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The NFL Needs to Get with the Now

The Daily Norseman tackles the NFL Black-Out rule, and DirecTV's exclusive Sunday Ticket contract.

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Jayne Kamin-Oncea-USA TODAY Sports

I am an out-of-market NFL fan, and like many of you, I know that I am not alone.  I became a fan of the Minnesota Vikings when I lived in the Twin Cities, but my life and career (like many of us) took me away from Minnesota.  But my love of Vikings football has remained, and I do what I can to catch the games in the most affordable way possible outside the market of the Great White North.  It's frustrating to constantly cross my fingers for Prime Time nation-wide broadcasts of Vikings games every year, or hope for those few times when the Vikings play one of the Texas teams and the game is broadcast in the Texas market.  If the Vikings don't land too many prime time games and don't play any Texas teams, then my options for watching the games for free out of market are pretty scarce.  So, that leaves me to have to pay for the Vikings game in some way.  The options include signing up for a satellite package that I don't want and can't afford, and then pay even more for the Sunday Ticket Package (which I really can't afford).  Or, I can visit a bar that has Sunday Ticket and spend a ton of money every week hoping they'll turn the channel to the Vikings game.  Or in a last ditch effort, I can even turn to illegal internet streams, available in any number of places in the deep dark depths of the interwebs.  Being "out-of-market" is terrible and I know I'm not alone in wanting to have greater options for consuming NFL content and not be married to an overpriced and unnecessary satellite subscription.

The NFL has some seriously outdated modes of thinking with regards to how it brings its product to the masses for consumption.  First off, there is the black-out rule, which has been in place since 1973.  This was long before the internet, and even before cable television took serious hold in the US.  The whole idea was to create a penalty for folks for not spending money at the stadiums and surrounding businesses as a way to motivate people to come out to the games.  In 1973, the stadium experience was far better than sitting in a living room staring at a 13-inch screen getting a static filled signal of the game over the air.  Television has come a LONG way since the 1970s and 1980s to the point now where we have gigantic screens, high definition, and surround sound filled with dramatic music, announcing, crowd noise and high quality camera work.  The television experience is so much more immersive now than it was 40 years ago.  Despite my relative lack of experience with live NFL games, the "at-home" experience of the NFL is, in many ways, better than the live counterpart when you consider not having to deal with traffic, parking, drunken stupidity, crowds, over-priced stadium food and the like.  So why does the black-out rule even still exist, especially after Congress recently considered getting rid of it?  Well, the black-out rule still exists, because the NFL thinks it still helps them sell-out stadiums.

And now, the NFL has started a campaign to try to fool persuade people to contact their congress people to continue supporting the black-out rule.  If you don't believe me, check out their website.  It's one of the biggest scams I've ever seen.  At no point does the website truthfully and accurately describe how the black-out rule keeps the NFL free on television.  Let me break-down their reasoning point-by-point.

1. NFL games remain on FREE broadcast television because of the FCC's sports blackout rule which has been working for nearly four decades.

Not true. First off, it's not even the FCC's rule, it's the NFL's rule!  Secondly, the games would still be broadcast regardless of the black-out rule, because the NFL negotiates the contracts with the broadcasters like CBS, NBC and FOX.  The broadcasters will still pay billions of dollars for the rights to broadcast the games, because advertisers will pay them even more for commercials.  The black-outs have nothing to do with it.  Proof is in the fact that all of the other major sports leagues continue to have massively lucrative TV contracts, without needing a blackout rule.

2. While every other professional sport has moved to pay services like cable or satellite, the NFL makes every regular-season and playoff game available to you for FREE.

Again, not true, or at best a huge misrepresentation of the facts.  First of all, no single one person has access to every regular-season and playoff game for free.  You might be able to get all of your market's games for free, but that represents a little over 6% of all the games in a regular season.  Furthermore, in a sport like Major League Baseball, not only can you get every game, but you can get access to it for a reasonable fee and stream it on any number of devices without restrictions.  EVERY OTHER PROFESSIONAL SPORT has moved to streamable pay services, because it makes their leagues more money on top of the television contracts.  There is a serious missed opportunity by the NFL here.  Furthermore, local in-market games are still free on broadcast television for all major sports leagues.  If the NFL was willing to drop the "middle-man" fee that DirecTV pays them for exclusive access to Sunday Ticket (which they then pass along to the consumer to make their streaming package more than double other sports leagues), they could handle the access themselves and make even more revenue.

3. The rule promotes strong stadium attendance and benefits local restaurants, sports bars, and other small businesses near the stadiums.

