HIGH ON CABLE
OAKLAND RAIDERS-L.A. COLISEUM V. THE NATIONAL FOOTBALL LEAGUE.
The suit began sending ripples of fear and loathing through the pro football Establishment as soon as the first litigious murmurs were heard three years ago. Even a man of such infinite calm as NFL Commissioner Pete Rozelle had dreams about it. Before the trial began on May 11, Rozelle said, "If Al Davis wins, we have chaos in the league. Each team can auction itself off to the highest TV bidder. The big cities get the big money. So long, Green Bay." He shook his head at the thought. "A team could sell its games to some superstation and encroach on other NFL territories all over the country," Rozelle continued. "Teams could do local pay TV deals on their own. They could kill the NFL."
Wait a minute. The suit that Al Davis, resident genius and managing general partner of the Oakland Raiders, and the Los Angeles Coliseum have brought against the' NFL is a fairly straightforward antitrust charge involving restraint of trade, isn't it? The crux of the Davis complaint is that the part of the NFL constitution known as Article IV, Section 4.3, which requires an affirmative vote from 21 of 28 team owners before a franchise can be shifted, represents an arbitrary and unfair restriction of free enterprise. Davis wants to move the Raiders into the Coliseum, which was vacated by the Rams in 1979, but the other owners vetoed his plan. Thus, he and the Coliseum sued the NFL not only for the right to shift the franchise but also for damages of $15 million. A verdict in Davis' favor would nullify what has come to be known as the 4.3 Rule. Right?
Basically, that's right—superficially right. That the league might lose control over who moves whose team to what town could be troublesome, possibly even chaotic, as Rozelle maintains. But on a more subtle level, many believe that Davis is really threatening something far more precious to the NFL than the 4.3 Rule. That would be its 20-year-old practice of giving every team an even share of all TV revenue.
Gene Klein, 60, is principal owner of the San Diego Chargers. He, Rozelle and Cleveland owner Art Modell make up the NFL's powerful television committee. Before he suffered a massive heart attack in late May this year, Klein testified passionately at the trial—against Davis. Then, outside the courtroom, he gave his version of the true size and shape of Davis' threat to pro football.
"The real success of the NFL is that strong teams in strong towns have no economic edge over weak teams in weak towns," said Klein. "The NFL sees San Diego as just as important as New York. In the Chargers' bad years we survived because of what we got out of our share of the league's TV revenue. Now that we've become a damned good draw, we can help others the same way those teams helped us six years ago.
"Obviously, the fact that the NFL shares television funding equally is what makes the league viable. But Davis sees a $10 million pot of gold at the end of the rainbow in Los Angeles. It is spelled g-r-e-e-d. He doesn't care about the other 27 teams in the league. If he gets away with breaking our constitution in this case, anything is possible. That is the crux of the entire thing, not merely forestalling a franchise shift. If Davis' ideas became reality—if he were allowed to keep all the L.A. pay TV money with no league share—it would ruin the league. I wonder whether Davis wants that."
Of course, Davis says no, he doesn't want that. "Pay TV revenue is not the reason I want to move to Los Angeles," he says. "The reason is that Oakland Coliseum officials and the city have ignored my requests for improvements. Meanwhile, I look around and see the Los Angeles Rams doing $5 million more at the gate than I am, and others keeping $2 million from special-box revenue that they don't share with the league. Of course, if we ever get to the point where larger revenue comes from pay TV than at present, I'm for taking it."
Does that mean Davis favors equal sharing of all such revenue? Davis says yes, but..."I don't believe pay TV is covered by the NFL rules, though the commissioner thinks it is. However, I do favor a continuation of sharing of TV revenue just as we do now."
Davis' lawyer for the NFL suit is Joseph Alioto, former mayor of San Francisco and an antitrust expert. Alioto, too, denies that Davis had any motives except to open a road for the Raiders to the L.A. Coliseum. Nevertheless, Alioto has an interesting thought about the allocation of pay TV money in the NFL's future. "This is my own notion, and you cannot attribute any of it to Al Davis," he says. "The NFL has a 75-mile TV blackout rule for non-sold-out home games. Someone is going to figure out that a team could open up that blacked-out zone to pay TV. If that 75-mile zone happens to be around New York or Los Angeles instead of Green Bay, that's a lot of money. The question is: Would the other NFL teams share that?" Alioto points out that the NFL already has set a precedent for not sharing revenue by allowing owners to keep what they take in from lucrative stadium executive boxes, parking and concessions.
