Why didn’t the NFL bite Apple?
The NFL appears poised to make another mega-media deal this week with the league close to selling the Sunday Ticket rights to YouTube and YouTube TV to Google, moving a package of out-of-market games into the world of streaming.
The NFL is closing in on a deal with YouTube for Sunday Ticket rights
But for a while it seemed that Apple would be the one to take the popular Sunday Ticket fully into the digital universe (the pioneering DirecTV enabled streaming in areas where its satellite dishes were unfeasible). The NFL has longed to be in business with arguably the world’s most important company, and spent much of the past year trying to make it happen. And the deal seemed like a natural fit for Apple, which is trying to expand Apple TV Plus.
The NFL scored a Super Bowl halftime sponsorship from Apple earlier this year, but media talks fell through a few weeks ago. Why?
There are clear answers. Apple reportedly wanted to pay less than the NFL demanded so it could offer the product at lower prices than existing DirecTV, but the NFL’s contracts with Fox and CBS didn’t allow for that (lower Sunday ticket prices could drive viewers away from the network’s Sunday afternoon windows). DirecTV Sunday Ticket deals start at around $300 per season.
Google’s media strategy is also more robust than Apple’s, with YouTube TV being a growing digital multi-channel platform and YouTube itself having 2.5 billion monthly users.
“Other technology companies are much more advanced in where they are with their business model for media, for broadcast,” said a person close to the NFL. “Apple is very far in media with music, but other companies that are, you know, Amazon are much further. Google and YouTube are much further away. Apple is really behind.”
Apple and the NFL also couldn’t agree on whether the company would get the rights to distribute Sunday Ticket on non-existent platforms. Apple is investing massively in virtual reality and augmented reality, i.e. newly emerging platforms on which sports are not usually watched yet. As a result, Apple wanted what are called known and unknown rights, individuals familiar with the NFL and Apple said. In other words, there is no known virtual reality market for Sunday Ticket, but one day there may be.
Imagine a virtual reality device that gives fans a Sunday Ticket experience where it’s like they’re watching from the 50-yard line, said Tom Richardson, senior vice president of Mercury Intermedia and adjunct professor in Columbia University’s sports management program. Such a platform may seem far off, but Richardson said it could be coming in the next 24 months.
“It’s a well-known fact that Apple is on the verge of making it big in AR and VR,” Richardson said. “And it’s been widely reported over the last couple of years, ’23 could be a watershed year. So I suspect, like when they’re looking at multi-year deals… you’re looking at what could be a very different technology landscape, consumer electronics landscape by the end of the decade at this point, with no doubt some potential for very large growth in the world of immersive media experiences .”
Richardson worked for the NFL and NHL in the 1990s and recalled similar situations arising in the emerging new digital world when companies questioned whether it was a good idea to show negotiated media rights on “everything.” And as now, the answer was no.
“The league doesn’t like to compromise, and Apple as a two and a half trillion dollar company, whatever they are now, obviously has its own way of doing business.”
Apple’s deal with Major League Soccer to stream all of its games is believed to have open language in the deal. MLS did not respond for comment.
Why wouldn’t the NFL agree to “unknown” language in the contract? First, it has never done business in this way and has assigned rights beyond those specifically defined. However, it may also view future AR and VR platforms as new media categories that deserve separate stores.
It wasn’t possible to determine where the pending Google deal would come up on the issue, but with this being such a standoff between the NFL and Apple, it’s hard to see the league backing down. Google has its own AR and VR efforts.
Apple also asked for broader rights than were available.
Patrick Crakes, a former Fox Sports executive, said Apple and the NFL have never been on the same page. “So (Apple) kept learning things, right, like, ‘Well, we want to do a five-year period.’ “No, you have to graduate for 10 years.” “We want worldwide rights.” “No, you can’t.” “We need some exclusivity.” “No.”
The Sunday Ticket’s value to fans has also declined over the years as more games that previously only aired locally – making the away package valuable to fans outside their home team’s market – declined with more national windows.
“When the Sunday Ticket came out (in 1994), there were clearly important games you missed every week,” Crakes said. “Okay, now we have three to four national windows throughout the year. You have matches on Saturday, you have matches on Christmas. There’s just all these games everywhere and you have flexible scheduling that makes sure the biggest and best games end up, you know, definitely Sunday Night Football, next year we’re going to start getting that with Monday Night Football.”
Nearly 30 years ago, when DirecTV launched Sunday Ticket, there were no Thursday Night Football games that stood out from Sunday afternoon contests or NFL Network with a handful of exclusive games. Those TNF games are now being streamed by Amazon, which belatedly pushed Sunday Ticket.
The NFL was looking for much more than the average annual payment of $1.5 billion it received from DirecTV, a number that many pundits paled because the satellite carrier lost money on the lower figure. But a report in the SportsBusiness Journal on Wednesday said the NFL is getting $2.5 billion (it’s unclear if that includes the bar and restaurant market, which could be cut from the deal).
It wouldn’t be the first time the NFL has surprised pundits. When the league bought the TNF package, it was getting about $650 million a year, and incumbent Fox and other traditional players weren’t bidding. Amazon picked it up for $1.1 billion a year, proving the power of NFL content.
One thing is clear: Apple, which in addition created the home computer market and then the smartphone business, will be fine and find other ways to expand its Apple TV Plus without the glitzy appeal of the NFL.
“Apple is Apple,” said Richardson, who wrote for Apple magazine in the 1980s. “And they always seem to figure it out.
(Top photo: Scott Olson/Getty Images)