TV Contract

[jerichoholicninja]

Could the Packers and Brewers pair up on some sort of sports network? Not like the Packers need anymore money but it would nice to piggyback on them. What about a Milwaukee sports network with the Bucks?

[Dragonbait]

Why not add the Admirals in on that too? I'd like to watch them casually.

[brewmann04]

Wow Mark dropped the ball in the new TV deal.

[logan82]

Even if our TV contract doubled, it would still be pretty bad. I would drop cable if I could stream Brewers games.

 

I don't think we could join the Packers for a regional sport channel. I believe the NFL has national contracts. Until TV contracts start getting closer to being split 100% than 50% there will be huge inequities.

[Oxy]

Quite simply, there needs to be expansion into markets whose teams have TV deals that are too large. i.e. Portland/Vancouver, Brooklyn, Providence/Boston #2, Maybe the Inland Empire in CA. If the league was hurting you could contract the small markets I suppose, but the League is far from hurting.

 

I'm not even sure this would help the issue in SoCal or New York though, since the current teams would still get to broadcast to 20+ million people so they'd probably still have gigantic TV deals. Unless you really restricted the geography of each teams broadcast area--but that just doesn't seem right. I guess it's luxury tax/revenue sharing. Meh.

[MJLiverock]

A recent research report on the cable companies and cost of sports listed Seattle at the 12th largest TV market. Milwaukee was ranked 34th and the smallest in baseball. Cincinnati actually ranked 35th but the author acknowledges that doesn't include Dayton, Cleveland, Columbus which have some following for the Reds and push them over Milwaukee.

 

The next closest to being as small as the Brewers are the Royals at 31 and the Padres at 28, Orioles at 27 (but they share D.C. which is #8) and the Pirates at 23. The Brewers only received a reported $20 million per season for their new TV deal at #34 while the Padres at #28 got $60 million. I don't have the exact breakdown on the numbers of subs covered and the like but that seems like a big discount for the Brewers vs. the Padres. The difference being the Padres own 20% of their new RSN labeled Fox Sports SD versus nothing of the prior RSN Cox Channel 4.

[Roderick]

A recent research report on the cable companies and cost of sports listed Seattle at the 12th largest TV market. Milwaukee was ranked 34th and the smallest in baseball. Cincinnati actually ranked 35th but the author acknowledges that doesn't include Dayton, Cleveland, Columbus which have some following for the Reds and push them over Milwaukee.

 

The next closest to being as small as the Brewers are the Royals at 31 and the Padres at 28, Orioles at 27 (but they share D.C. which is #8) and the Pirates at 23. The Brewers only received a reported $20 million per season for their new TV deal at #34 while the Padres at #28 got $60 million. I don't have the exact breakdown on the numbers of subs covered and the like but that seems like a big discount for the Brewers vs. the Padres. The difference being the Padres own 20% of their new RSN labeled Fox Sports SD versus nothing of the prior RSN Cox Channel 4.

 

When comparing contracts you also have to keep in mind the local costs. While Milwaukee has almost as many tvs as San Diego, what are the costs in San Diego? In other words, advertisers are willing to pay more for ad space there as every other cost of doing business is higher out there. Whereas costs are lower in Wisconsin, hence the advertisers aren't going to pay as much for a 30 second spot as another team. They will pay what the market will bear. I think that is killing us more than how many tvs there are, as I think the actual viewership in Wisconsin of the Brewers is a lot higher than other teams.

 

But obviously there is still a lot of room for the Brewers to maximize their media revenues.

[Oxy]

A recent research report on the cable companies and cost of sports listed Seattle at the 12th largest TV market. Milwaukee was ranked 34th and the smallest in baseball. Cincinnati actually ranked 35th but the author acknowledges that doesn't include Dayton, Cleveland, Columbus which have some following for the Reds and push them over Milwaukee.

 

The next closest to being as small as the Brewers are the Royals at 31 and the Padres at 28, Orioles at 27 (but they share D.C. which is #8) and the Pirates at 23. The Brewers only received a reported $20 million per season for their new TV deal at #34 while the Padres at #28 got $60 million. I don't have the exact breakdown on the numbers of subs covered and the like but that seems like a big discount for the Brewers vs. the Padres. The difference being the Padres own 20% of their new RSN labeled Fox Sports SD versus nothing of the prior RSN Cox Channel 4.

 

I don't really know how much of that is relevant without looking at the details. Wisconsin is a very provincial, sports oriented state, so the "Milwaukee" market doesn't quite make sense. It's more like a "Wisconsin" market. Other teams can't quite claim this kind of dominance over their region except for maybe Atlanta, Colorado, and Minnesota.

