Why didn’t the NFL get a bite at the Apple?
The NFL appears ready to snare another mega-media deal this week with the league close to selling Sunday Ticket rights to Google’s YouTube and YouTube TV, moving the out-of-market games package into the streaming universe.
NFL close to deal with YouTube for Sunday Ticket rights
But it had appeared for some time that it would be Apple that would take the popular Sunday Ticket fully into the digital universe (incumbent DirecTV did allow streaming in areas where its satellite dishes were infeasible). The NFL longed to be in business with arguably the globe’s most important company and spent much of the past year trying to make that happen. And the deal seemed like a natural for Apple, which is trying to grow Apple TV Plus.
The NFL earlier this year scored a Super Bowl halftime show sponsorship from Apple, but several weeks ago the media talks broke down. Why?
There are some obvious answers. Apple reportedly wanted to pay less than the NFL sought so it could offer the product at lower prices than incumbent DirecTV, but the NFL’s contracts with Fox and CBS disallowed that (lower Sunday Ticket prices could drive viewers away from the Sunday afternoon network windows). DirecTV’s Sunday Ticket offerings start at around $300 for a season.
Also, Google’s media strategy is more robust than Apple’s, with YouTube TV a growing digital multi-channel platform, and YouTube itself with 2.5 billion monthly users.
“The other tech companies are far more advanced in where they are with their business model for media, for broadcasting,” said a person close to the NFL. “Apple is very far along in media with music but the other firms that are, you know, Amazon is much further along. Google and YouTube are much further along. Apple is really behind.”
Apple and the NFL also could not agree on whether the company would get the right to distribute Sunday Ticket on as yet non-existent platforms. Apple is heavily investing in virtual reality and augmented reality, nascent platforms in which sports are so far largely not viewed. As a result, Apple wanted what is dubbed known and unknown rights, individuals familiar with the NFL and Apple said. In other words, there is no known virtual reality market for Sunday Ticket, but there might be one day.
Imagine a virtual reality device offering fans a Sunday Ticket experience where it is as if they are watching from the 50-yard line seats, said Tom Richardson, senior vice president of Mercury Intermedia and an adjunct professor at Columbia University’s sports management program. Such a platform might seem a long way off, but Richardson said it could be coming in the next 24 months.
“It’s a well-known fact that Apple is on the verge of going big in AR and VR,” Richardson said. “And it’s been widely reported for the last couple of years, ’23 could be a breakout year. So I suspect, as when they’re looking at multi-year deals … you’re looking at what could be a very different technology environment, consumer electronic environment by the end of the decade at this point, with no doubt some growth potentially very big growth in the world of immersive media experiences.”
Richardson in the 1990s worked for the NFL and NHL, and recalled similar situations arising in the emerging new digital world when companies asked if the media rights getting negotiated were good to be shown on “everything.” And, like now, the answer was no.
“The league doesn’t like to compromise and Apple as a two-and-a-half-trillion-dollar company, whatever they are now, they obviously kind of have their own way of doing business.”
Apple’s deal with Major League Soccer to stream all its games is believed to have open-ended language in their deal. MLS did not respond for comment.
Why wouldn’t the NFL agree to the “unknown” language in the contract? For one, it has never done business that way, ceding rights beyond those that are delineated specifically. But also it may view the AR and VR future platforms as new media categories worthy of separate deals.
It could not be determined where the pending Google deal will come down on this issue, but given it was such a blockade between the NFL and Apple, it is hard to see the league giving ground. Google has its own AR and VR efforts.
Apple also inquired about broader rights than were available.
Patrick Crakes, a former Fox Sports executive, said Apple and the NFL never got on the same page. “So (Apple) kept learning things, right, like, ‘Well, we want to do a five-year term.’ ‘No, you have to do a 10-year term.’ ‘We want worldwide rights.’ ‘No, you can’t have those.’ ‘We need some exclusivity.’ ‘No.’”
The value of Sunday Ticket has also declined for fans over the years as more games previously broadcast only locally — and thus making the out-of-home package valuable to the fan outside their home-team market — had declined with more national windows.
“When Sunday Ticket came around (in 1994), there were clearly important games you were going to miss every single week,” Crakes said. “OK, now we’ve got, you know, three to four national windows later on in the year. You’ve got games on Saturday, you got games on Christmas. I mean, there’s just all these games everywhere and you’ve got flex scheduling that ensures that the biggest and best games are going to end up, you know, certainly Sunday Night Football, next year we start getting it with Monday Night Football.”
Nearly 30 years ago when DirecTV started Sunday Ticket there was no Thursday Night Football sucking games away from the Sunday afternoon slate of contests, or NFL Network with its handful of exclusive games. Those TNF games are now streamed by Amazon, which made a late push for Sunday Ticket.
The NFL was seeking well more than the average annual $1.5 billion payment received from DirecTV, a figure many experts blanched at because the satellite carrier lost money on the lower figure. But a report Wednesday in SportsBusiness Journal has the NFL getting $2.5 billion (it’s unclear if that includes the market for bars and restaurants, which could be sliced away from a deal).
It wouldn’t be the first time the NFL surprised experts. When the league bought the TNF package, it was getting around $650 million a year, and the incumbent Fox and other traditional players were not bidding. Amazon scooped it up for $1.1 billion a year, proving the power of NFL content.
One thing is clear: Apple, which all but created the home computer market and then the smartphone business, will be fine and will find other ways to grow its Apple TV Plus without the shiny attraction of the NFL.
“Apple is Apple,” said Richardson, who in the 1980s wrote for what he described as an Apple magazine. “And they always seem to figure it out.”
(Top photo: Scott Olson/Getty Images)