Why Ultimately You Are Paying For ESPN's Big TV Contracts

It was hard last year to try and really explain the overall strategic impact of the shift in NASCAR TV programming. ESPN acquired the ten Chase for the Championship races, the seven Sprint Cup races before the Chase and the entire Nationwide Series.

This effectively put ESPN in a tremendous position of power as far as the overall perception and impact of NASCAR in North America was concerned. While Fox makes a big deal out of the Daytona 500, that network is long gone before the real drama begins. TNT comes and goes very quickly, making the summer Daytona race the focus of their efforts.

It is ESPN that has surrounded NASCAR. They have the end of the regular season, all of the playoffs and the second-tier series. In addition, ESPN originates the only daily NASCAR news program and floods the Internet with NASCAR content through the ESPN.com website.

As most sports fans know, ESPN has made news by paying incredible amounts of money for the rights to SEC college events and most recently for BCS college football games. That leads to the question of where this large amount of money is coming from? The answer is easy to understand. It came from you.

Click here for the outstanding summary by Clay Travis over at Deadspin.com of the recent headline article in the New York Times. Clay summarizes for sports fans exactly how the ESPN financial engine works and what role cable TV customers play in that equation.

This is the original story from veteran sportswriter Richard Sandomir of the New York Times. Sandomir is factual and polite as he describes the sequence of events that ultimately led to ESPN winning the Bowl Championship Series TV contract.

It may come as a surprise that ESPN charges cable operators almost four dollars a month per viewer for channel access. The resulting four billion dollar annual windfall makes it pretty simple to outbid over-the-air broadcast TV networks that derive no additional income from cable TV carriage.

As NASCAR fans know, when the college football season starts, NASCAR moves to the back burner across the ESPN family of networks. The power of ESPN over NASCAR has been demonstrated since the contract first began in 2007.

Suddenly, practice sessions were not televised. The Nationwide Series races tried to survive between live college football games and the NASCAR coverage on ESPNEWS and SportsCenter effectively ended in September.

The balance of power was ultimately demonstrated in "the big switch" of the East and Central Time Zone audience from ABC to the ESPN2 cable TV network while the Phoenix Cup race was in-progress. Just a reminder, that was the next-to-last race of the season.

Both the Deadspin and NYT articles are much more effective than I could ever be in explaining the financial pathway that has enabled ESPN to become a media monopoly. It seems ironic that after paying billions of dollars for college sports contracts, ESPN is seeking to significantly downsize the NASCAR TV production costs for 2009.

Thanks for taking the time to read the linked articles and thanks to both Clay Travis and Richard Sandomir. The comments section is open for your views on this topic. Just click the COMMENTS button below and follow the easy instructions. Your comments will appear shortly after they are submitted.

The TV Cost-Cutting Talk Has Begun

The outstanding Charlotte-based reporter Michael Smith offered an article Monday updating the concerns of the NASCAR TV partners about declines in advertising revenue for 2009.

While one way to keep the current advertisers in the sport is to offer a new level of cooperation and integration between the TV partners, there is also an eye toward cutting TV production costs for the upcoming year. You can click on the picture above to see the tremendous size of a typical NASCAR TV compound.

Click here for the link to the full Sports Business Journal article, while here are some excerpts:

Facing a discouraging ad market, Fox is talking to NASCAR and ESPN about ways the network can save money on its broadcasts of the sport next year. Fox was expected to meet with NASCAR this past week and ESPN in the coming weeks to explore potential cost cuts on the production side.

NASCAR's Paul Brooks said the sanctioning body will work with Fox to find savings as long as the viewers won’t notice a difference. “There are additional things we can look at as far as sharing and managing facilities in an even more efficient way,” Brooks said.

Can broadcasters get by with 55 cameras instead of 60? Can they share a production truck over the course of a weekend instead of using multiple trucks? Those are the kinds of cuts the TV networks will weigh.

“It’s something we’re very cognizant of,” said Rich Feinberg, ESPN’s vice president of motorsports. “Every business has been affected by the economy and we’re just trying to stay ahead of those things. Our content will still be there, but we’ve got to take a closer look at how we acquire that content. Are there areas where we can be flexible?”

The combined TV rights fee for Fox, ESPN and Turner averages $560 million a year through 2014. Additionally, each of the networks has a multimillion-dollar spend with NASCAR Media Group, which manages the TV compound at each venue and provides additional content, such as unique camera angles and audio.

Smith explains that NASCAR is happy with the balance between races on cable and broadcast network TV, so changes in that area are not going to happen. Neither will NASCAR consider moving any races to pay-per-view.

All three of the Sprint Cup TV partners had very specific reasons for buying into the current NASCAR TV contract and those reasons have not changed. The most likely scenario for 2009 is an increased sharing of on-site facilities between the TV partners.

No mention has been made of eliminating hard costs like The Hollywood Hotel, ESPN's Infield Pit Studio or the TNT rotating infield stage. We saw that TNT shot all the Wally's World features at Pocono in 2008 in order not to travel the cars and support personnel. Tim Brewer's ESPN Tech Center is also a very expensive item.

Reductions on that scale would no doubt result in less on-air and behind-the-scenes production folks traveling to the races. While all these elements would change the broadcasts as we know them, keep in mind that SPEED handled the entire 2008 Truck Series with four or five total announcers, no infield facilities and few added costs. The result was a tremendous increase in TV ratings and an outstanding year.

We will keep you updated on these issues and thanks again to Michael Smith and The Sports Business Journal for the information in his report.

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Ray Evernham Story Links

Thank you for all the email, but we are not yet aware of what role Ray Evernham will be playing for ESPN next season as an announcer. The recent news that Evernham will indeed sell his remaining interest in GEM and retire from NASCAR was expected.

As we mentioned in (click here) this column, Evernham was a surprise addition to the ESPN line-up in 2008 and the variety of roles he was assigned this season was clearly an audition for future opportunities.

Evernham has been in the broadcast booth as an analyst, worked on the Monday NASCAR Now roundtable show, provided NASCAR commentary for ESPNEWS and also most recently was a panelist in the Infield Pit Studio for the Cup Series events.

We will update his status with ESPN when news comes along. The comment section will remain open, but please post comments about Evernham's personal life elsewhere. Our interest is who he might replace on the ESPN team or if he will be added as an Infield Pit Studio panelist once again in 2009.

Click on the title to read the full story:
Evernham Leaving GEM and NASCAR (examiner.com)
East Lincoln Speedway Could Be Next For Evernham (Charlotte Observer)
Ray Evernham Leaving NASCAR (Bleacher Report)
Evernham To Retire (NASCAR.com)