The recent cancellation of the 2020 collegiate football season by the Big Ten and Pac-12 conferences has reinforced a belief that has taken hold over the six months of the coronavirus pandemic: Without fall football, networks will be in trouble. The sport is America’s preeminent pastime, and broadcasters have fought bitterly to spend billions on its rights.
Yet a growing number of analysts and insiders are reaching a startling conclusion: While the NFL and its sky-high viewership may be critical to networks as marketers look to unleash their budgets on holiday shoppers, the scrapping of the college Division I football season actually might come with as many silver linings as drawbacks—maybe even more.
“They can’t come out and say it because they don’t want to offend the schools. But I think there are a lot of people at these networks who aren’t crying about a possible canceled season in the fall,” said Neil Begley, an analyst at Moody’s who tracks television sports and speaks regularly with that industry’s executives. “The games cost a lot of money, and you don’t know if the ad dollars will be there.”
The idea upends common wisdom about the pandemic, which holds that cancellations of any kind are bad for business. And it can seem counter-intuitive. But conversations with experts and a dive into the numbers highlights a dirty secret: buying the rights to college games has become so expensive that sometimes networks are better off if the games aren’t played at all.
Spokespeople for ESPN and Fox, the two networks most invested in the sport, declined to comment.
Hoping to avoid COVID outbreaks, the Big Ten Conference canceled its fall season earlier this month. The Pac-12 soon followed, with only tenuous plans to play games in the spring. The other three major conferences—the SEC, Big 12 and ACC—have not canceled.
But three ACC schools recently sent students home due to COVID-19, and the University of Alabama, in the SEC, has sent more than 500 students home because of COVID.
No executive would ever root for an interruption in the NFL season, where a Sunday afternoon regular-season game can draw more than 20 million viewers (it happened 15 times last season). Because of the league’s clout, networks already have begun to make payments that wouldn’t come back to them right away if games were canceled.
But it’s a different story in college, where no money has yet changed hands and, more important, rising costs and dipping ratings make for a toxic combination, especially in an ad downturn like the current one.
No regular-season college-football game in 2019 reached the 20 million-viewers threshold, and games routinely fell short of even 10 million viewers. Only nine regular-season college football games exceeded seven million viewers. Just five years earlier, 13 games reached the mark.
Yet the deals to air the games have grown pricier. In December, ESPN agreed to pay $300 million per season for SEC games when CBS’ current deal for them expires after the 2023 season—a sixfold increase. Under a deal signed in 2017, ESPN now pays $190 million per season for some Big Ten games (they also include many less-viewed basketball games). Fox pays more for a better pick of games—$240 million per season.
Collectively, the Big Ten rights—valued at $2.64 billion over six years—cost roughly triple the previous deals.
That kind of price tag might make sense for high-profile contests like Ohio State-Michigan, which garnered more than 12 million viewers last fall. But the logic is less obvious when an Indiana University or Michigan State—or Rutgers or Northwestern—is involved. Michigan State’s games against Michigan and Penn State last year, on Fox and ABC respectively, each notched under 4 million viewers.
And it’s especially problematic in an advertising downturn.
“A lot of the coverage of the cancellations focuses on the revenue lost. But that’s a mistake,” said Neal Pilson, who served as president of CBS Sports for much of the 1980s and 1990s. “What it’s really about is the profit. And the margins for these games have gotten pretty thin.”
In the 1990s, the profit margin on a college football game could range between 20 and 30 percent, he said. With viewership down and the packages costing more, it’s now often between 15 and 20 percent. That makes the networks a lot more vulnerable to a weakened ad market.
Consider the Penn State-Ohio State matchup last year. Played the Saturday before Thanksgiving, the Fox game featured not only a historic Big Ten rivalry but two teams in the top 10, and provided thrills as Penn State came back from 21-0 down to score 17 unanswered points before losing 28-17.
But total viewership for the game was just 9.2 million viewers. The pro matchup between teams from the same states, the Steelers and Browns, garnered 15.7 million viewers on Fox the week before. The advertising disparity was even worse: the game generated $5.1 million for Fox, according to Standard Media Index, which tracks rates, or $81,000 for a 30-second spot. The average 30-second spot in the NFL topped $400,000 last season.
The $5.1 million barely puts Fox in the black for the game. Even if only half of the $240 million Fox spends on its overall Big Ten package is allocated to football, that would put the rights cost of each of its 25 football games at just under $5 million, in addition to several hundred thousand dollars in production costs.
Even the games that generate more ad revenue are vulnerable in the current climate.
“It’s a simple equation: if a profit margin is 20 percent and the ad market is down more than 20 percent, the networks are losing money,” said Pilson.
According to the Interactive Advertising Bureau, which surveyed 148 media buyers, overall ad spending will drop 20 percent in 2020.
Experts say there’s another big reason networks might want college football to go away entirely in the fall—it could allow them to show NFL games on Saturday.
A provision in the 60-year-old Sports Broadcasting Act prevents the pro league from showing games on Saturdays during the college football season. If all five conferences cancel this fall, networks and the NFL are likely to push for—and get—dispensation to show highly rated pro games on Saturday.
“I think if Comcast, which has a huge lobbying presence in Washington, watches college football get canceled, we’ll see that small paragraph adapted to allow NFL games on Saturday,” said Anthony Crupi, an expert on advertising from sports-business outlet Sportico. “There are a lot of incentives for them [to do away with it].”
Without the NFL, Fox and ESPN would need to come up with replacement programming, but alternate sports or reruns could cheaply fill the time.
There are, experts acknowledged, some hidden economic drawbacks if the games aren’t played.
One of the largest is that conglomerates’ negotiation of carriage fees—the amount a cable or satellite provider pays to a network per subscriber—is contingent on fresh programming. If Fox Sports 1, the company’s cable network, doesn’t offer enough games, carriers can claim the network is violating its carriage agreement and resist paying those fees.
And the loss of the college football postseason, a strong possibility despite organizers’ attempted optimism, would decidedly be a loss for ESPN, which collected $84 million on last year’s title game, watched by 25.6 million people.
But overall, experts say, media networks will emerge unscathed with no college football this year.
“I would worry about the conferences not getting their money. I would worry about the schools which can’t keep other sports running. I would worry about the students that won’t get an opportunity to play,” said Patrick Rishe, director of the sports business program at Washington University’s Olin Business School. “But I wouldn’t shed any tears for the networks. They’ll be fine even if the games aren’t played. More than fine.”