Bubble could burst on sports' viewership
Like athletes who defy physical limits, economic gravity seems to elude the sports business.
Not a year goes by — minus the pandemic hiccup, perhaps — that record prices seem to get paid for various athletic assets such as teams, players, sponsorships and TV contracts. But is the consumer's appetite for sports entertainment limitless? Is a sports business bubble brewing?
Today, a team's bottom line really isn't how many fans attend the games. Rather, it's the riches created by rapidly shifting TV audiences who can choose to watch on everything from traditional TVs to phones, tablets and desktop computers.
This sports smorgasbord, however, might be a case of too much good stuff.
Sporting eyeballs are spread across more events. As many as 40 million Americans are “cordcutting” — moving from buying TV content in bulk from traditional cable services to a la carte choices through “streaming” services.
That means sports businesses aligned with cable TV are suffering. But streaming services covering far more games are typically unprofitable because they pay big for content — as much as $26 billion for U.S. games in 2023, according to Variety — up 75% from 2015.
Yet in the middle of this spending spree, warning signals emerge.
The viewership turmoil caused Walt Disney Co. to consider spinning off ESPN, its cash-guzzling sports programming giant. And a major provider of televised games over cable TV — Bally Sports — can't pay its bills.
Bally's road to this fiscal mess is complicated, but it's a mix of cable TV's declining audiences and too much debt. It leaves big questions percolating about the future broadcasts of 47 pro teams, including baseball's Los Angeles Angels and San Diego Padres, basketball's Los Angeles Clippers, and hockey's Anaheim Ducks and Los Angeles Kings.
It's a harsh reminder that the business of athletics is by no means risk-free. Just like the competitions that are broadcast, there will be winners and losers in this unfolding viewership contest.
The big question: How many sports broadcasts Americans can watch? Audience trends from Sports Media Watch and others help us see how viewership is changing.
Is the Super Bowl still super? The NFL's championship match has become a national pastime. It's still the super TV event with an audience that's all but impossible to replicate. But like most sports TV, peak audiences are in the rear-view mirror. This year's
113 million-person TV audience was just off the record 2015 TV viewership.
There's a new football league? Apparently. But pro football's XFL has TV ratings in early its new season that run half of what they were three years ago when this effort to create a true NFL competitor started.
And soccer? Consider the World Cup, the quadrennial international soccer championship. Yes, it's the biggest global media event. But in the U.S., last year's thrilling final game of the men's tournament was watched by 26 million — part of an estimated 1.5 billion across the planet. That U.S. audience was just below soccer's domestic record who watched the U.S. women win their World Cup in 2015.
Is baseball boring? Major League Baseball last fall suffered its secondlowest TV audience for the World Series championship. Six games averaged only 12 million fans even with a heart-tugging storyline — manager Dusty Baker winning his first World Series at age 73.
Are all-star games dead? Who'd watch meaningless “prestige' events? It's a common theme in sports TV with a dubious future. This low-quality event generates just enough eyeballs to justify their existence. Consider when each pro sport's all-star game had peak TV ratings — baseball 1980, basketball 1993, hockey 2004, and football 2014.
NASCAR in the slow lane? The recent Daytona 500 race, a major early-season event, drew 8 million viewers. That was the most-watched TV show of the Presidents Day weekend. The Florida race's peak audience was 19 million in 2006.
College football cools? The 2023 championship game's 17 million-viewer audience in January was the smallest viewership since the series started in 1999. The top-viewed title match, the 2006 Rose Bowl, drew twice the audience.
College league hopping? Schools now jockey to create athletic ties not based on geography, educational cultures or student-athlete needs. Nope, it's about how many TV viewers a conference can draw. So, we see UCLA and USC leaving their West Coast-based Pac 12 league for the higher-profile, eastern-based Big 10.
How much money? UCLA athletics will get more than $60 million primarily from new TV revenue in the switch. But there will be $12 million in extra expenses — including added help for athletes with ballooning travel schedules. And California's university czars made UCLA share as much as $10 million with fellow state school Cal, which will remain in the Pac 12.
What's next for the Pac 12?
The league scrambles for new members while it negotiates a new broadcast package. The tough TV choice: more money (likely from a niche streaming service such as Amazon Prime), more audience (traditional broadcaster such as ESPN) or a mix of both.
Whither ESPN? Its financial headaches sum up sports TV's challenges. Disney must rethink what ESPN charges consumers and what ESPN pays for games it shows. Disney CEO Bob Iger says of ESPN, “We just have to figure out how to monetize it.”