When reports surfaced that ESPN was laying off hundred of employees this week, the rising cost of airing live sporting events was the biggest factor, according to Ty Duffy of BigLeadSports.com. And in the chart below, we can see how those costs are going to skyrocket in the next year.
This year, ESPN will pay approximately $2.8 billion for the broadcast rights to most of the major sports*. By 2014 and 2015 ESPN’s commitment will jump to $4.7 billion, a 67% rise in 1-2 years.
ESPN has three major deals set to begin in the next year, including the NFL (up from $1.1 billion to $1.9 billion annually), Major League Baseball (up from $350 million to $700 million annually), and the BCS and major bowl games (up from approx. $125 million to $823 million annually).
These costs will almost certainly rise when ESPN negotiates new deals with the NBA and the Big 10 conference. Those current deals expire in 2016. And if those double in size, a pattern seen in many of the recent deals, ESPN’s financial commitments will jump to $5.3 billion annually in 2017. And in 2021, the costs will skyrocket again when ESPN must re-do the deals with the NFL and MLB.
Live sports are at the core of ESPN’s success and domination of sports television. But with the addition of competitors such as NBC Sports Network and the upcoming Fox 1, there is more pressure than ever for ESPN to overpay to hold on to their broadcasting rights. And those deals have now cost a lot of people their jobs…
See text for data sources* For the purpose of this report, we have included ESPN’s deals with the NFL, Major League Baseball, NBA, the six major college conferences (SEC, Big 10, Big 12, Big East, Pac-12, ACC), the BCS and major bowls, U.S. Open tennis, and Wimbledon. This data does not include ESPN’s obligations to major golf tournaments or the Australian Open in tennis, as data was not readily available. Data is based on the average annual value of the contracts.
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