January 24, 2008
I’ll see your hockey games on Versus Network and I’ll raise you…3 more years!
On Wednesday, the New York Times reported that the Versus Network and the NHL have decided to extend their mutual agreement through the 2010-2011 season. The contract currently calls for Versus to pay $72.5 million per year in return for showing NHL games and that number will increase on an inflation basis over the next three years (compare that to the 5 year, $600 million dollar deal they had with ABC/ESPN which ended after the 04-05 season). From the New York Times,
“We’ve really benefited from our relationship with the N.H.L.,” said Gavin Harvey, the president of Versus. “It was a game-changer for us. We certainly feel we’ve seen great growth, but there’s major growth ahead. We feel positive momentum.”
“You don’t renew at these levels unless you feel you have a property that’s reached the objectives you’ve set,” said Bill Daly, the N.H.L.’s deputy commissioner. “Versus exercising its option tells you a lot about how they value the league.”
Versus is only pulling in a .3 rating this season, but they are now averaging over 260,000 viewers per NHL game and they’ve seen their subscriber base increase from 10 million to 74 million in just a few years. More importantly, they have successfully raised their subscriber fees to 26 cents a month from 20 cents a month (for comparison sake, NFL network is looking to charge about .70 per subscriber/month), and they are currently turning a profit.
It’s obvious when looking at Versus programming that they are making the NHL the centerpiece of their network (other Versus shows include hunting, fishing, cage fighting and the Tour De France) and as I already mentioned, they are profiting from the deal…but was it in the NHL’s best interest to re-up with Versus? The initial deal between the NHL and Versus only had each team receiving $2 million per team from television revenue. This extension, based on reports, seems to be nothing more than a contract extension with an inflation increase. Seeing as how half of the teams in the NHL currently have an operating income in the red, it seems as though at the very least they should have been seeking a price increase with Versus (they really should had been taking strides to get back on ESPN, but at the very least, get more money from Versus!). I don’t really understand how this doesn’t put the NHL in a disadvantageous position for the next three years. Yes, they’ve seen revenue increases recently, but this is based mostly on an increase in ticket prices, and teams are still operating at a loss…so why would you not try to get a more lucrative contract?
I’m guessing (read as: I hope) there is more to this story than meets the eye.
The NHL. Securing their spot as the top 2nd tier spot in the United States, one day at a time.
P.S. Dear Sidney Crosby, get better soon.
New York Times: Versus Extends Contract With NHL
Sports Business Digest: ESPN and NFL Network hate Cable Companies, Fans
Washington Post: NHL’s Strong Comeback Marred by Poor TV Ratings
Forbes.com: NHL Team Valuations
Sports Business Digest: Ovechkin makes NHL history…without an agent
3 comments
In my opinion, the NHL just sealed their fate as being a bottom-feeder on the national sports scene. Versus handles a hockey game like Britney Spears handles fame. This is a disaster for the league. They need to be on ESPN, even in a “subordinate” role. The network is so all-powerful that to be truly relevant they had to go in that direction. I guess some accountant is working a budget sheet and thinking they’re making money, so stick with it. In my mind, this undoes the goodwill generated by the Winter Classic January 1st. They are idiots.
My sentiments exactly.
This deal with versus is bad for the fans that cannot afford the extra cost of purchasing versus over ESPN.
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