The 300 Club

If the modern sports landscape has a Big Bang moment—the inflection point that sent sports stuff spinning off into the surrounding empty space, spawning everything we love and hate about the games we play and the financial activity that buzzes and hums all around them—it arguably happened 45 years ago this week.

June 9th, 1960. The American Football League and American Broadcasting Corporation agreed to a television deal worth just under $2 million annually. At the time, it was a watershed moment for the AFL. The revolutionary deal established revenue sharing across the entire league, money that was critical in keeping all of its member clubs solvent and competitive with the then-monolithic National Football League.

READ MORE: Playmakers, The Show the NFL Killed For Being Too Real

Of course, none of that is what makes ABC-AFL deal the most significant business transaction in professional sports history.

We know what you're thinking. Two million dollars? Chump change. Revenue sharing? Duh. Sports on television? What sport—or sport-like substance—isn't on television? The AFL? Didn't it merge with the NFL? Fair enough. But think things though. Go back in time.

In 1960, sports were massively publicized, a standby in newspapers and on the radio. That said, they hardly qualified as big businesses. Even as late as 1971, Stanford sports economist Roger Noll told the San Francisco Chronicle, "Professional sports is not very big as an industry... It's something like half the size of canned soup."

Sports owners and executives were dreaming much, much bigger than canned soup. Enter the ABC-AFL deal, which turned television not just into a new way for fans to watch their favorite teams, but also gave the league a massive revenue stream from a source that wasn't dependent on butts in stadium seats.

NFL commissioner Pete Rozelle swiftly realized his league needed to get in on this action, but a two-year, $9.3 million exclusive contract with CBS for the 1961 and 1962 seasons was blocked after stations that had entered into rights agreements with individual teams successfully challenged it under the Sherman Antitrust Act. The AFL didn't face this problem—as a new league, there were no pre-existing partners to challenge its deal. By contrast, the NFL's effort to pool all of its rights deals and sell them as one package was ruled to be monopolistic, suppressing market competition for media rights.

Naturally, the NFL wasn't going to let something as trifling as federal law stand in its way. Rozelle lobbied his buddies in Congress and within a few months, Public Law 87-331 was on President John F. Kennedy's desk, waiting to be signed. This piece of legislation is better known as the Sports Broadcasting Act of 1961, and it was the single most important law in transforming American sports into the 24-hour televised circus it is today.

The Sports Broadcasting Act ruled that antitrust laws "shall not apply to any joint agreement... by which any league of clubs participating in football, baseball, basketball, or hockey contests sells or otherwise transfers all or any part of the rights of such league's member clubs in the sponsored telecasting of the games... engaged in or conducted by such clubs."

In other words, the NFL's pooled TV rights deal, like the AFL's, was now legal.

The transition into the televised sports era began in earnest here, as sports leagues realized the power of television in both spreading their games and as a revenue stream. Over the next decade, the sports industry ballooned in size. The professional football ranks—AFL and NFL combined—grew from 12 teams to 26 and Major League Baseball expanded from 16 teams to 24. Revenues grew in kind, as monopoly profits tend to do. The professional ranks were not the only beneficiaries, as ABC and the NCAA entered into a $12.1 million per year deal, one that led UCLA sociologist Dr. Harry Edwards to claim television was "the savior of collegiate sports" in his 1973 work Sociology of Sport.

Without the Sports Broadcasting Act, the NFL's $1.9 billion per year contract with ESPN and $1 billion per year contract with DirecTV, the NBA's upcoming nine-year $24 billion dollar deal with ESPN and Turner Sports, and MLB's upcoming eight-year, $5.6 billion deal with ESPN would all be illegal under antitrust law. These deals guarantee franchises in the tiniest media markets—or franchises that are consistently losing or just poorly run—can stay afloat. "What Pete Rozelle did with television receipts," legendary Packers coach Vince Lombardi said of the Sports Broadcasting Act, "probably saved football in Green Bay."

Believe it or not, while leagues and owners have profited immensely of this arrangement, its beneficence is much less clear for the rest of the sports world. The costs of these gigantic rights deals are passed down to cable subscribers—sports fans or not—to the tune of somewhere between 75 and 110 dollars per year as calculated by the website What You Pay For Sports (and detailed here by our own Patrick Hruby), rates that will only rise as the next wave of deals kicks in. The power granted by the Sports Broadcasting Act has also made it difficult for upstart leagues like the World Football League and United States Football League to get mainstream broadcast television space, and it has even been used—albeit unsuccessfully—as lockout insurance for NFL owners.

