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ESPN’s “Crack Cocaine” And The Most Expensive Deal In Sports TV History

ESPN and the NFL are in the midst of finalizing a television and media rights megadeal that is worth upwards of $16 billion (some estimates put the deal’s value at $19 billion). It is, without a doubt, the biggest sports television deal in history, and ensures another revenue stream for two companies that are already printing money.

The deal was first reported by James Andrew Miller, co-author of the upcoming (and much talked-about) ESPN book. At the time, Miller said that “The NFL is the crack cocaine of Bristol. They don’t want to be without it.”

Now, more details are emerging about just how far ESPN was willing to go to get their fix.

Sports Business Journal’s John Ourand is reporting that the deal is worth between $1.8 billion and $1.9 billion a year, and the length is “nine or 10 years, which would take it up to 2022-23.”

Why is ESPN willing to spend so much? We spoke with Miller, whose much-talked-about oral history of ESPN, “Those Guys Have All The Fun,” is being released this year.

“More than a half century ago, horse racing and boxing were America’s great sports obsessions,” Miller said. “But it’s no news that the NFL now dominates, and has for quite some time. Just look at NBC’s weekly ratings, and then extract Sunday Night Football. It’s not a pretty picture. So for ESPN, the biggest sports network, to spend serious, let’s say incredibly serious, money on NFL rights is hardly a head scratcher.”

The centerpiece of the agreement is “Monday Night Football,” which ESPN will carry throughout the length of the contract. They’ll also retain the rights to highlights and the NFL draft (UPDATE: ESPN will reportedly get a Wild Card playoff game as well). According to Sports Business Journal, the league was playing with the idea of broadcasting the first few rounds of the draft on the NFL Network, which, in my mind, would have been an unmitigated disaster. So crisis averted on that front.

Mobile rights are still being negotiated, and according to SBJ the NFL is “guarding them jealously.” In 2010, they signed a four-year, $720 million deal with Verizon that included exclusive streaming rights to “Sunday Night Football,” NFL Network games, and the RedZone channel. ESPN, meanwhile, wants its “TV Everywhere” concept to include the NFL (one would assume they’d like the ability to stream “Monday Night Football”). With mobile viewership booming, this is obviously a big hurdle to clear before the deal gets done

When we reached out to ESPN spokesperson Josh Krulewitz, he confirmed that talks are ongoing, saying, “We continue to have conversations with the NFL and have not yet reached a new agreement.”

“The question becomes at what point does the cost become too prohibitive, even for Bristol,” says Miller. “There are people at the network who could tolerate not having any NFL games. They say, let’s use all that money on other properties, including the Olympics, and for further technological advancements. But those people are outnumbered.”

But is having the NFL a sound business strategy for the network, or more of an ego thing for the Worldwide Leader in Sports? Both, says Miller.

“Having the NFL on ESPN not only changes the financial equation with revenue from cable operators and Madison Avenue, it also affects the image and prestige of the place. It was a big deal when ESPN got the NFL back in ’87. It gave them a seat at the big boys table. They’re not about to leave that chair to anyone else now.”

Although the deal is going to present some challenges to ESPN, overall it’s a win-win for both sides.

“I don’t know if there was any other source or combination of sources that would have come close to what ESPN is going to pay for Monday nights, so I’m guessing the league will be pleased with the deal. I just wouldn’t want to be selling ads for ESPN or be one of their lobbyists in D.C. fighting changes regarding cable regulations. This deal’s price tag puts a lot of pressure on them. Then again, it’s going to be a blast for Berman, Tirico, and the rest of the Bristol NFL powers that be.”