Should the jury—which as of Sunday had been out for 12 days—decide in favor of Davis, the NFL would certainly undergo change. Whether the league would degenerate into chaos or the decision would merely mean the relocation of a franchise or two remains to be seen. But one thing will not change: The financial foundation of the league will remain—as it has for more than 20 years—firmly planted in the rich ground of TV megabucks.
Pro football is about to enter the last season of a four-year contract with CBS, NBC and ABC. As you read this, Rozelle is negotiating a new agreement extending through 1985. The package will be worth about $1 billion, with each club guaranteed approximately $8 million annually.
With the blossoming of cable and pay TV, one might expect Rozelle to be eager to reap their revenues. But no, he's going to stick with the commercial networks for another three or four years. "Over the years I had hoped we could use some kind of pay cable or subscription TV as a supplement to free television," he says. "When we had the full blackout of all home games, I thought something could be worked out with pay TV in home-team markets. But we lost the blackout, and it hasn't worked out. I still feel that when cable penetrates a lot more homes in the country than it does now, we can use it. Even then, though, it will only be supplementary to the networks. There may be a revolution going on, but this time we can't be the bellwether. Our value in this country is as an institution. We can't go only for the bottom line. It's a matter of public relations. And there's Congress to consider. It may not permit us to abandon the commercial networks. There is still going to be an enormous amount of money in pure cable and pay cable and all the combinations. But the combination of public responsibility and politics will still probably keep the NFL out of them—at least in terms of a total commitment—for quite a long time."
"We must protect and restrict the NFL package or we will have terrible overexposure," adds Klein. "We cannot have pro football seven days a week or six games on Sunday. In our last negotiations we walked away from $18 million because we wanted to restrict the number of Thursday night games to prevent oversaturation. I can see a lot of pay TV in the future of the NFL. Common belief has held that our agreements with the networks have excluded us from experimenting in pay TV. But I expect we will negotiate at least a small window in the next [1982] agreement so we could experiment with pay TV."
Throughout sport, the talk about pay TV and its big payoffs rises in crescendo and expectation every day. Even the players are talking about getting a piece of the action. During the recent baseball strike, the Yankees' Dave Winfield said, "Free agency and compensation aren't the only issues involved in our future and not the most important. Television and cable TV will be very important down the line. For what's at stake we may have to change the entire player-owner relationship as we know it." Yet despite the prospects of a bonanza, commitments by major organizations have been slow in coming. The Dodgers and the Angels have each sold 15 home games this season to ON TV, the Los Angeles over-the-air subscription television service (STV), for about 25¬¨¬®¬¨¢ per viewer. Similar deals have been struck in metropolitan New York and Philadelphia. Last month Wichita State became the first university to announce a sports agreement with a cable company. Next season Air Capital Cablevision will carry 15 of the school's basketball games. Subscriptions will cost $78.
By far the most ambitious pay TV package to date is the one recently announced by the Seattle SuperSonics of the NBA. If the NFL is cautiously looking for a "window" to pay TV, then the Sonics have built themselves an entire glass house—and we all know the risks of living in one of those.
The pay TV gamble in Seattle is somewhat surprising, because the Sonics have led the league in attendance the past three years, attracting a record average of 21,725 fans during their 1979-80 season. Still, the Sonics are going to put almost all their eggs in a TV basket next year.
Here's how it will work. The team has leased its own channel on eight major cable systems in the Seattle area. Together, these systems have 220,000 subscribers. Next season the Sonics will transmit over these channels 82 regular-season games, eight exhibition games, a few training-camp workouts and the club's segment of the league draft.
To receive this Sonics super package, a viewer must buy a TV "season ticket." It will cost $120, an average of $1.33 per game. Each subscriber's home will be equipped with a small box that will decode the scrambled signal. As an extra bonus, subscribers also will receive $120 worth of real tickets allowing them to attend games at the Kingdome.
