Published on April 17, 2013 8:52 PM by dbo.
On March 21, 2013 the CFL, TSN and RDS jointly announced the renewal of their exclusive broadcast agreement through the 2018 season begining in 2014. First reported by Dan Ralph of the Canadian Press and published by the Winnipeg Free Press followed by papers across the land (Regina, Ottawa, Calgary, Toronto/Winnipeg Toronto, Vancouver and the Globe and Mail) the news was welcome and not unexpected. Since becoming the exclusive rights holder in 2008 and exercising its option for the 2013 season, it was presumed that the CFL would continue its relationship with the Bell Media family.
Some expected the CFL to open conversations with other broadcasters after the exclusive negotiation period with the current holders expired January 31st. While the finalizing of the agreement did go past the exclusive period, as reported by Bruce Dowbiggen seven weeks before the announcement, the league did not entertain offers from any other parties. Dowbiggen reflected on the exclusivity once the deal was announced. The politics of sports properties in Canada where one network owns a baseball team and they all have multiple channels to fill time and promote their wares on creates these exclusive scenarios. Exclusivity is half about keeping it away from the other guy when he won’t share his properties, and for the CFL, why would they want to put some of their games on The Score? TSN/RDS provides the best broadcast team and reach the league can acquire.
The announcement was followed by Twitter recognition from a play-by-play man, a classy move from a classy on-air guy. The CFL may see diminished coverage from the Rogers properties of TV and radio stations, it certainly was diminished and turned negative in the first few years after the last deal. If Rogers wants to maintain any sense of integrity they will be reporters and journalists first and leave the business dealings to the boardroom. I believe that any attempt to diminish or ignore the CFL will be seen through by the majority of Canadians. Sportsnet is fast becoming the Pepsi to TSN‘s Coke and get only what respect they deserve.
The terms of the deal were not released, but ballpark figures were certainly leaked to the media and many attempts were made to guess at the numbers (though not check facts). Speculation on the current deal ranges from $15 to $17 million per season, very likely it started at $15 million and rose to $17 million for the last year of the agreement. Member clubs whose books are open reported just over $2 million in league revenue last year. Considering the amount needed to run the league office, officials, video replay, etc. with additional revenue from league sponsorships and other streams, this is probably accurate.
For the new deal, more than $30 million per season is the oft-quoted source. Those that dig deeper report that the deal does not exceed $40 million per season, is more than double the previous deal, but not triple the previous contract and is around the $4 million per team per season range. The addition of the Ottawa franchise in 2014 guaranteed an increase and the growth over the last six years combined with bringing on a new market (building on six years of anticipation) resulted in a substantial increase. The most believable estimate puts the annual contract at $34 million per season with annual increases. I would speculate based on my interpretation of the leaked hints that the contract may provide $36 million to $38 million per season over the life of the contract. I do believe that annual average will be a minimum of $36 million a season, which results in a $180 million value over the 5-year term of the contract. The first five years of the previous contract was estimated to be in the $75 to $80 million range, so this is quite a substantial increase. It is not clear, as it was never mentioned to my recollection, if TSN had an option for a sixth season on this deal as they did on the prior agreement.
Though the payout doesn’t start until the 2014 season, it was received positively across the league. The impact on Winnipeg was examined in light of their new stadium and the cost owed by the club. The view in Edmonton sees the agreement as a strong investment of TSN in the CFL and vice versa. With the CBA expiring before the 2014 training camps (not 2015 as reported in some places) players are ready for the negotiations and to split the new revenue. The belief is the CFL member clubs will not be reckless with its new wealth and will instead be prudent in its decisions.
Before reading any of the drivel here, go read Canadian Sports Fan/A Rouge Point’s analysis of the deal and response to the responses without basis. You can be sure that for most, if not all, detractors of the CFL it is because they see it as a roadblock to the NFL in Toronto/Canada. Not that they will ever admit those motives, instead they hide behind “analysis”. A doubled television deal flies in the face that the CFL is dying, so let us attack it another way. The country is so used to disparaging the league anyway, no one will really notice, its been going on for 30 years or more.
We will be sure to continue to get the comments that TSN is subsidizing the Toronto Argonauts, with accusations they are losing money on the agreement, single-handedly keeping the Argos afloat despite their business failure, let’s throw Hamilton in there too, etc. With the advent of the new agreement, Toronto will be 1/9th of the league. Surely Toronto doesn’t get more than their equal share of the television money. Should TSN insist Toronto doesn’t get any broadcast money? Businesses don’t last long that overpay for properties to prop up a sports team they don’t even own (but if you do own the team, you can overpay apparently). The logic is so flawed it is hard to understand what TSN and the CFL should do. When there is no right answer to the criticism, you know the criticism is without merit.