[MJLiverock]

The 2 biggest drivers of TV contract revs are number of potential viewers and number of actual viewers. ( Advertisers pay for number of impressions, not necessarily the cost of living in a city, NY cost a lot to advertise because there are a ton of people and hence ton of impressions per ad, typically broken down by cost per impression) The report I reference doesn't give the details on every team, it was written as an investment report on the cable companies and how much the sports contracts are costing and how they may or may not be profitable to the cable companies. The resets in prices, i.e. money paid for the team broadcasting rights are being negotiated fully aware of how many people and what advertising costs are.

 

As I said I had the raw whole numbers for some teams not the number of subs, but just in looking at the MSA for Milwaukee vs. San Diego the difference in population is 1.9MM vs. 3MM according the 2010 census, are about 1 MM total, 50% bigger than Milwaukee. Adding in the rest of the state of WI won't change the rankings, (they may already be including the TV Market rank, it doesn't define each one) once the other cities have their surrounding areas added in as well. KC was 31, has a MSA of just over 2MM, Milwaukee was a bit smaller at 1.9, but San Diego is 50% bigger at 28. You can add in the whole state of WI and only get to 5.7MM. The problem with that is it doesn't do a Milwaukee company anything to advertise to the whole state, only the Milwaukee market matters to them. So by having a disbursed audience the rates go down as the channel offers a local spot or two to the Eau Claire market or Madison market. Having half your potential audience not even in the market for the ad makes it worth a lot less than knowing 3MM viewers are in the San Diego market.

 

The caveat that matters as well is the Padres own 20% of their RSN, the Brewers own zero. Also to consider is not just the population of the area but the number of subscribers to the channel. If the RSN is on a special tier that cable/sat/telco viewers can avoid, is the RSN available over the air, how many games are on the channel.

 

The big money driver for the RSN is sub fee paid by the cable/satellite/telcos that carry the channel. In the case of Prime Ticket which just lost the Dodger deal, it is estimated that only 15% of their revs came from advertising and that is in the L.A. market. Most money was made by the $2.30month they get for each of the 6MM subs. (note subscribers, i.e. billable accounts not people).

 

In any rate the problem the Brewers have and will likely always have is just pure demographics. There just aren't enough people in Milwaukee and by further extent WI to come close to generating the dollars needed to be on equal footing with the rest of the teams. Milwaukee will always be in the bottom 10% for TV money.

[Patrick425]

I found the interview with Attanasio in the Milwaukee Business Journal. Here is the excerpt in regards to the TV contract:

 

Q: Sportsbusiness Journal, a sister publication of The Business Journal, said the Brewer TV rights fee went up to $20 million from $12 million. I assume that's a positive development.

 

Attanasio: We renegotiated that contract in 2008, coming off our highest (TV) ratings season ever and a playoff appearance. There was a fiscal crisis going on at the time, so we thought it would be good to lock in our TV contract at that time similar to Tampa's. (The Tampa Bay Rays also get $20 million) At that point, they were the 14th-largest TV market and we were the 39th. We took some risk out. Now with where rights have gone, we may have left a little money on the table.

[Oxy]

The 2 biggest drivers of TV contract revs are number of potential viewers and number of actual viewers. ( Advertisers pay for number of impressions, not necessarily the cost of living in a city, NY cost a lot to advertise because there are a ton of people and hence ton of impressions per ad, typically broken down by cost per impression) The report I reference doesn't give the details on every team, it was written as an investment report on the cable companies and how much the sports contracts are costing and how they may or may not be profitable to the cable companies. The resets in prices, i.e. money paid for the team broadcasting rights are being negotiated fully aware of how many people and what advertising costs are.

 

As I said I had the raw whole numbers for some teams not the number of subs, but just in looking at the MSA for Milwaukee vs. San Diego the difference in population is 1.9MM vs. 3MM according the 2010 census, are about 1 MM total, 50% bigger than Milwaukee. Adding in the rest of the state of WI won't change the rankings, (they may already be including the TV Market rank, it doesn't define each one) once the other cities have their surrounding areas added in as well. KC was 31, has a MSA of just over 2MM, Milwaukee was a bit smaller at 1.9, but San Diego is 50% bigger at 28. You can add in the whole state of WI and only get to 5.7MM. The problem with that is it doesn't do a Milwaukee company anything to advertise to the whole state, only the Milwaukee market matters to them. So by having a disbursed audience the rates go down as the channel offers a local spot or two to the Eau Claire market or Madison market. Having half your potential audience not even in the market for the ad makes it worth a lot less than knowing 3MM viewers are in the San Diego market.

