Behind the Mic: Why the NHL TV Deal makes Cents (Bob’s Blog)

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As I am sure most people have heard by now, the NHL has reached an agreement for a new TV deal with NBC/VERSUS (which is actually all owned by Comcast, more on that later). The ten-year deal will run through the 2020-21 season and will pay the NHL $2 billion during that span, an average of $200 million per season. The deal they had for this year was worth $77.5 million with VERSUS, and revenue sharing with NBC.

I’m sure that plenty of people are bemoaning the fact that ESPN was in the running, but the NHL chose to go with NBC instead.  I couldn’t be happier that they did. Those reasons are well documented in 5 Questions, Kevin Bartl’s blog, so I won’t go into those here. I want to focus on the monetary aspect of this deal.

In order to understand the deal, a basic knowledge about TV contracts and ratings is necessary. Basically, television programming gets a ratings number based on how many people are tuning into the broadcast. This number is based on the number of viewers compared to the number of potential viewers, so a 1 rating is equal to 1 percent of available viewers actually tuning in. The higher the rating, the more viewers, which means advertisements are exposed to more people making it worth more money. Demographics also have an impact, but that is for a different time. The short, short version: Higher ratings means the programming is worth more money to the network.

Among the NFL, MLB, NBA, and NHL, hockey’s deal is the lowest gross total. The NBA has a deal worth about $7.5 billion dollars over an eight year span ($937.5 million per year), which on the surface would seem to blow the NHL out of the water. The NBA received a 1.6 rating for its games on TNT this season, so they got $585.9 million per share. The NHL’s games on VERSUS received a .2 rating, so under the deal for next year this rating would be worth $1 billion per share (keep in mind this number is higher than the annual amount because they aren’t getting a full rating point), or almost twice as much as the NBA TV deal.

Not only is this smart from a monetary standpoint, but it also has potential for HUGE growth of the sport. Yes, ESPN has better market penetration, at least right now. Think back to your times watching ESPN since the NHL lockout. The vast majority of their coverage is NFL, even during the NFL off-season, with NBA second and the MLB third. The NHL is rarely to be found, unless it is 2 minutes of highlights on SportsCenter or a segment on something bad that has happened in the NHL. Not exactly a good sign that ESPN would make the NHL a priority.

NBC is owned by Comcast, and there are signs that Comcast is going to try to create their own national sports network, similar to ESPN. Hockey could be the flagship sport of that endeavor. If the NFL locks out next season, and that is highly possible, eyes will turn towards the NHL, which means Comcast/NBC/VERSUS. This is an excellent chance for Comcast to steal some of the market share from ESPN, offering an opportunity for hockey to play a major role on a major sports network.

And for those of you who simply dislike the channel name VERSUS (I am one of those people), rumors abound that pretty soon (I’m guessing after the end of the Stanley Cup Playoffs) VERSUS will be changing its name to something with NBC in the title.

Seems to me this is a pretty good deal.

Bob Mills is the Broadcasting and Media Relations Manager for the Condors, and part of the Broadcast team. He just completed his first season with the Condors. His blog will be posted every Wednesday on bakersfieldcondors.com.