Zollie Volchok, president and general manager of the Sonics, says the operation will cost the club about $1.2 million to set up. That means the team would break even if it sells the $120 TV season ticket to 10,000 homes. The Sonics will share any revenues with the production and cable companies. In a unique team/arena arrangement, the Sonics also will pay the Kingdome to make up for any loss of attendance caused by the TV deal.
According to Volchok, surveys indicate that the Sonics might realistically expect some 25,000 of Seattle's cable subscribers to buy the TV season ticket. That comes to a cool $3 million—not counting live gate proceeds, which last season totaled about $7 million.
Whatever happens, the Sonics' scheme is the first truly revolutionary step taken by a major team into the new environment of pay TV sport. The mind behind it all belongs to Sam Schulman, 71, chairman of the Sonics. He also is a partner in Schulman-Levin Productions, a Los Angeles-based motion-picture distribution company. "I've been thinking about pay television for many, many years," says Schulman, "but we had only been offered nominal amounts—so many pennies per game. For that kind of money, I thought I'd be prostituting my software." (When a sports entrepreneur talks about his software, he means the games played by his team.)
The first year, season tickets to Schulman's SuperSonic software will be good for cable only, but he sees over-the-air subscription television generating many more big bucks in the future. "In a couple of years," says Schulman, "we'll go on STV to reach those who don't have cable, and that will open up another 1,200,000 households. With any luck, over the next five years we could have 250,000 to 300,000 season subscribers, and when that day arrives, we can foresee taking in $30 to $35 million a year just from our channels."
Here again are those astronomical figures that sports entrepreneurs love to fling around whenever they discuss the potential of cable and pay TV. Are they real? Obviously, no one knows. But one factor in Schulman's Seattle operation that differs from most other existing cable or pay TV packages in sport is that he controls both the medium and the money. "This is an entrepreneurial approach rather than the accepted traditional concept of selling your software to a cable company for pennies," says Schulman. "We believe the huge profits forthcoming if our concept is viable should rest with us as long as we are willing to take the financial gamble with our own channel, our own production, sales, billing and the rest. It is our risk and therefore our gain."
But what of the rest of the NBA? There is no sharing among clubs of local TV revenues. A national CBS-TV package does guarantee each team roughly $1 million, but owners like Schulman see no reason why they should divide their spoils with anyone else—no matter how such inequities may damage the league. "If I'm successful, naturally I'll fight any plan for sharing," he says.
Schulman's brand of local opportunism is anathema to the share-alike purists of sport. The NFL's Klein is furious about the SuperSonic experiment. "What Seattle is doing in the area of pay TV is a disgrace to the NBA," he said. "It's totally adverse to the best interests of that sport. But Seattle can get away with it because the NBA isn't strong enough to stand up for the common interests of everyone."
True enough. But pro basketball is by no means the only sport facing the problem of owners who are less than selfless when it comes to dividing TV revenue. For example, Tom Villante, director of marketing and broadcasting for major league baseball, is concerned about potential TV problems facing his game. "I'm afraid in the short term there'll be a big increase in the gap between the haves and have-nots," he says. "Population used to be the governing factor in the success of ball clubs. The more you could draw from, the more money you made. Over-the-air TV evened out the population differences to some extent, but now with pay cable, we're right back to population. Owners in big cities can make a mint. But those in places like Kansas City, Milwaukee and Minneapolis have big problems.
"Some baseball towns have no cable TV at all. Others are saturated. And the gap will get larger in the next five years. It would be O.K. if all the extra money the big-city teams make is allowed to fall to the bottom line as pure profit. But if that extra revenue is used to gobble up all the talent around, then the imbalance among teams becomes worse and worse."
Is there a cure for baseball's potential inequities? Villante isn't particularly optimistic. "Sanity has a lot to do with it, self-control, self-discipline," he says. "I don't think baseball would go to across-the-board revenue sharing. It might be done with new dollars—sharing new pay TV revenue at every level. But it would take a three-quarters vote of the owners. I don't see any major change in the offing. The best thing would be if we could somehow start over. Reorganize and give each club, say, six million wired homes. Put them all on an equal footing at the start. Let the best marketing make the most money. Let the smartest guys finish first, not just the richest. These days too much is done on 'wallet wisdom.' The inequities are built in. I'm afraid they're going to get worse."