While the focus of such an announcement is on the size of the deal, there are many other important factors to the CFL besides just money in their pockets.
In addition to the value of the contract that will be shared amongst nine teams, the CFL will be the benefactor of increased exposure.
With a $4.4 million salary cap (likely to increase under a new 2014 CBA), there is much less worry about the new franchise in Ottawa and the teams in Toronto and Hamilton. Owners are being rewarded for their patience. Their franchises have now taken a substantial jump in value. Again, I say this makes the BC Lions much more attractive to potential buyers to take over before the 2014 season.
With stability the CFL becomes a more attractive property for other advertisers and partners. The numbers keep perpetuating the growth; the eyeballs are there, the right demographics are growing and it is nationwide exposure.
So let’s assume league revenue will double per team on an annual basis to about $4 million starting in 2014 thanks to this television deal. My speculation is that should put all teams in the black under normal circumstances. New stadiums in Hamilton, Winnipeg and Ottawa in the next two years will also drive revenue up in those cities, where Winnipeg expected their new stadium to increase revenue enough on its own to pay down their share of the cost of the stadium.
Following that, Regina is expected to complete their stadium for the last year of the television deal and there is rumblings in Calgary over a major enhancement of McMahon Stadium or new stadium altogether. This new revenue will help teams contribute to stadium projects and other facilities, like a practice facility in Toronto for the Argonauts.
Before the money is all spent on infrastructure, the new collective bargaining agreement between the CFL and CFLPA must be negotiated before the 2014 season. The players will be looking for a substantial increase in the salary cap immediately and over the life of the deal. With a cap in place, something that did not exist previously when the teams received a television windfall and spent themselves into oblivion, the league will not want to hand over all their gains right off the bat.
The membership of the CFLPA will likely focus on increases to the salary cap, playoff shares and perhaps pre-season compensation for veterans. That is what their membership consists of. Increasing the minimum salary and compensation for rookies during training camp would not be a priority. The CFL, on the other hand, may want to boost the minimum salary so they can better attract new import talent. There may also be a desire to increase rosters at the same time from the league, such as the speculation the league will make another attempt to increase the practice roster size in 2013. If this is seen as whittling away they gains made on the salary cap, the association may be against.
There could be a lot of at odds back and forth in the next round of negotiations as their usually is in any collective bargaining. Despite their ability to get agreements done in the past, this one could be difficult if the players look to gain back much of their sacrifices the past decades, especially if they go after a percentage of revenue instead of salary cap boosts. More discussion of the areas of the CBA that players and owners will be focusing their money on are presented in another article.
Some fans may already be ready to kick their feet up in 2014 and watch some football at home, no longer needing to go to games since the television deal is so great. Not so fast. Television revenue per team will still be less than ticket revenue for each team and 20-25% of total team revenue. Blackouts are not going away, though much more limited than 30 years ago. There will be some great new or improved stadiums to watch the games in Vancouver, Winnipeg, Hamilton, Ottawa and Montreal. Those seats need to be filled, and they will be in hot demand in most centres.
The TSN agreement places the CFL in a great position for future expansion. Providing guaranteed revenue streams, capable parties will take an interest in investigating opportunities in new CFL franchises. The five year deal positions the CFL to try to get something done in time for the next renewal. As we’ve repeated over and over, ownership is only one part of the equation, a capable stadium being the other. With an owner or group in place, and proper research on the market and a solid business plan, focus can turn to a stadium. As shown in the past, when serious owners are in place to start talking about a stadium, all parties from government to private enterprise to fans take the situation a lot more seriously. A conditional franchise or prospect of such can be the catalyst to make the plans for a financing a stadium take hold in a community.
Quebec City and Moncton are still the obvious choices. If there is any local person or groups in these areas that have heard about the new revenue stream they will be starting to put together plans immediately. These things take time, and only with the best of circumstances could we expect another team to launch in 2019. If there is no person or group with the means in these areas, then expansion will have to wait.
The CFL is much closer to adding that elusive 10th team than ever before (including the 1982/83 conditional Halifax franchise period). It will likely happen after Commissioner Mark Cohon’s term, unless he renews his contract beyond the end of the 2014 season. But Cohon and this deal will have enabled it if it ever does happen.