 

The caveat that matters as well is the Padres own 20% of their RSN, the Brewers own zero. Also to consider is not just the population of the area but the number of subscribers to the channel. If the RSN is on a special tier that cable/sat/telco viewers can avoid, is the RSN available over the air, how many games are on the channel.

 

The big money driver for the RSN is sub fee paid by the cable/satellite/telcos that carry the channel. In the case of Prime Ticket which just lost the Dodger deal, it is estimated that only 15% of their revs came from advertising and that is in the L.A. market. Most money was made by the $2.30month they get for each of the 6MM subs. (note subscribers, i.e. billable accounts not people).

 

In any rate the problem the Brewers have and will likely always have is just pure demographics. There just aren't enough people in Milwaukee and by further extent WI to come close to generating the dollars needed to be on equal footing with the rest of the teams. Milwaukee will always be in the bottom 10% for TV money.

 

Thanks for more of the breakdown, MJ. What is the breakdown of "local" advertising versus national advertising, and is there a price difference? I don't think Miller Lite much cares where somebody lives when viewing their ads. Also, how is a jump from 1.9M in the Milwaukee market to 5.7M in the Wisconsin market NOT a significant jump? Also--can't local ads be sold and "regionalized" within the state--i.e. Eau Claire, Green Bay, and Madison cable operators can substitute in their own local ads rather than use Milwaukee's?

[TheCrew07]

Well NW WI is the Twins market, not the Brewers, so the total population within the state really isn't representative of total number of potential viewers.

[Oxy]

Well NW WI is the Twins market, not the Brewers, so the total population within the state really isn't representative of total number of potential viewers.

 

Not true, at least according to Direct TV. Not sure about local cable operators though. Also, nobody lives up there (except my kin of course--Brewer fans, naturally).

[Baldkin]

Thanks for more of the breakdown, MJ. What is the breakdown of "local" advertising versus national advertising, and is there a price difference? I don't think Miller Lite much cares where somebody lives when viewing their ads. Also, how is a jump from 1.9M in the Milwaukee market to 5.7M in the Wisconsin market NOT a significant jump? Also--can't local ads be sold and "regionalized" within the state--i.e. Eau Claire, Green Bay, and Madison cable operators can substitute in their own local ads rather than use Milwaukee's?

 

I will say that each commercial break is broken down into "local" and "state wide"/"National" portions. So, when I see a local Milwaukee ad on a brewers telecast, the people in Eau Claire are probably seeing a local Eau Claire ad.

[Oxy]

Thanks for more of the breakdown, MJ. What is the breakdown of "local" advertising versus national advertising, and is there a price difference? I don't think Miller Lite much cares where somebody lives when viewing their ads. Also, how is a jump from 1.9M in the Milwaukee market to 5.7M in the Wisconsin market NOT a significant jump? Also--can't local ads be sold and "regionalized" within the state--i.e. Eau Claire, Green Bay, and Madison cable operators can substitute in their own local ads rather than use Milwaukee's?

 

I will say that each commercial break is broken down into "local" and "state wide"/"National" portions. So, when I see a local Milwaukee ad on a brewers telecast, the people in Eau Claire are probably seeing a local Eau Claire ad.

 

Yeah, that's what I thought. I was thinking about it all wrong though. MJ answered my question originally--basically saying that the dispersion of the market cheapens how much the local advertising is worth, which makes sense. Just wasn't thinking right.

[MJLiverock]

I agree with Oxy that Miller Lite or Chevy (national brands) really don't care where in the state you live and will pay based on the total number of sets and as Baldkin says there must be some regionalization of the content but a 30 sec spot targeting the Eau Claire market probably doesn't cost as much as a 30 sec spot targeting the Milwaukee market. I fast forward on the DVR through most commercials and watch the games after my kids go to bed so I rarely notice which commercials are on anyway. I do notice a lot Piggly Wiggly and Time Warner stuff, which are pretty useless to the Madison market since Charter is the cable provider there (aside for the usually satellite and telco offerings) and the only Piggly Wiggly's around are in small towns.

[azcheesehead]

Well NW WI is the Twins market, not the Brewers, so the total population within the state really isn't representative of total number of potential viewers.

 

Not true, at least according to Direct TV. Not sure about local cable operators though. Also, nobody lives up there (except my kin of course--Brewer fans, naturally).

 

I live up here and we get both. Our Charter service is out of EC and we are a TRI market. Eau Claire/Minneapolis/Duluth. We get stations for all of them. The FSN HD feed is FSWI. We also get FSNorth. More people (at least in my town) that are casual fans are Twins fans because of the proximity. The hardcore fans are Brewer fans. They seem to talk the game more, and obviously are smarter!