Rights Fees in Sport Essay

1551 Words May 16th, 2005 7 Pages
The steadfast rule when it comes to sports and rights fees is that it's the business of entertainment. The dollars are going to go where the value is. With Rights fees, networks pay fees to have the rights to a particular broadcast, for example march madness, the NFL or the Olympics.

Rights fees are determined by the value a certain property holds, this is determined by the ratings. The most important ratings market world wide is undisputedly the North American, and in particular the US market as we will later discuss with the Olympic media coverage. With in the US it is a battle field to increase ratings because of the dollar value associated with the opportunity to sell advertising and consequently the rights fees.

Personally I
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But as aformentioned the rating speak volumes and while the NBA is very popular in the US, from a network point of view March Madness, NCAA basketball is a winner. CBS is paying $6.2 billion dollars over a 12 year period to ensure their TV rights. As this is one of basketball's major properties and wanted by advertisers who are trying to target a very specific demographic.

However, there is a problem with increasing rights fees being paid by networks, funds are not bottomless. At a certain point the sports industry will plateau and as we are seeing financial resources are being pulled from sports with lower rating to finance the network's bid for the highly rated events like the Superbowl. This is also known as a zero sum industry, where one event/league will benefit while another suffers. The NFL is currently taking in about $550 million/year from 4 different networks respectively. The price tag is not that high because of the extensive amount of game air-time, but because of the perceived value. Networks are teaming up with their own programming to compliment the short NFL season to bring in more ad spots and rightly so. The NFL as a league also knows the value of their product and realizes that networks are still willing to pay these incredible rights fees. After all the networks are already paying twice as much as their last contracts. However, who suffers in the zero sum game? The worst case or ratings influencing the general public
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