports content to offset the decreasing subscriptions:
- College Football/Basketball: $2.0 Billion
- NFL: $1.9B
- NBA $1.4B
- MLB: $700M
- Other > $2.0B
This 2017 Data showed that ESPN sports contracts reached $8B, with subscription revenue at $7.55B = $45B difference. The traditional cable subscriber base has only continued to dwindle in recent years:
Just glancing at the data, it has been little wonder why the once 5,000+ employed ESPN has drastically reduced staff over the last decade:
- November 2020: 500 jobs (300 layoffs, elimination of 200 open positions)
- April 2017: 200 layoffs
- October 2015: 300 layoffs
Number crunching aside, the future of the NFL and ESPN is a very unclear direction. While overall in good financial health, I am betting Disney does not love the future of traditional ESPN. When you consider decrease in value of the rights that it paid for a decade ago, no playoff games or Super Bowls and the lackluster draw of what currently constitutes Monday Night Football, it does not take much to understand why.
Here is where it gets interesting: Disney is still the biggest conglomerate NFL partner and is highly vested in ESPN+ entry into the streaming market. Per their Q1 earnings report: ESPN+ has seen a significant increase in subscriptions since December 2019 (6.6M) to January 2021 (12.1M) with an insignificant increase in revenue as earnings are offset by the higher sports programming costs as well as unclear ties to subscriber totals are related to bundle packages vs. stand-alone subscriptions.
Disney has made no secret that it is aiming at supplanting Direct TV for the rights to NFL Sunday Ticket and place it on ESPN+ in addition to a Super Bowl on ABC. Timing is a lot of things in life and if these negotiations were happening five years ago, it might have been easier on the NFL. Under the previous leadership of CEO Bob Iger, Disney had a growth by acquisition strategy (Marvel, Lucasfilm, 20th Century Fox and Pixar) with deals easily in the billions and faced some scrutiny by financial experts. While that strategy appears discontinued the leadership of new CEO Bob Chapek, who is unwilling to meet the reported $3.8B price tag the NFL is seeking, but does want more in exchange – ESPN/Disney are backed into a corner with the NFL and it is just a matter of how much they will concede.
TL;DR
Even with a malleable Salary Cap, it’s unlikely the Cap Floor will increase significantly past the $180 mark this year. This leaves teams with two options, shedding salaries or kicking the can down the road with extensions, albeit they can do so with a financial strategy. On the slight chance there is any significant increase to the cap this year, it will depend on the size of the TV deals and it will still come off future salary caps. In essence, the NFL will be loaning the players money from future caps and then collect it back. With less than a week of February left, deadlines creep closer on the inevitable clock. Disney, with its investment in ESPN/ABC cannot back out of airing football games and the NFL knows it (as does Disney). However, they have overpaid for some of their recent acquisitions (Lucasfilm) and the pandemic has hit their theme parks hard. Negotiations will not be simple — but it really can all come down to the NFL’s negotiations with Disney.
If you are looking for a guarantee, I’ll guarantee that you’ll see a constant series of “reports” about speculation but zero facts. My advice is to not get worked up by them. No talking head is going to have “insider information” outside a guess.
My prediction is this: The Steelers are preparing to play 2021 with Roethlisberger under center and will, for better or worse, even if it means borrowing from the future. It’s more likely to happen than not happen and TV deals will be done. The only TV partner with anything approaching true uncertainty is Disney and whether they move on Sunday Ticket (this year) but the NFL is about to go up $3B from three networks and it is about how much Disney will agree to.
Comments or thoughts? Please share in comments below.
#SteelerNation
Support SteelerNation by clicking here to read the story..