Eddie Einhorn, 45, the new president of the Chicago White Sox, is determined to overthrow all inequities—economic and otherwise—that have plagued his struggling club for many years. A former executive producer at CBS Sports and founder of the TVS network, which he sold to Corinthian Broadcasting for $5 million in 1973, he is considered one of the sharpest TV minds in sports ownership today.
Although reluctant to reveal details until the deal is finalized, Einhorn has come up with what he calls a "unique and complicated" television plan that includes the NBA Bulls, the NHL Black Hawks and the NASL Sting, each of which also needs all the help it can get. (The Cubs aren't expected to participate.) The four teams intend to buy or lease a station and form their own local all-sports channel. Because Chicago isn't wired for cable, the games would be on STV within the city limits and on cable in the suburbs, many of which are wired. Commercial TV might also be part of the package.
"We need additional income to survive, and the future is in pay TV of some form," says Einhorn. "We can't get enough money from commercial television alone. Last season the Sox [under Bill Veeck] didn't make $500,000 on TV, and that was televising virtually every game, home and away. We had the lowest TV revenue of any team in baseball last year—$3,000 or $4,000 a game. That meant if just 700 people didn't show up because the game was on television, we lost money. Trouble is, when you sell to commercial television, you're at their mercy. I'm not going to do stupid things like that anymore, not when I know the station gets $1.9 million from Budweiser just for eight spots on 60 games. That comes to more than $30,000 a game—and that's only one advertiser. Unless you have control, you're going to be taken advantage of."
Can pay TV save Chicago's troubled clubs? Given the proper setup, yes. Ed Norris, vice-president and general manager of WSNS-TV in Chicago, which broadcast Sox games for several years, says flatly, "If the Cubs came in, they would have this town by the tail." Modestly, Einhorn says, "We're not going to become billionaires with pay TV. All we want to do is stay out of the red and run contending ball clubs."
The idea of a local all-sports channel didn't originate with Einhorn. In New York, for example, a pay cable service called SportsChannel presents about 600 events a year, including Yankees, Mets, Islanders, Nets and Arrows (indoor soccer) games that aren't carried by local stations. Beginning this fall, SportsChannel also will broadcast a selection of Ivy League events in the New York metropolitan area. In New England the Boston Celtics and the Hartford Whalers recently created their own pay cable channel. And in San Diego discussions are under way to form a local all-sports cable channel that might become the bellwether for this type of programming.
Of the 350,000 homes in San Diego, 224,000 are wired. The largest operation there—or anywhere else in the country—is the Cox Cable system, with 211,000 homes. According to William Gruber, vice-president and program director of Cox-San Diego, the firm is preparing to launch a locally oriented sports-only channel early next year. "We will start slowly," says Gruber, "but what we envision is a channel devoted to anything happening in local sports, wrapped around national events as a supplement. It will be a broad-based package. Eventually, we would like to carry Padre, Clipper, Socker, L.A. Aztec and University of San Diego games. We'd like the Chargers, too, if NFL teams ever become available to cable. We would televise everything from one-time-only national events all the way down to high school games. We would complement the package with special feeds from the USA Network."
And the financing? "We would have to have advertising to supplement subscription fees," continues Gruber. "The idea of advertising on pay TV is said to offend a lot of people, but our studies have shown just the opposite. Seventy percent of the people said they wouldn't oppose advertising if it kept their costs down and didn't interrupt the flow of the shows. In other words, no time-outs for TV. The commercials would be only at the beginning of games or at the end of periods. If we could supplement a sports channel with advertising, I think we could offer it for $6.50 a month."
What kind of penetration might the channel have? Says Gruber, "Sports is a specialized area. I think a maximum we could hope to reach is 50% of our subscribers. I see pay TV as a supplement for most teams—albeit one that can create profits where it was break-even or a loss before. I see the big leagues continuing a blend of pay TV and network television for a while on a national basis. Also, I have no doubt that local subscription revenues alone will never be large enough to support sports on pay TV stations. Ultimately, our revenue will come from a combination of advertising, share feeds to other stations and subscriptions."