Television created what it means to be a sports fan for many Americans—most of us born after 1961, and Millennials like myself in particular—and gave us unprecedented access to our favorite teams. It also created a world in which the monopoly power of the major sports leagues was only enhanced, leading to the largesse and excess that defines American professional sport today. The future of televised sport is unclear, as the Internet is threatening to throw the sporting landscape into disarray in the same way television did half a century ago. But whatever happens, the AFL-ABC deal and the televised sports revolution that followed changed the path of sports history forever.

big things have small beginnings,

that line was the only part of prometheus that made any sense,

throwback thursday

June 24, 2015 Ty Schalter

IS THE NFL-YAHOO STREAMING DEAL THE START OF A SPORTS TELEVISION REVOLUTION?

Last week, National Football League fans heard their wind chimes flutter in a brief gust of wind. Entertainment lovers thought they felt a couple drops of rain. Tech-sector observers saw the barometer fall.

And that was it.

When the NFL announced that Yahoo had acquired global streaming rights to a single regular-season game, millions of people who love football, watch television and use the Internet didn't even notice. Many of those who did notice didn't care. And perhaps they were right to put it out of mind--maybe that's the last we hear of the NFL partnering with tech companies for years to come.

Or maybe, just maybe, the deal foreshadows a coming media storm that could radically alter sports, TV and technology forever.

READ MORE: Throwback Thursday: The TV Deal That Created Modern Sports

The game itself couldn't be less significant, or more perfect: A mid-season snoozer between the Buffalo Bills and Jacksonville Jaguars, kicking off at 9:30 ET on a Sunday morning. The two home TV markets (second- and third-smallest in the NFL, per StationIndex.com) will still get the game over the air—so only NFL diehards will be waking up early and directing their phones, tablets and computers to Yahoo.

Internationally, those who don't or can't pay for the NFL's GamePass international streaming service will finally be able to tune in to a live match at a reasonable hour. As part of the NFL's International Series, this game holds particular interest for those audiences. It should be a great test of global demand, not to mention Yahoo's ability to deliver.

Unlike the game, however, the deal itself is fraught with long-term significance, raising a number of serious questions: Why hold this game back from traditional broadcast partners to stream it "over the top," in industry parlance? Why choose Yahoo as a partner?

More importantly, what does this potentially mean for the future of NFL viewing, subscription TV, and the tech sector?

"Huge changes are coming to this market," Dave Warner, proprietor of WhatYouPayForSports.comtold VICE Sports, "and streaming will grow as a result."

For decades, the NFL and its network partners have enjoyed a lucrative, symbiotic relationship, the same relationship driving economic growth across all sports. The league sells games to the networks. The networks use those games to sell advertising, and also to charge cable and satellite providers more money to carry their programming. That money funnels back into the next round of NFL broadcast rights negotiations, and the overall pie keeps getting bigger.

Everyone wins—except for pay TV subscribers whose monthly bills continue to rise and rise, even if they never watch NFL games in the first place.

On-demand and live-streaming TV options threaten this business model by allowing viewers to cut their cable and satellite subscriptions, abandon bundled network programming and instead pay just for the shows they want to watch. And this isn't just theoretical. Over the last half decade, members of the 18-to-34 demographic coveted by advertisers have forsaken pay TV at astonishing, accelerating rates.

Per the New York Post's Claire Atkinson, the number of young adults watching traditional prime-time TV has fallen by nearly 20 percent over the last four years. Meanwhile, the subscription-streaming market grew by 22 percent in 2014 alone. A generation of viewers is moving to streaming, the same way a generation of listeners abandoned albums and CDs for individual song downloads. Advertising dollars are sure to follow. If the NFL wants to keep growing its revenue base, it has to make its product available to those cord-cutters and cable-nevers, too—and that means cutting streaming deals like the one with Yahoo.

In the near-term, however, the league already sold most of its inventory to its traditional partners—and at very handsome rates.

"The NFL can't unbundle if the networks won't do it with them," Janko Roettgers told VICE Sports. Roettgers, Senior Silicon Valley correspondent for Variety, sees very little opportunity for the NFL to grow into the streaming space, at least in the short run. "The current network partnerships have been very lucrative for the NFL, so they won't give up on them that easily—and they also can't, given that most rights are locked up for at least another five years.

The only immediate hope for the NFL to reach these new viewers are new TV services that offer skinnier or more flexible bundles."

