THE 28-MILLION-DOLLAR DEAL
One day last week a pink-and-white plant with shiny green leaves arrived at the New York offices of National Football League Commissioner Pete Rozelle. Technically, the plant was Azalea indica, and spread over its shiny green leaves were three small oblong cards, each decorated with a galaxy of dollar signs. On one card was written "CBS Television Network," on another, "NBC Television Network," and on the third, "ABC Television Network." Rozelle examined the plant, which had been sent to him by a friend in the advertising business, and noticed a Band-Aid box bearing a message leaning against the stalk. "Exercise care in opening envelopes," the message read. "Paper cuts."
Forty-five minutes after the arrival of the Azalea indica Pete Rozelle opened three large, plain envelopes and emerged unbloodied—his hands dripping with green instead of red. Each of the envelopes contained a preciously guarded bid for the 1964-65 television rights to the NFL's regular season games. Rozelle's announcement that CBS-TV had won those rights by bidding an unprecedented $28.2 million produced staggering reactions up and down Madison Avenue, at the television networks themselves, among sports fans and sports promoters the country over.
In California, Walter O'Malley, the owner of the Los Angeles Dodgers and a pretty good man at assessing situations, said, "I flipped. It's a tremendous compliment to the NFL. It shows great intelligence, good planning and fine foresight. It is also solid proof of the great national interest in sports. It is great for sports and a great tribute to sports."
As the chart at right indicates, sports are booming on television now as never before, and the $150 million spent on sports by advertisers in 1963 will easily be surpassed this year. The $28.2 million bid by CBS and the unsuccessful bids of $26.1 million by ABC and $21.5 million by NBC give a clear indication of what is going through the minds of the men in the nation's networks and advertising agencies.
Ever since last August, William C. MacPhail, vice-president in charge of sports at CBS, had been concerned about keeping the rights to NFL games on his network. Two years ago, when CBS last negotiated for the NFL rights, it paid only $9.3 million, "but everyone knew that the price would go much higher this time. Speculations ran from $14 million to $20 million, and throughout the offices in Ulcer Gulch pools were formed to guess the correct bid. People with access to ratings noticed that from 1961 to 1963 the audience had increased by 50%. The presidents of all three networks thought deep presidential thoughts of how high they might have to bid to get NFL football—the biggest single sports showcase in the TV industry. "The thinking within television and within advertising is that when a network says it has NFL," an advertiser said last week, "it really has something. I believe that if the American Broadcasting Company could say that it had NFL it would open up areas for itself that it could not open up otherwise. There are a lot of two-station towns in America, with one station handling CBS, the other NBC. If ABC could get that foot in the door it could drag in some of its other things."
Six weeks ago NBC won the 1964-65 rights to the Saturday afternoon college (NCAA) football games by bidding $13,044,000—$2.8 million more than CBS had paid for the 1962 and 1963 seasons. This brought the normal long-range war between CBS and NBC down to almost hand-to-hand combat. Recently Richard S. Salant, a vice-president of CBS-TV, made a statement that almost sums up this feeling of competition. "I don't sleep well when I'm losing," said Salant, "and I love to sleep." William R. McAndrew, an NBC-TV executive vice-president, stated it more crisply: "We intend to kill them—clean."
Upon winning the college games, NBC thought it could then gain the NFL and figured its bid adequate. With the NFL defeat, NBC executives fled the bid meeting in Rozelle's office with heads bowed. MacPhail's head, of course, was high. For weeks he had been lying awake nights, and when he arrived at the meeting he was floating on a $28.2 million dream. Once he found out that he had won the rights he puffed a sigh of relief, then a Marlboro, settled back and tried to relax. "This has been no kidding matter," he said. "This whole thing has been just fraught with emotion. By me. By Mr. Aubrey [James T. Aubrey Jr., the president of the network]. By the advertisers. It's an image thing and everybody wants the image. Wants the NFL."
The National Football League will distribute its freshly-harvested television money at the rate of $1 million to each of its 14 teams for each of the next two years. "I can remember just eight years ago," said Rozelle, "when the Green Bay Packers signed a television contract for $35,000. People kid me sometimes about the cliché that on any given Sunday any team in the league can beat any other team. Well, if each has a million dollars before the season opens that should certainly make that cliché more true. Think of the expenses that the $1 million will take care of." (The cost of running an NFL team ranges between $1.4 and $1.8 million a year.)
For MacPhail and for CBS-TV their new contract offers a problem, best expressed by MacPhail's own secretary when she heard that CBS had acquired the NFL games. "Bill," she said, "the whole office is jumping up and down. Of course, we realize that some of us may have to take a cut in pay." To get its $28.2 million back, CBS will jack up costs to advertisers from $40,000 a minute to between $55,000 and $60,000. It will add more commercials. Next fall CBS will also give viewers doubleheaders—probably five of them. For example, a Giants-at-Steelers game shown in New York would be followed by a game from the West Coast. The time difference would work out just right.
Bob Reynolds, the president of the Los Angeles baseball Angels and the owner of radio station KMPC in Los Angeles, says that the huge NFL-CBS contract "is a clear forerunner of what is likely to happen in baseball and other sports. Sports may find in network television what they may have been expecting from pay-TV. This may be the networks' way of keeping pay-TV out of the sports market." And last week baseball men were hard at work on a plan that would give each team equal moneys for a nationwide, prime-time Monday night game, plus Saturday and Sunday games. Under this plan some baseball people see a $40 million yearly contract.
The $40 million dream may or may not come true, but CBS obviously is prepared to bet that TV advertisers and their customers are ready to pay $28 million-plus for NFL football right now.
[originallink:10519351:42879]
PHOTO