However it happens, we are moving into an era when television rather than the box office will generate the largest source of revenue for most major sports. Today, even NFL teams don't make the bulk of their money from television. Some are close to 50%, but the ratio is roughly 40% TV, 60% stadium tickets, parking, concessions, programs, etc. In baseball, the standard formula is 30% TV, 70% other sources. On the average, TV accounts for 20% of an NBA team's total revenues. For hockey clubs in most U.S. towns, TV income is low or nonexistent, perhaps 15% of all revenues. Soccer is worse. John Daley, the president and general manager of the Seattle Sounders, estimates that television represents but one-tenth of 1% of his club's income.
In the future these ratios will vary considerably from sport to sport and city to city. In a megalopolis like the Los Angeles area, which ultimately will enjoy maximum saturation by any and all available forms of TV transmission, the change could be extreme. Lakers owner Dr. Jerry Buss is locked into a five-year agreement with ON TV, a deal sealed before Buss bought the team two years ago. Buss isn't happy now, but the future seems wildly promising. "We get seven cents per set now," he says. "Next year it goes to eight. That's pennies, 6% or 7% of our overall income. But by the time our contract runs out in 1984, a million sets should be equipped for pay TV in Los Angeles. Assume that just 25% of them subscribe, paying something like $80 a season. We'll gross $20 million. Eventually I would think we should be able to depend on something close to 90% of our income from pay TV systems."
But what will happen at the Forum then? What will happen in all the King-domes and the Spectrums, the Gardens and the Coliseums of the land? Will they all become yawning canyons of empty seats, monuments to sportsmen's greed? For decades conventional wisdom has held that TV kills the box office. This axiom is carved on stone tablets, engraved on bronze plaques in center-field, written in God's own smoke across the sky. As it turns out, the axiom is probably wrong. Willard Nichols, former chief of the cable bureau at the Federal Communications Commission and now administrative assistant to the chairman of the commission, says, "Over and over our studies have shown that cable TV does not have an impact on the live gate. If there's a competitive team in town, no matter what the sport, people go to the game."
"What hurts the gate in the NFL is not TV but a losing team," says Rozelle. Adds Gene Autry, a cable TV entrepreneur in several cities and owner of the California Angels, "We have not found that TV hurts our attendance at all. It probably helps. If we're playing a three-game series with the Yankees at home and we telecast the first game by pay TV, we usually find that the attendance for the next two games picks up."
Tom Villante spent 20 years in advertising before coming to Bowie Kuhn's office two years ago. He says, "TV is the most potent sales force known to man. TV sells your ball club. It's an energizer. There has never been a case in which, when the TV ratings went up, the gate went down. What hurts the baseball gate is what else is on TV. In the early days clubs weren't hurt by the televising of their games but by The Milton Berle Show and I Love Lucy."
To Villante's way of thinking, the type of TV that is most destructive today is the baseball beamed out by the three superstations: WTBS in Atlanta, which, in a non-strike year, broadcasts 150 Braves games by means of 3,250 cable systems, some so small they have only 200 subscribers; WGN in Chicago, which does 146 Cubs and 64 White Sox games by means of 1,548 systems; and WOR in New York, which airs 100 Mets games by means of 890 systems. The superstations rain games down on all 50 states and have a total potential reach of perhaps 21 million viewers.
Because of their enormous range, the superstations can create pockets of Braves, Cubs, White Sox or Mets fans among people who live thousands of miles away from the cities where these teams are based. Says Villante, "Ted Turner's station is carrying all those Atlanta games to a kid who lives, say, in Cleveland. The boy gets this tremendous load of Braves games on his TV, and he gets to love the team. Well, that's how you fragment a local baseball market. What good is a kid who lives in Cleveland carrying around an Atlanta Braves pennant? Not only is he not a fan of the Cleveland Indians, but he isn't even a fan of the American League. He's the least productive fan in all of sports."
Troublesome—and popular—as the superstations have been, many TV people think they're already dinosaurs of a kind. Even Robert Wussler, former president of CBS Sports and now executive vice-president of Turner's cable operations, says, "The economics will not be the same again, and there will be no more superstations. There is no way to control who watches them. Sports on TV in the future will be increasingly local, increasingly focused on specific sports, specific teams, specific fans."
