COMMENTARY
MAY 6, 2005
Breeders’ Cup TV deal just another blunder
by Steve Moody
The racing industry has made a world of mistakes when it comes to the use of
television to further the sport. When televised sports exploded in the
’60’s and ’70’s, racing dwelt in the starting gate, limiting their offerings to
a very select number beyond the Triple Crown. As things slowly began to change
for the better in the industry, those in decision-making positions continue to
shoot themselves in the foot. Last year, when television ratings reached an
all-time high during Smarty Jones’ run through the Triple Crown, the heavy heads
at NYRA got the ball rolling and decided they couldn’t stand prosperity.
NYRA listened to an offer from Disney/ESPN/ABC and decided to move the
telecast of the Belmont S. (G1) from NBC, where it’s been broadcast since 2001,
to ABC. While the telecast is likely to remain on free over-the-air television,
it does interrupt the continuity of having the first two legs of the Triple
Crown on one network (NBC) and the last leg on a different one.
On Tuesday, Churchill Downs Inc. and Magna Entertainment announced that they
had reached agreement with
NBC to extend the contract to televise the Kentucky Derby (G1) and the Preakness
(G1) for
five years through 2010. NYRA felt they deserved a better deal because of the
high ratings generated by recent runnings of the Belmont S.. What they don’t
seem to understand is the Belmont gets the lowest ratings of the three spring
classics when there’s no possibility of a Triple Crown winner. Under terms of
the current deal with NBC, Churchill Downs receives 50 percent, with Belmont
Park and Pimlico sharing 50 percent.
NYRA’s decision, however, pales in the blunder department to the one made by
Breeders’ Cup/NTRA to pull the telecast from NBC, who televised the championship
event since its inception in 1984, and move it to ESPN. In this case, however,
increased revenue was not stated reason for the move. Like the current
arrangement with NBC, the new deal calls for revenue to be shared between ESPN
and Breeders’ Cup/NTRA based on advertising sales.
Beginning in 2006, the Breeders’ Cup World Thoroughbred Championships
telecast will be a live seven-hour program airing from 12–7 p.m.
(ET), two hours longer than its current length. ESPN and ABC Sports will air five
two-hour telecasts from June through October, featuring major stakes races
leading up to the Breeders’ Cup.
“This is an extraordinary multi-media agreement highlighted by unprecedented
television coverage for the Breeders’ Cup and Thoroughbred racing. It solidifies
our sport’s presence on television and a broad spectrum of media platforms for
the next eight years,” Breeders’ Cup President and NTRA Commissioner D.G. Van Clief
Jr. said. “We are very impressed with ESPN’s capability of
delivering a seven-hour window for the Breeders’ Cup World Thoroughbred
Championships, and its ability to present and promote our event through a
variety of ESPN assets. We are also looking forward to working with ESPN in
reaching a younger demographic of fans who will enjoy the excitement of
Thoroughbred racing.”
Someone needs to send Van Clief to Media 101 class. A top media executive
with whom I spoke this week said if the Breeders’ Cup telecast does indeed move
to cable, he conservatively estimated a drop of 25 percent in television ratings and,
at best, no
gains in the prized 18-34 demographic. ESPN Sportscenter barely does a 1
rating. It’s a known fact that of all cable subscribers, the most watched
channels by far are the broadcast channels, which the cable companies also carry
on their systems. This is not to say keeping the Breeders’ Cup means new and
younger viewers are going to flock to the NBC telecast. Indeed, ratings have
been down in recent years, but the Breeders’ Cup has no chance to increase
viewers by moving the telecast to cable.
In addition, now viewers who want to watch the Breeders’ Cup telecast will
have to pay for it. This sticking point is not lost on longtime racing fans that
remember Breeders’ Cup founder John R Gaines’ press conference announcing the
creation of a Championship Day of horse racing.
The Breeders’ Cup was to be a day for the
everyday fan who supported the game to enjoy a “World Series” of racing. Prices
for the event needed to be kept at reasonable levels. It wasn’t until Churchill Downs and the city of Louisville
promised to keep in check the
type of price-gouging that goes on during Derby Week that the Breeders’ Cup was first
scheduled there in 1988.
Unfortunately, Mr. Gaines’ vision of what the Breeders’ Cup should be is a
now a distant memory. Prices have consistently risen under urging from the
Breeders’ Cup marketing arm to levels approaching other sports’ championship
events. There isn’t an affordable ticket to be found, the event is geared to
corporate America.
What the Breeders’ Cup forgot was that fans who pay $150 for a ticket to
an NBA playoff game aren’t leaving their seats to make an exacta on who the top two
scorers in the game will be. Racing derives the bulk of its revenue from
pari-mutuel wagering. Fans that are now paying usury prices for poor seats and
supporting the game with their betting dollars are now being asked to pay for
the telecast.
ESPN is carried on every cable system’s basic package, so subscribers have to
pay for it even if they don’t want it. Their carriage fee is the highest in the
industry, about $2.30 per subscriber. If you get ESPN-HD, a premium
above and beyond that is charged. It’s no wonder ABC unloaded Monday Night Football to
ESPN. They can afford $1.1 billion a year because of their multiple revenue
streams. Over-the-air broadcasters have to rely solely on advertising to pay the
bills. After the folks at ESPN stroke a few of those $1.1 billion checks to the
NFL, is there any doubt that your cable bill will be going up?
Here’s the bottom line. Breeders’ Cup/NTRA won’t derive a financial
windfall from this new deal. If anything, they’ll
have to work harder just to stay where they are now. Can they expect their TV
ratings to go up or to garner a greater share of the coveted 18-34 demographic?
Almost certainly, the answer is no. Given that, it’s a blunder of dramatic
proportions.