NFL recently revealed that Google will distribute the its "Sunday Ticket" package of out-of-market Sunday afternoon games on YouTube TV and Primetime Channels.
The seven-year contract is worth almost $2 billion per season. Since 1994, the bundle has been on DirecTV. The satellite provider has paid $1.5 billion each year on an eight-year contract that expires at the conclusion of the current season. The NFL has sought $2.5 billion annually for the package. The league still has commercial rights to pubs and restaurants and is currently selling these rights.
Diving into the details:
The partnership will enhance YouTube’s standing in the competitive streaming industry. Beginning with the 2023-24 season, "Sunday Ticket" will be offered as an add-on bundle on YouTube TV and as a standalone à la carte option on YouTube Primetime Channels, which allows you to subscribe to specific streaming services and channels as well as view movies. In the second option, users will be able to subscribe to "Sunday Ticket" without also subscribing to YouTube TV. Pricing has not been established for any alternative.
The pact is the latest in a series of commercially eye-popping deals negotiated by the NFL, the most expensive live sports rights in the world, following its $113bn, 11-year agreements struck with broadcast partners last year, in which Amazon purchased $1 billion worth of games yearly.
The thirst demonstrated by YouTube, which solidifies another meteoric surge in the value of NFL rights, will excite Premier League executives who hope a new major spender can restart the lucrative bidding battles for UK rights that characterized the previous decade.
While the Premier League nearly doubled the value of the US rights in a £2bn deal with NBC last year, which is primarily airing matches on its streaming service, Peacock, UK executives were forced to roll over a deal with existing partners to avoid potentially losing hundreds of millions of pounds in the absence of new competition.
Streaming's threat to cable
The increased competition for sports licenses from digital titans such as Google, Amazon, and Apple (AAPL) has put pressure on TV sports broadcasters, whose viewership has been declining due to consumer defections from cable.
Apple broadcasts Major League Baseball and Major League Soccer games on AppleTV, according to The New York Times, which reported that the company bid for the Sunday Ticket package before withdrawing.
Wells Fargo analysts predicted that the pressure of growing rights fees and declining TV income will likely push recently rehired Disney CEO Bob Iger to launch spinoffs of ESPN and ABC in 2023. Sunday tickets cost DirecTV $500 million annually, and big sports TV rights have increasingly become loss leaders for broadcast networks.
According to the Times, the NFL would get incentives based on subscriber growth and other performance indicators, which put the contract’s yearly worth at $2.5 billion. YouTube has more than 5 million YouTube TV customers. This allows the NFL to negotiate a separate agreement, presumably with DirectTV, to continue offering Sunday Tickets to clubs and restaurants.