FRANK:
I just wanted to get my 2 cents worth in on this NFL Sunday Ticket thing.
FIRST: Consumer value is not there for the NFL Sunday Ticket. It is a niche product. It only matters for sports bars or if you can devote the time to watching up to 13 games on a Sunday. If I tried that, my wife and kids would mutiny for sure.
SECOND: The NFL doesn't want the ticket widely distributed. The owners (especially Ralph Wilson in Buffalo) hate it. Right or wrong, owners think the ticket is behind falling attendance at NFL games. I think it has to do more with high ticket prices at the stadiums. For this reason, however, the NFL raises the retail price of the ticket every year to keep subs down.
THIRD: Nobody but DIRECTV was ever offered the Ticket. Speculation, of course, but I think it goes something like this. The NFL calculates the buy rate in markets (DSS and C Band) where the Ticket is available. They then apply this buy rate to the channels of distribution - DISH and PRIMESTAR - that they are foregoing (notice this doesn't include cable - cable will NEVER have the Ticket - see above). They then take this number of lost subs and multiply by 85% of the retail cost (wholesale is 85% of the NFL's retail price). The actual math is something like 13% (buy rate) times 2,760,000 (895k DISH subs + 1865k Primestar subs) times $159 times 85% = $37,301,400. This is the premium that DIRECTV pays to retain the exclusive.
This means that the NFL gets a HUGE sum to offer the exclusive, while only having to support 1 customer and not having to have all those bothersome Ticket subs to reduce attendance. Not bad, huh?
Hope this helps!
Regards,
NOEL |
