Can Team Brands Suffer in RSN Disputes?

For decades, Chicago Blackhawks owner Bill Wirtz clung steadfastly to the once commonly-held belief that televising home games led to decreased attendance and wasn't fair to season ticket holders.⁽¹⁾ It took winning a Stanley Cup (as well as televising a lot more games after Wirtz's death) to repair the damage to the Original Six team's brand.

Modern thinking embraces widespread television exposure and believes it does not negatively affect team revenues or ticket buyer loyalty. In fact, the extra exposure leads to additional opportunities to generate revenue and for potential fans to embrace the brand. The brand enhancement and the revenue creation usually go hand-in-hand. Some teams, however, have recently seen the two come into conflict and face some difficult decisions because of it.

The Los Angeles Dodgers’ brand has a lot going for it, including marquee players, a distinguished history, and a great chance to make this year's postseason. Their local TV deal, however, cannot be helping their brand image.

Last year, the team executed a big-money contract with Time Warner to create a new sports network with the Dodgers as its cornerstone programming. The agreement guarantees the franchise $8.35 billion over 25 years. ⁽²⁾

Such a substantial amount of money would seem difficult to turn down no matter what the circumstances. That even includes the current situation, in which carriage disputes have kept Dodgers’ games out of some 70% of the market’s homes, because $8 billion is just a lot of scratch. ⁽³⁾ When teams do a deal to create a new network, however, they may want to keep in mind a couple of things besides the immediate revenue numbers.

One is the potential long-term impact on their brand in case the network's distribution piece doesn't work out and ticked-off fans blame the team or become apathetic about it. If fans perceive your arrangement as a money-grab at their expense, that can’t be good. Businesspeople always have difficulty quantifying brand-related effects of deals. It’s a squishy science, to be sure. In the long term, does the revenue generated from the TV deal offset that lost from brand negativity? We can measure the amount of team-controlled promotional inventory running in the games that fans missed, but there’s no standard spreadsheet for calculating the broader impact.

Franchises also must consider the long-term viability of the network itself if it doesn't get distribution. Poor distribution could hurt ad sales enough that the revenue loss can’t be offset by the monies a Comcast or Time Warner bring in from subscribers switching or staying. It won't do any good to have signed a big-bucks deal with a TV outlet if the station goes out of business. A couple of teams in Houston have found themselves confronting that scenario.⁽⁴⁾

When the NFL Network launched, they did so with a sizable charge for operators but without universal distribution. It took them nearly a decade to get close to universal availability.⁽⁵⁾ MLB Network, perhaps learning from the NFL’s experience, prioritized carriage.⁽⁶⁾ They likely made that decision partly with the long-term health of the MLB brand in mind.

A team network implies team control, which should make for enhanced brand opportunities. That presumes the business side works, however. Sometimes we get YES ⁽⁷⁾ and sometimes we get Royals Sports Television Network.⁽⁸⁾ Fox Sports’ regional channels seem to have found a happy medium by adding team-centric ancillary programming and working to promote team initiatives.

The Dodgers’ disputes have climbed to a new level of contentiousness, with Time Warner calling out DirecTV.⁽⁹⁾ How does that kind of negativity affect the Dodgers’ brand? It’s difficult to quantify, of course. Perhaps we could measure it by the number of folks using the #NeedMyDodgers hashtag now showing up onscreen during Dodgers’ telecasts (presumably seen only in sports bars and on highlights shows by those affected).

The Dodgers reside in the country’s second-ranked television market. The Astros and Rockets also occupy a top-ten slot. Could these be the disputes that pop the sports rights bubble? It’s conceivable. What’s for certain is that the impasses will damage teams’ brands. Will it be enough that only championships can rebuild them? Teams should make sure they’ve evaluated the possibilities.

Rush Olson has spent two decades directing creative efforts for sports teams and broadcasters. He currently creates ad campaigns and related creative projects for sports entities through his company, Rush Olson Creative & Sports.

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Footnotes

⁽¹⁾ Steve Nidetz “Nhl's Tv Blackout Policy Hot Topic,” Chicago Tribune.

http://articles.chicagotribune.com/1993-02-07/sports/9303176598_1_espn-officials-blackout-sportschannel-america (accessed July 25, 2014)

⁽²⁾ Joe Flint “Standoff over Dodgers games could be defining moment in sports TV,” Los Angeles Times. http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-dodgers-tv-standoff-20140718-story.html#page=1 (accessed July 21, 2014)

⁽³⁾ Ibid.

⁽⁴⁾ David Barron “Judge returns Crane-McLane-Comcast lawsuit to state court,” Houston Chronicle. http://blog.chron.com/ultimateastros/2014/07/23/judge-returns-crane-mclane-comcast-lawsuit-to-state-court/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+houstonchronicle%2Ffanblogastros+(FanBlog%3A+Astros)#22102101=0 (accessed July 25, 2014)

⁽⁵⁾ Mike Reynolds “NFL Network Finally Adds TWC, Bright House to Distribution Roster,” Multichannel.com. http://multichannel.com/news/orphan-articles/nfl-network-finally-adds-twc-bright-house-distribution-roster/126037#sthash.406t6dcG.dpuf (accessed July 25, 2014)

⁽⁶⁾ “MLB Network learns lesson,” Washington Times.

http://www.washingtontimes.com/news/2008/nov/13/mlb-network-learns-from-nfls-mistakes/ (accessed July 25, 2014)

⁽⁷⁾ Bloomberg News “As TV Sports Surge, YES Network Extends Yankees Rights Through 2042,” Ad Age. http://adage.com/article/media/tv-sports-surge-extends-yankees-rights-2042/238396/ (accessed July 25, 2014)

⁽⁸⁾ The Staff “Fox Sports Midwest gets Royals TV deal,” BizofBaseball.com. http://www.bizofbaseball.com/index.php?option=com_content&view=article&id=514:fox-sports-midwest-gets-royals-tv-deal&catid=40:media-news-television-radio-internet&Itemid=52 (accessed July 25, 2014)

⁽⁹⁾ Steve Dilbeck “Time Warner ad campaign may signal movement in Dodgers' TV impasse,” Los Angeles Times. http://www.latimes.com/sports/dodgers/dodgersnow/la-sp-dn-dodgers-tv-impasse-20140724-story.html (accessed July 25, 2014)