Some of these services, like SlingTV, have already tried serving up major sports in the U.S. Sling attempted to simulcast 2015's Final Four semifinals, only to get swamped by demand. Similar troubles befell ESPN's WatchESPN service during the 2014 FIFA World Cup.

According to Warner, the stakes in this deal are much higher for Yahoo than the NFL. If the viewing experience is poor, Yahoo will be widely criticized, and the traditional NFL audience will barely notice.

On the other hand, the possible upside for both entities is huge.

"If that platform can handle the stress," Warner said, "Yahoo comes out smelling like a rose." Per Re/Code's Peter Kafka, Yahoo paid at least $20 million for the rights to stream just this one insignificant game—a "drop in the bucket," Warner said, compared to the NFL's billions. Yahoo will then stream it globally for free, earning back only ad revenue off the CBS-produced feed. It's this commitment to free streaming, The Wall Street Journal's Yoree Koh reported, that sealed Yahoo's win over Twitter and others. For a company struggling to find its post-search-engine future, live NFL football is a glorious get.

"In the end," Roettgers said, "Yahoo's NFL deal may be more symbolic: The company is trying to prove it can play with the big guys in the video space, which may help it to get some ad dollars for even some of its lesser-known projects. It's a good marketing investment." The deal could also lend credibility and traffic to Yahoo's in-house NFL editorial.

Depending on how well Yahoo's feed is received, and how big the audience is, Roettgers' "big guys" could open their massive vaults. The NFL engaged Google, Apple and Amazon in the bidding for the Yahoo game, per Variety's Todd Spangler, and Roettgers sees the 2016 renewal of CBS's Thursday Night Football slate as the first real opportunity for the tech giants to usurp the NFL's current partners.

Ultimately, that could be game-changing.

already expressed excitement about.

The best-case scenario for the NFL? Apple blows out the price curve for league content in 2016, leading to eye-popping Silicon Valley deals at the end of the decade, just as a shift to streaming hits a critical mass and the NFL's current deals with CBS, FOX, ESPN and DirecTV all expire.

Warner isn't sure that will happen. At least not quickly.

"I suspect this [Yahoo-style streaming deal with a tech company] is once-a-year thing at best," he said. "For other games in their regular time slots, the NFL will probably just stick with existing partners that already do streaming, like ESPN and NBC. WatchESPN is still tied to cable right now, but if Sling TV and Apple's TV service move enough people off cable, we might see that change in the far future."

"I don't think much if anything will change for the next five years," Roettgers said. "After that, all bets are off. But five years is like five decades for internet TV, so ask me again in 2019."

As time and technology march forward, it's hard to imagine that the NFL's massive rights deals with old-school broadcast conglomerates—the envy of every other American sports league—will continue into perpetuity. Already, the NFL's competitors are moving quickly to establish their own streaming services. The NBA just announced single-game and single-team streaming packages for next year, according to Ira Boudway of Bloomberg Business, unbundling its NBA League Pass product and putting pay-TV carriers on the defensive.

Major League Baseball led the way with MLB.tv for out-of-market viewers, and according to John Ourand and Eric Fisher of SportsBusiness Journal they're working hard to expand it into local markets where regional broadcasters hold TV rights. An NBA-like unbundling could end-around these providers entirely.

As for the NFL? "DirecTV already offers NFL Sunday Ticket as a streaming service," Warner said, "but only to apartment-dwellers whose lease prevents them from having satellite TV." The league also offers the GamePass streaming product to fans outside the U.S. Technically, everything already is in place for the NFL to go over-the-top, either directly or with a partner. One its traditional current deals expire, widespread streaming and on-demand games could become a reality—or not, depending on the media market, currently in so much flux it's impossible to tell who, exactly, will be bidding for football in the 2020s. Will Google, Apple and Amazon really jump in? Will independent TV networks and satellite providers like CBS and DirecTV still be competitive—or will they be snatched up beforehand by tech giants, as NBC was by Comcast?

With live sports as the biggest driver of appointment eyeballs, and the NFL's position as the king of American sports, Silicon Valley bidding wars for global live streaming rights could dwarf previous auctions. On the other hand, sports fans getting used to watching basketball, baseball, hockey and soccer wherever and whenever they want could quit waiting all week for Sunday rights—leaving the NFL's pull on those coveted young viewers greatly weakened.

Many football fans didn't even notice the Yahoo deal happened at all, and few will fret about this unenticing game disappearing from the Sunday slate. Yet its ripple effects could eventually change how we watch football forever—and in turn, the NFL itself. Sometimes a breeze is just a breeze. Sometimes, it's the start of a storm.