Deal of the New Century

A new NBA television contract that Commissioner David Stern is negotiating in New York could offer the first sign of how deeply the terrorist attacks could reverberate through the sports world.

“The contract Stern writes will be the most interesting and important contract in the history of sports television,” said David Hill, chairman of Fox Sports. “It will determine the future of professional sports.”

The NBA’s lucrative national television contracts have gone from an annual rights fee of $27.5 million in the early 1980s to more than $600 million.

Another increase--once all but a given--is not guaranteed in such uncertain times.

“No major sports contract has ever been negotiated in as negative an economic climate as what we have now,” said Neal Pilson, former CBS Sports president who now has his own consulting business, Pilson Communications. “Those negotiating this contract have to be influenced by what is going on outside their door.”

While parties close to the negotiations will not discuss the status of contract talks, Stern hopes to have a agreement in place not long after the Oct. 30 start of the season. When the current four-year contract was negotiated, it was announced Nov. 11, 1997.

Stern is currently in an exclusive negotiating period with incumbents NBC and Turner Broadcasting. If no deal can be struck, other entities such as the Disney entry of ABC-ESPN will be invited to submit bids.

The negotiations are being so closely watched because, after all, television money is the foundation upon which professional sports is built. It is the main reason salaries are where they are.

It’s also basic economics.

About three-quarters of the revenue generated by professional sports comes from television sponsors. And the sponsors’ money comes from consumers.

If consumers cut back on spending, sponsors will no longer have the money to pass along to television. In turn, television will no longer have the money to pass along to sports teams and leagues.An NBA source said that, in order to generate more revenue, the new NBA contract may include such aspects as Internet rights, product licensing rights and archive rights, similar to CBS’ NCAA tournament contract that takes effect in 2003.

“These are very bright, very experienced people,” Pilson says of the negotiators. “I’m sure they will come up with something.”

Sean McManus, the current CBS Sports president, does not see this contract as quite the benchmark that Fox’s Hill envisions.

“It obviously is a very important negotiation,” McManus said, “but we don’t know what the future holds. The economy could be booming in three years.

“What is going to determine future negotiations of sports contracts will be how strong the economy and advertising marketplace is at the time.”

Because of the current economy, Pilson and other industry sources also believe that a deal is likely to be structured so there won’t be much of an increase for the NBA from this season to next season, which would be the first of the new contract.

“If there is any significant increase, it would be toward the back end of the new deal,” Pilson said.

Pilson and others believe there is a possibility that, because of the economic climate, this deal could end up being only a one-or two-year extension.

NBC Sports Chairman Dick Ebersol declined comment because of the current negotiations and an NBA spokesman said Stern was unavailable.

But Ebersol, who recently appeared on CNBC’s “Squawk Box,” predicted that with Michael Jordan’s return, regular-season ratings will go up--a plus for the NBA during negotiations.

What is especially needed is for Jordan and the Washington Wizards to make the playoffs.

“That’s the key because 75-80% of the value of this contract for us is in the postseason,” Ebersol said.

About negotiating a contract in this economic climate, Ebersol said, “It’s very tough for both [NBC and the NBA]. I have been in this business for 34 years and there has never been a marketplace like this.

“We are losing money with the NBA package. They are aware of that. So I don’t think there is any high expectation for any enormous increases this time.”

Most industry experts expect NBC to renew.

“I’d have to handicap NBC as a favorite to retain the rights,” Pilson said. “NBC will compete to avoid losing the NBA, and there is a strong friendship between Ebersol and Stern.”

Apparently there is no interest on the part of CBS and Fox because of scheduling conflicts, and little interest by ABC, according to several sources.

But ESPN could get involved on the cable side of the deal.

“ESPN has positioned itself to be a candidate for the cable package, or part of the cable package,” Pilson said.

The network carries WNBA games and on Nov. 16 will begin carrying games involving teams from the NBA’s new minor league, the National Basketball Development League.

An ESPN spokesman said, “We are interested in the NBA, but only if it makes good business sense, particularly in this economic climate.”

The state of sports television was a topic of discussion by a panel at USC’s Annenberg School of Communications the other day. The panel included Terry Bradshaw, tennis commentator Pam Shriver and Fox Sports Net’s Kevin Frazier. The moderator was Fred Claire.

Bradshaw took the opportunity to go on a rant.

“I just want someone to explain to me how television ratings can keep going down and the leagues keep asking for more money,” he said. “They say this is a partnership. Yeah, right.

“The money is all out of whack, and it’s because of television. That’s where most of the money comes from. I don’t understand why they charge so much for tickets. With all the money owners get from television, you should be able to get a ticket for $5.

“The way it is now is absolutely nuts. Reality is going to set in. It can’t go on like this. It’s crazy, and I don’t understand it.”

Bradshaw is not alone in his belief that athletes are overpaid.

And resentment could run even higher for baseball players and owners if there were to be a lockout next season.

“I think there should be a moratorium on any lockout for one year,” said Claire, the former Dodger general manager. “There will be no sympathy if the players and owners get into another bitter labor dispute at this point in time.”

As for basketball, problems were there even before Sept. 11. Regular-season ratings have been in steady decline. NBC averaged a 4.8 in 1997-98, Jordan’s last season with the Chicago Bulls, and the average has gone from 4.3 to 3.4 to 3.0 since then.

But the ratings for the NBA finals have improved, going from 11.3 to 11.6 to 12.1 over the past three seasons. The NBA is the only sports league to have its championship experience ratings growth during the past two years.

But if sponsors aren’t willing to continue picking up the tab the NBA could be headed for some rough times.

And so could other sports leagues.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Current NBA TV Contract

Four years (1998-02)

Total value Annual value

NBC $1.6 billion $400 million

Turner $840 million $220 million

*

Past NBA TV Contracts

Four years (1986-90)

CBS $188 million $44.2 million

Turner $25 million $12.5 million

(first two years)

Turner* $50 million $25 million

(last two years)

Four years (1990-94)

NBC $600 million $150 million

Turner $275 million $68.5 million

Four years (1994-98)

NBC $892 million $224 million

Turner $397 million $99.4 million

* --Includes TBS and TNT.

Other Sports’ TV Contracts

NFL

Eight years (1998-2005)

ESPN $4.8 billion $600 million

ABC $4.4 billion $550 million

Fox $4.4 billion $550 million

CBS $4 billion $500 million

Baseball

Six years (2001-2006)

Fox $2.5 billion $416 million

ESPN $851 million $141 million

NHL

Five years (1999-04)

ABC-ESPN $600 million $120 million

NCAA Tournament

11 years (2003-2013)

CBS $6 billion $545 million

NASCAR

Eight years (2001-08) for Fox-FX; six years (2001-06) for NBC-Turner

Fox-FX $1.6 billion $200 million

NBC-Turner $1.2 billion $200 million

Note: ESPN’s baseball contract is for regular season only. CBS’ NCAA tournament contract includes Internet, marketing and sponsorship rights, plus rights to events such as the College World Series.