John Ourand: Only Winners in YouTube TV-Sunday Ticket Deal Are NFL, Companies Who Didn’t Get Rights
NFL fans across the country rejoiced when it was announced that Alphabet Inc. had acquired the rights to the league’s out-of-market games package NFL Sunday Ticket to put on YouTube TV. The league was deep into negotiations with Apple, but pivoted to YouTube TV when those negotiations reached an impasse in December.
Not everyone in the sports world is celebrating the deal, however. Sports Business Journal writer John Ourand and New York Post columnist Andrew Marchand discussed the agreement on the most recent episode of their podcast, “The Marchand and Ourand Sports Media Podcast” (discussion begins around the 20:44 mark). When asked to list his winners in the deal, Ourand mentions the NFL first and foremost.
“The NFL got their money,” Ourand explained when asked why the NFL was a winner. The league is getting approximately $2 billion per season from Google for the Sunday Ticket rights, a tidy increase of around $500 million over what DIRECTV was paying to hold the rights.
DIRECTV was next on Ourand’s list of winners in the deal. When asked why, he replied “DIRECTV has been losing a boatload of money every year [on Sunday Ticket rights]. DIRECTV tried to get out of this deal two years ago at $1.5 billion and the NFL couldn’t find anybody to get them out of the deal.”
Ourand then listed Disney, Amazon, and Apple as winners because they will not be saddled with the financial responsibility of Sunday Ticket’s rights. His issue is not with the deal itself, but rather with the nature of Sunday Ticket as a football product.
In Ourand’s opinion, Sunday Ticket is “one of the most overhyped packages that’s out there.” Because so many games don’t appear on Sunday Ticket, such as international contests and other nationally televised games, there’s less value to the package. That value is reduced even further by the existence of NFL RedZone, which shows the most important moments from NFL games at a fraction of the $300 annual subscription cost of Sunday Ticket.
Ourand’s skepticism regarding the wisdom of the deal for Alphabet/Google was echoed by market analyst Michael Nathanson of MoffettNathanson. Nathanson estimates that YouTube TV will have to attract around 4.5 million subscribers to break even on the Sunday Ticket deal. The package never garnered more than 2 million subscribers on DIRECTV, and since the NFL’s contracts with CBS and FOX require the league to keep Sunday Ticket at a “premium price,” potential new users might experience some sticker shock at being asked to pay hundreds of dollars for a streaming video product.
The NFL is still one of the most popular entertainment companies in the world, and YouTube TV will undoubtedly attract many new customers thanks to Sunday Ticket. But sports writers and media analysts are already wary of the deal, and YouTube will face an uphill climb to get its money’s worth from the agreement.
YouTube TV
YouTube TV is a live TV streaming service with more than 60 channels for $72.99/month. This plan includes local channels, 32 of the top 35 cable channels, and regional sports networks (RSNs) in select markets. The service includes an unlimited DVR.