March 2, 2021

Regional Sports Networks Show the Money

The MSG Network was the first successful one, carrying the Knicks and the Rangers initially to a tiny audience. Dozens followed as teams moved more of their games from free broadcast stations to cable.

Now, these cable networks have grown so big that they have evolved into the primary local outlets on which to see professional teams play and increasingly powerful factors in an array of major sports deals.

They are, for instance, critical in the sales of professional teams and the financial growth of college conferences. And one such network is at the center of the dispute with Major League Baseball that led the Los Angeles Dodgers to tumble into bankruptcy.

Another was deemed so valuable by the Mets that their owners refused to part with a piece of it when they decided they urgently needed cash. They decided, instead, to sell a part of the actual team.

There is a good reason for all this: With a few exceptions, regional sports networks are money-printing operations that heavily promote the teams they carry and play on the loyalties and wallets of local fans.

“What you’re seeing, especially in professional sports, is the inherent value inside a team are its media rights,” said Chris Bevilacqua, a media consultant who devised the strategy for the Pacific-12 conference’s new suite of networks. “A prospective buyer looks at a team as if you’re buying a regional sports network that happens to have a team.”

The value and influence of these networks can be appreciated in a variety of ways.

Conferences Cash In

For decades, the Pac-10 was defined to a great degree by the 10 national championships won by John Wooden’s U.C.L.A. men’s basketball team and Southern California’s success in football. From Terry Baker to Matt Leinart, the conference’s universities produced nine Heisman Trophy winners. Games were seen on national networks and local channels, a formula long followed by college athletic conferences.

But Larry Scott, the conference’s commissioner, recently recognized that it could do much better. He decided to maximize television revenue by using natural regional rivalries among his conference’s universities to create an entire matrix of regional networks. One network went to U.C.L.A. and U.S.C. and another to Oregon and Oregon State. A third went to Washington and Washington State, a fourth to Arizona and Arizona State and a fifth to Stanford and California. A sixth will feature Colorado and Utah, whose additions turned the Pac-10 into the Pac-12 but have no historic rivalry.

“We have a national brand,” Scott said. “But at its core, college sports is local. It’s tribal.”

Scott, if he might be the most ambitious in his exploitation of these regional networks, was hardly the first. He found his television template in the four-year-old network of the Big Ten Conference.

Scott’s first trick was to secure a standard television deal, with two media giants that were eager to stay in business with the Pac-12 and could ensure a large, reliable flow of cash.

ESPN and Fox Sports signed 12-year deals worth $3 billion which let Scott go for more. He carved out enough football and men’s and women’s basketball games from the ESPN and Fox deals to allow him to construct his six rivalry-based cable networks. The conference will own 100 percent of the six regional networks as well as a separate national one.

“The networks will be profitable from Day 1,” Scott said.

The average regional sports network in 2010 had revenue of $137.8 million, reported SNL Kagan, a leading research firm. Atop the list was the Yankees’ YES Network, at $435.2 million. But the Big Ten’s take was hardly chump change — $227.1 million.

Indeed, the lucrative nature of regional networks for certain individual colleges can be intimidating enough to force rivals to contemplate radical action.

Article source: http://feeds.nytimes.com/click.phdo?i=9307c5f0503b905afbddeea650537f76

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