NHL might increase $ 600 million a 12 months as soon as the second rights bundle is bought

NHL Commissioner Gary Bettman presents the Stanley Cup to Captain Steven Stamkos # 91 of the Tampa Bay Lightning after the sixth game of the NHL Stanley Cup Final between the Tampa Bay Lightning and the Dallas Stars on September 28, 2020 at Rogers Place in Edmonton, Alberta, Canada.

Dave Sandford | National Hockey League | Getty Images

Let’s call it a goal for the National Hockey League. And if the league can get two more business deals it could be a hat trick.

Media experts believe the rights package of NHL’s new seven-year contract with ESPN is worth $ 400 million a year. That’s an increase over the roughly $ 200 million a year NBC Sports pays out, and the NHL is poised to attract even more money.

NHL Commissioner Gary Bettman called the ESPN deal “groundbreaking”, adding that the league would “benefit from the unparalleled power, reach and influence of The Walt Disney Company and ABC / ESPN”.

“It sets a new standard in making our game available to the most passionate and tech-savvy fans in the sport, in the way they are asking for it now and on the platforms they use,” Bettman said in a statement last week.

The return to Disney will bring the NHL back to ESPN for the first time since 2004. However, after the split, ESPN continued to treasure NHL content by focusing its coverage on longtime analyst Barry Melrose.

Dan Cohen, senior vice president of Octagon’s global media rights consulting division, said the NHL could raise more than $ 600 million annually for its entire package. He added that the NHL “would be best placed to renew its other rights package with NBC, which has invested heavily in marketing the NHL and can offer a tri-cast distribution model.”

“Now they make decisions about sports less based on managerial preferences and more based on the purpose the content will serve,” Cohen said. “Something as voluminous as hockey can be combined with a tri-cast model across ABC, ESPN and ESPN + / Hulu.”

ESPN receives premium NHL playoff competitions, all-star events and streaming rights. ABC will host four Stanley Cups. The streaming services ESPN + and Hulu also receive exclusive games. This is the tri-cast model that Cohen predicts that other media companies will use it to place secondary sports content behind paywalls and get the die-hard fans to subscribe to streaming services.

And since sport is the main draw to keep up the cable model and encourage streaming, the NHL has revived its rights fee using the same network it devalued more than a decade ago. Now the NHL is auctioning the other half of the package.

Joe Pavelski # 16 and the Dallas Stars puck past Pekka Rinne # 35 and the Nashville Predators during the Bridgestone NHL Winter Classic at the Cotton Bowl on January 1, 2020 in Dallas, Texas.

Richard Rodriguez | Getty Images Sports | Getty Images

NHL and NBC need each other

NBC is the front runner in returning to the NHL. It was whispered that CBS Sports was interested and that Fox Sports was lurking. But during a media call last week, CBS Sports chairman Sean McManus downplayed any interest in the NHL, and Fox had the NHL long ago in a failed experiment with a glowing puck.

Fans and corporate sponsors are already used to NBC’s NHL coverage. NBC is moving sports to the U.S. network to resemble a Turner Sports-like property, meaning NHL games will reach more households. NBC can’t afford to lose hockey, which would fit nicely with its new Peacock streaming service.

Cohen suggested NBC could pay $ 185-225 million a year to keep NHL rights. The package would include games on Peacock, the Winter Classic, postseason games, and three Stanley Cups. He called the package “fair market value” because NBC would pay more while losing the NHL content it owned when Comcast acquired the rights in 2005 for approximately $ 70 million per season.

“NBC has not invested or let go of the NHL for the past decade, especially when they need live sports and programming during the week,” Cohen said. “NHL fans are used to finding NHL content on NBC and it has put a lot of marketing and promotion into it. I would be surprised if they dropped out as an NHL affiliate.”

According to a person familiar with negotiations, who spoke on condition of anonymity, talks between the two parties are currently ongoing.

However, the network would need to be careful when it comes to overpayments as the rights to football’s Premier League are also on the verge of renewal. Cohen said the package could be worth $ 300 million a year, up from roughly $ 167 million a year. Part of a six-year extension of $ 1 billion in 2015.

“And after that, they have to decide what to do with NASCAR, which they pay $ 440 million a year for,” Cohen said.

As the NHL expands its media rights, it could also face media contraction. The NHL network could create an occlusion as the channel is not strictly needed as consumers continue to cut the cable.

“It wasn’t profitable,” said Cohen of the NHL Network. “If you remember, Disney ran this network and it returned to the NHL last year. Now, in a shrinking cable world, the NHL has to run its own linear network, and they just sold half of their rights to ESPN. The NHL has to.” get creative to add value to the NHL network for their MVPD partners. “

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

Correction: This report has been revised to correct in a reference when the ESPN deal was announced. It was last week.