No, it doesn't promote attendance actually.  In fact, in 2009 the league had to soften the black-out rule due to decreasing ticket sales.  And furthermore, the games that appear on the Red Zone channel, or that are available later on NFL Game Rewind are not subject to the black-out rules.  So, why are the live games subject to them in the first place?  While I can't deny that the live games benefit local economies, removing the black-out rule will not suddenly decrease attendance.  Having a shitty team or a shitty stadium decreases attendance.  And one simply has to, again, look to the other professional sports leagues in the US to get a sense of whether or not the lack of a blackout rule impacts attendance.

The NFL's claim is this:

Pay-TV lobbyists have manufactured a controversy in an effort to change the current rule and charge fans for games that they currently watch for free.

We cannot let these special interests dictate what is best for NFL fans and their communities.

There's no basis for this claim first of all.  Mike Florio brought up a very good counter-point to this on Pro Football Talk last month:

There's no actual connection between preventing the local broadcast of games absent a full stadium and protecting the ability to televise of games on free TV.  Without tangible evidence showing why and how a rule requiring home games to be televised on free TV in the local market regardless of attendance harms the ability to televise games on free TV generally, the effort will look and feel like a bass-ackward strategy for allowing the NFL to continue to do what it wants.

The NFL wants to maximize ticket sales, and the NFL wants to be able to put the squeeze on markets in which the tickets haven't been sold.  Ultimately, the NFL doesn't want the government or anyone else telling the NFL what it can and can't do.

The reality, as noted earlier today, is that any significant reduction of the ability to watch games on free TV would invite far more serious governmental action via the scuttling of the broadcast antitrust exemption.  Overturning the broadcast antitrust exemption would allow networks to negotiate with teams like the Cowboys, Patriots, and Steelers directly Notre Dame-style packages.  That would create a dramatic income discrepancy among teams and little or no market for plenty of the 256 regular-season games to be televised anywhere, for free or otherwise.

That's the last thing the NFL wants.  Thus, the last thing that ever will happen is the disappearance of NFL games on free TV, regardless of whether the blackout rule lives or dies.

Good points Mr. Florio and I couldn't agree more.

Which brings me to the next recent issue.  Why are NFL games not readily available for streaming?  Last season DirecTV offered a promotion in conjunction with Madden 25, where you could purchase the anniversary version of the game for $100 and get a free trial of Sunday Ticket streaming on a mobile device or PC.  I jumped at the chance to essentially get Sunday Ticket for a third of the cost, a free Madden game, and have it streamable on my PC without needing a DirecTV subscription.  I was hopeful that the NFL would make Sunday Ticket available for everyone without needing a DirecTV subscription this year in much the same way, but in a more widely available version.  Instead, we got a lame version where only people in certain areas of the country can get it without needing the satellite subscription.  I suppose this is a step in the right direction, but it's still too restrictive and the pricing is astronomical (the lowest package for students is still $200).

Imagine if the Sunday Ticket model were no longer part of the satellite package?  Imagine if fans could access all NFL games anytime/anywhere for a similar cost as other professional sports leagues in the US?  For example, $110 per season gets you access to every MLB game, or $170 per season gets you all the NHL games with NHL Gamecenter.  Even the NBA has their Gamepass available for $180 per season.  In additional all of these leagues have their usual television contracts without blackout restrictions for in-market games to be broadcast locally for free.  There is no reason what-so-ever that the NFL couldn't do the same thing.  DirecTV pays the NFL $1 Billion for their exclusive rights to NFL Sunday Ticket.  But guess what?  That contract is up after the 2014 season.  I don't know enough about the inner-workings of how DirecTV turns a profit after paying that $1 Billion for exclusive rights to DirecTV, but considering that DirecTV had around 20 million subscribers in 2013, and according to this source, only about 10% of their subscribers have Sunday Ticket, I can't imagine it's paying off for DirecTV.  If my math is adding up right, 10% of 20 Million, multiplied by $300 only equals about $600 Million.  Now granted, they can leverage their exclusive rights deal as a way to build their subscriber base (IE, profits) by offering it for free for a year to new subscribers recoup the remainder.  But even then, it hardly seems worth it for DirecTV.

Furthermore, why is the NFL still accepting this arrangement?  They could simply build their own over-the-top streaming network and deliver the same content and generate potentially even more revenue than the $1 Billion from DirecTV.  Those Sunday Ticket subscribers would surely transfer over, and there are millions more who would sign up that aren't already Sunday Ticket subscribers, especially if it were offered at a lower price.  The NFL is missing the boat on potential additional revenue: tapping out of market fans.

So, until the NFL stops living in the dark ages and gets rid of the archaic black-out rules, and ends their bad contract with DirecTV to make their Sunday Ticket package affordable and available without a satellite subscription, they will continue to miss out on additional revenue streams.  All of the other major professional sports leagues have this model figured out, so why can't the NFL get their act together?