They call this narrow casting, and what it means' is that sheer bulk numbers will no longer be the one and only standard for measuring success on TV. "There is a growing opinion that the way the commercial networks work is a terrible waste of money," says John A. Ledingham Jr., assistant professor of journalism at San Diego State. "Shows that aren't pinpointed to specific markets aren't going to cut it much longer. When the advertiser is given the option of reaching a researched and pinpointed market, he will move away from the networks' hit-and-miss markets in favor of the specialty market."
At long last the all-powerful standard of Mass Appeal will become far less significant. For once, there will be a place for programs—and sports—of Mini Appeal. There will be a place—and a reason—for television to cater to the wants and whims of the minority, the eccentric, the off-the-wall outcast who likes things that don't appeal to the masses.
Hockey is a perfect example. Jerry Buss, who also owns the Los Angeles Kings, says, "Why won't hockey work on NBC or ABC or CBS? Because it doesn't have the mass popularity the networks must have. To survive on advertiser-supported networks, a program has to get 25% of an audience—of a national audience with every kind of individual in it—or the economics fall flat. Get 25% or die! But on a pay channel, there's no difference between getting 1% or 10% or 100%. The only thing that matters is how much money you take in through subscriptions. On those grounds, hockey can make it on TV."
Says Don Ohlmeyer, president of NBC Sports, "God knows, there must be at least one million homes in this country with hockey freaks—right? Say you get those one million hockey nuts to pay $3 a week for a full menu of hockey—every night, every day. That brings you $3 million a week. You spread that over seven months of the NHL season, and you've made a fortune. It will happen, and it's what will save hockey."
This is the kind of fragmentation that television sport faces. A channel for everyone and everyone for a channel: a hockey channel, a soccer channel, an indoor-soccer channel, a trash-sport channel, a channel for sport scandals, a channel for Christian athletes, a channel for Little League, a channel for Notre Dame, for USC....
For the better part of four decades, people of all ages, from all regions, with all imaginable ethnic roots and individual eccentricities have been fed the same selection of events by the commercial networks. But with the new fragmentation the choices will be enormous. Allie Sherman, former coach of the New York Giants and now senior sports consultant for Warner Amex Cable Communications, is enthusiastic about the prospects of non-homogenized TV sport.
"What we will have is the ability to customize, to personalize, to deal with sports on a regional basis," he says. "There's a huge historical love affair in this country with high school and small-college teams. You go into towns all over the U.S. on a Friday night or Saturday afternoon—they're empty! Everyone's at a football game. Those towns have sports traditions that won't quit. Grandfathers played against grandfathers; now grandsons are playing against grandsons. We can do high school rivalries. We can show a game two, three, four, five times. Kids can come home and watch themselves play. My God, it's so exciting, and there's nothing wrong with it economically. We don't need to satisfy advertisers. We have the channels to do it. The emphasis is going to be on individuals, on the grass roots."
These things are all part of the wave of the future. However, the future hasn't arrived, and despite the euphoric forecasts for cable and pay TV in sports, the commercial networks are still the dominant force. And they probably will remain so for several years. Even such a cable-oriented executive as Gerald Levin, vice-president of Time Inc.'s video group, says, "The networks will continue to deliver the single largest mass audience, and, thus, they will continue to have the showcase events. The networks are still the best way to merchandise a sport, because you can reach the largest number of people with a single exposure."
Most broadcast people agree with Levin that, no matter how much money might be pouring out of the pay TV cornucopia, the commercial networks will hang on to the so-called "jewels" of sport, meaning the likes of the Super Bowl, the World Series, the Olympics. Yet there is just enough evidence to the contrary to suggest that we also may be ready for quite another kind of future for the jewels.
In 1979 ABC won the rights to the '84 Olympics in Los Angeles with a whopping bid of $225 million. No surprise there. But what's not so widely known is that Jerry Perenchio, part owner and operator of ON TV, bid $190 million. His tender was second only to ABC's. Even if Perenchio had been highest, it's doubtful that he could have guaranteed enough U.S. homes for the International Olympic Committee to have awarded him sole rights. But remember, the bidding was done two years ago, and since then the technology of pay TV has been vastly improved.
