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Sports, TV & Money: An Explosion Without End : When Money Talks, NBA Is Ready to Listen

June 25, 1989|JOHN McMANUS

It's the game of sports television rights, and any billionaire can play.

Up for grabs at the moment are an estimated $2.7 billion in new network contracts with the National Football League, the National Basketball Assn., the National Collegiate Athletic Assn. basketball tournament, the College Football Assn. and Big Ten/Pac-10 football and the domestic rights to the 1994 Winter Olympic Games in Lillehammer, Norway.

The rules are simple. Learn what the sports leagues and organizations selling the rights are looking for from television, then come to the negotiating table with the checkbook.

"The bottom line is the bottom line is dollars," said Arthur Watson, former president of NBC Sports. Watson, succeeded last month in the top spot at NBC Sports by Dick Ebersol, has become an NBC executive vice president, handling negotiations with sports rights holders. "You have to build relationships with the rights holders. But mostly, you have to be competitive with the amount of your check."

Who wins or loses, however, depends on whether the company that successfully obtains the rights can make money on them. With an offering of $309 million in 1985, ABC beat NBC in a ruinous bidding war for the 1988 Winter Games in Calgary. Despite ratings that lifted the network from third place to No. 2 ahead of CBS in February, 1988, Capital Cities/ABC lost about $65 million on the deal.

"We've made ourselves marginally profitable," said ABC Sports president Dennis Swanson. "We sat out on the last two bids for the Olympics because we've been unable to find terms that are acceptable to us. We want to be in business in the 1990s. I'm not going to want to have spent the last three years scratching my way out of debt only to give it all away again in 15 minutes at the negotiating table."

This month and next, the rights games begin with the bidding process on the 1994 Lillehammer Games; the networks will also receive preliminary TV contract visits from NCAA executive director Dick Schultz; they will explore the International Football League proposed for the spring of 1990; and they will enter discussions with NBA Commissioner David Stern toward a contract that network and sports officials believe could be one of the most intriguing negotiations of all. By early 1990, network sports budgets for the next three years will be virtually spent out.

"Commissioner Stern's timing is going to be most fortuitous," said Robert Wussler, senior executive vice president at Turner Broadcasting System, which is in the first year of a two-year, $50-million contract for national cable rights to the NBA. "He's got a proven, excellent product, a wide number of bidders and many different options."

Stern, who negotiated contracts worth $248 million with CBS and TBS over the last four years, could double that amount over the next contract term, according to television, cable and advertising executives. The current CBS deal is for $173 million over four years through the 1990 playoffs, with $75 million coming in from TBS during the same time.

The NBA enters television contract talks this summer with more leverage than ever before, partly because CBS has exclusive rights to baseball after this year (it won the four-year contract for a cost of $1.06 billion). As a result, NBC and ABC are in need of springtime sports shows.

"Of all the properties coming up for negotiation during the next year, the NBA has become the jewel," said an advertising agency media executive who buys more than $40 million in commercial time during sports telecasts.

"Stern's genius and CBS getting baseball are the reasons for that," the executive said.

The NBA's relationships with incumbents CBS and TBS are said to be very strong, and both networks have a right-of-first-refusal clause written into their contracts that gives them a measure of preemptive protection against competing networks. After bids are in, CBS and TBS can match or top the high figure from competitors. The NBA can go once more to the highest bidding competitor for a final bid that could top the CBS and TBS offers and win away the rights.

"The negotiations themselves will be a fairly simple process," said Stern. "We'll come up with a figure we think NBA rights are worth, and if CBS and TBS agree with that figure, the process will be over."

In October, Stern and NBA executive vice president Russell Granik will step up the pace of negotiations with CBS and TBS during an exclusive negotiating time period. Once that period elapses, if no deal is struck, the NBA is free to test the competitive waters. "We've had a very, very good relationship with CBS and TBS," said Stern. "All things being equal, we would be very happy if they both stepped up and met what we ask (from) them."

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