Inside the NFL-ESPN Deal That Could Reshape Sports Media
The NFL and ESPN have agreed to a groundbreaking equity swap. Studio shows and streaming rights are nice, but there’s one underreported benefit that might be the most valuable of all.
The NFL and ESPN are set to announce a deal this week that could reshape the sports media landscape as we know it.
After nearly five years of back-and-forth discussions with every company interested in sports rights — Amazon, Apple, CBS, FOX, ESPN, etc. — the NFL has agreed to give control of the NFL Network and RedZone to ESPN. In exchange, ESPN will give the NFL a 10 percent equity stake in its business, tying the two together for years to come.
This isn’t the first time a professional sports league has intertwined itself with a media company. ESPN took an equity stake in the Premier Lacrosse League earlier this summer, and Fox recently paid approximately $125 million for a 33 percent stake in Penske Entertainment, the owner of IndyCar and the Indianapolis Motor Speedway.
However, the difference between those deals and this deal is that we are talking about the NFL. This isn’t just a contractual throwaway as part of a larger partnership; NFL content is currently the single most valuable piece of sports content on the planet.
I have spent the last several days reading every article I can find on the deal, and what I have found is that everyone is talking about the obvious benefits. You’ll hear that the agreement will strengthen ESPN’s direct-to-consumer offering. Some might even dive a little deeper, talking about how ESPN can leverage the NFL’s content to create a one-stop shop for sports fans, integrating fantasy stats and sports betting with live rights.
But not a single article I have read has mentioned the real reason ESPN is doing this deal. ESPN couldn't care less about adding studio shows from the NFL Network to its content lineup. ESPN is doing this deal because it gives them leverage. Let me explain.