Peck Prior, 60, a veteran of commercial television and the former director of media for the Los Angeles Olympic Organizing Committee, explains how things might have been different. "After ABC won the bid, under terms of the contract it had to begin paying on the package right away because the Olympic Committee had to have money to get things started," says Prior. "However, if this committee had had the financial stability to wait until 1983 to sell the TV rights, we probably could have gotten five or six times as much as ABC paid. We might have gotten a billion dollars." No commercial network could have afforded that amount of money. Only pay TV could have come anywhere near such a figure. Who knows what new power—by 1988—will be able to afford the Olympics.
Then there is the Rose Bowl. Last summer the commercial networks had been so eager to obtain the rights to the 1983 Rose Bowl that CBS and NBC got into a desperate bidding contest that boosted the price of that single game to $7.2 million. This past June, for the first time, The Granddaddy of Them All allowed non-network organizations—meaning cable and pay systems—to join the bidding for the games of 1984, '85 and '86 as a package. The only requirement was that the newcomers guarantee a minimum of 20 million subscribers. Before the bids were opened, William Nicholas, chairman of the Tournament of Roses Football Committee, said, "We didn't make a long-term contract with NBC because the cable people told us not to. I don't think $25 or $30 million for one Rose Bowl game will be out of line."
Well, it was out of line, for the time being, anyway. It wasn't a cable system that came up with the money, but NBC again. Having lost the NCAA basketball tournament to CBS, the network couldn't afford another fumble. To keep the Rose Bowl bouquet that it had held since 1952, NBC bid $33 million for the package. As it turned out, no cable or pay TV network could guarantee 20 million homes. Thus, the future didn't make its appearance in Pasadena in June.
Still, the direction in which things are moving is clear. The Liberty and Senior bowls both have jumped to cable (the former will be carried by commercial stations and the USA Network, the latter by ESPN), and it could only be a matter of time before other bowls take the same route, along with all manner of other one-of-a-kind events: the Kentucky Derby, the Masters, the British Open, the Indianapolis 500, the NCAA basketball finals....
Some visionaries even believe such gems as the Super Bowl and the World Series will eventually go up for auction to the highest bidder. Says Gustave Hauser, chairman and chief executive officer of Warner Amex Cable Communications, "One of these days the people who run pro football or baseball are going to wake up and say, 'Hey! God didn't ordain it on Mount Sinai that everyone has a right to watch pro football and the World Series free but has to pay to watch all the big boxing matches. God didn't really do that, did He?' And if God didn't do that, then why am I doing this? Who said I wanted to be a national institution and give my best products away for free? If God didn't ordain it, then to hell with it."
A lot of people disagree with Hauser, people who believe that God did ordain that Americans have an inalienable—even a divine—right to receive such events as the Super Bowl and the World Series for free. Many of these people think Congress would prohibit any move that would curtail the number of TV homes that could receive these sporting jewels.
Such Congressional action is certainly possible. Yet one must ask: Would Congress really force NFL owners to sacrifice huge sums of money that they have every right to get? Would Congress really dictate what owners should do with their own teams? Well, no one knows. Congress is nothing if not capricious.
However, whether it be an act of Congress or an act of God, nothing can undo the fact that televised sport in the U.S. is in the throes of a revolution. The old systems are passing. Precisely what new forms will replace them is impossible to foretell. The vast variety of possibilities is, in itself, exciting. The promise of something new, something better, even something merely different can only be stimulating. So, stay tuned. No sports fan worth his salt ever enjoyed a game if he knew how it was going to end.
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An apartment building in Manhattan, New York City's only borough with cable TV, gets wired.
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If Davis is able to move his team to L.A....
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...chaos would beset the NFL, says Rozelle.
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Klein has one word for Davis' motives: greed.
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Training in Denver, future cable installers learn how to free their hands by tossing balls around.
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In metropolises like New York City, television cable is run underground rather than along poles.
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Schulman sells "season tickets" to Sonics games on pay TV.
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Nichols' studies show that cable doesn't hurt the gate. Perenchio's Olympic tender was second only to ABC's.
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Buss says his Lakers will take in $20 million from pay TV in 1984.