It was a long time coming. It could be a long time going.
The first sentence of the press release calls the deal between ESPN and the NFL a “non-binding agreement.” Which makes it even weaker than a Jerry Jones handshake deal.
It’s not binding because the federal government must approve the transaction. And that’s not a sure thing.
Assuming that, eventually, the non-binding agreement becomes binding and enforceable and final, it will give rise to various questions. Here are a few that come to mind.
1. Will ESPN now have a guaranteed package of NFL games?
With the league owning 10 percent of ESPN, why would the league not sell back to itself one of the various NFL broadcast windows?
It’s therefore hard not to wonder whether ESPN gave a piece of the company to the NFL as insurance against being nudged out of the mix by a tech company that is willing and able to pay a lot more than ESPN can afford.
And it could mean that the NFL will accept less from ESPN on a rights deal. To the detriment of the interests of the players, who share in the revenue. (More on that later.)
2. Why does the league want to own a piece of ESPN?
For years, the NFL benefited from broadcast partners doing deals that seemed to be out of whack. Those days could be ending.
While the numbers are still big and always increasing, there’s no longer the same incentive to overpay for pro football as a platform to promote other network offerings. It’s about monetizing the games, period, through subscription feeds, advertising revenue, or some of both.
So why not swap cash for equity? If the company will continue to thrive (and a guaranteed NFL footprint won’t hurt), the league will realize far more value over the long haul.
And 10 percent of ESPN will be worth more than 100 percent of NFL Media, since the NFL was never able to properly maximize the value of its in-house media conglomerate.
3. What’s in it for the players?
It’s a point we recently made. If the NFL were getting cash for its NFL Media properties (including the ability to televise more games), the players would be entitled to share in the money. With equity, who knows if or when or how the players will see a penny?
The players currently have no equity in any aspect of the NFL. They won’t get any ESPN equity.
For NFL Players Association interim executive director David White, it’s a critical question that should be immediately addressed.
4. What’s in it for the fans?
At this point, who knows? They’ll make broad, sweeping claims that it’ll be good for consumers. They’ll insist the RedZone product won’t change, for example.
Those promises are even more non-binding than the current non-binding agreement.
Don’t fool yourself. They didn’t do it for us. They did it for themselves. Ultimately, to maximize value for the 32 owners and the Disney shareholders. (As a 28-year Disney shareholder, thanks. I guess.)
Also, with the NFL eventually owning 10 percent of ESPN, it becomes very important to scrutinize any and all ESPN reporting on league matters. Will they be as candid in their criticism of the league and/or the owners? Will they pull punches?
Will the NFL be even more inclined to call and complain if/when someone says or writes something the league office and/or an owner doesn’t like?
With the NFL owning part of ESPN, it’s an extension of the practical impact of the NFL owning all of NFL Network.
Will you be getting the truth, or are you getting P.R. spin? That’s for the average consumer to decide.
If the average consumer even cares.