February 8, 2017
You know that sound effect often used to signal a dramatic realization?
The one that goes Dun-dun-dunnnnn?
Perhaps it should be replaced with ESPN’s trademark Da-da-da, da-da-da jingle following a massive round of layoffs last week including many longtime on-air personalities.
I’m no media analyst, and I couldn’t run fast enough from a math course in college, but something’s in the wind. When a property like ESPN needs to swing the axe, it means trouble’s ahead.
And make no mistake, for the professional sports industry, this news should be considered more a signal than noise. Consider:
Broadcast rights — not ticket sales, not concessions, not licensing and apparel, not corporate sponsorships — are the true lifeblood for pro sports. So what does it mean for the enterprise if the so-called “Worldwide Leader in Sports” is losing subscribers and ad revenue while paying more than ever for broadcast rights?
It means the business model has come to mimic the housing market that led to the Great Recession. Think about it:
Professional sports leagues are the overvalued houses.
Broadcast rights are the adjustable-rate mortgages.
ESPN is the feckless borrower.
And cable subscribers? I suppose we’re the investment bankers. Once willing to pay $150 per month for cable — and here’s where the analogy breaks down — we have begun to self-regulate, and we’re no longer willing to take on the cost of broadcast mega-deals. Sadly, ESPN assumed we were too big to bail.
I can’t recall professional sports ever seeming more vulnerable. At a time when franchises are being sold for more than $2 billion, taxpayers are funding billion-dollar stadiums and stars can command $43 million per year (get that money, Russ), it seems more than troublesome that one of the industry’s great institutions is resorting to layoffs to make ends meet.
Da-da-da, da-da-da, indeed.