(05-06-2014 10:19 AM)Frank the Tank Wrote:  

(05-06-2014 09:56 AM)blunderbuss Wrote:  Frank, do you have any actual hard numbers on your claims that there's essentially evidence of a bubble for sports? I'd love to see some real backup (ie, ratings, attendance over time adjusted for population growth and time value of money... stuff like that) for some of your statements.

(05-06-2014 09:15 AM)Frank the Tank Wrote:  In fact, the whole reason why sports rights fees have continued to rise is because sports consistently to outperform all of those alternatives on a relative basis. Even the most successful movies today are making a fraction of successful movies from 20 years ago on an inflation-adjusted basis, while the top-rated TV shows from today would be canceled if they received the exact same rating in the 1990s. That hasn't been true for sports - attendance and viewership have continued to rise despite the increasing prevalence of alternatives on TV and the Internet.

I'll pull some other stuff, but here's a look at MLB attendance for the past 60 years compared to population growth (and baseball is the sport that, on a relative basis, has lost popularity compared to football and basketball during that time period):

http://beyondthescorecard.blogspot.com/2...rends.html

The overarching point is that the "golden days" of baseball when it was the clear #1 sports in America (i.e. the Mickey Mantle/Jackie Robinson days) saw much lower attendance numbers (both outright and on a population-adjusted basis) than today.

Now, could we be seeing an attendance downturn compared to the relatively recent past (i.e. 2004 vs. 2014)? Sure, and that's why I've pointed out that sports teams certainly aren't in the clear in the future. I just push back on the automatic assumption that I see from a lot of people that high valuations automatically constitute a "bubble". You have to look into the basis of such high valuations and determine whether they are sustainable. Revenue growth in sports might slow down or flatten out compared to now due to the factors that I've pointed out, but I'd challenge the notion that they'd actually fall or crash (which is what eventually happens to a true bubble that bursts).

There are so many factors in play, it's hard to identify where the overall trend might be. I agree with the observation that baseball attendance grew with the increase in the number of night games. Americans also have had significant increases in disposable income and methods of transportation to games has gotten generally better. Recent flattening in attendances is undoubtedly due to substantial increases in ticket prices and the availability of games on HD TV. In addition, teams have moved to smaller stadium sizes, in part to create scarcity to drive advance sales and allow increased ticket prices.

The seat in the student section that I sat in during the 1980's as a Syracuse student now goes for $125 per game. The seat I paid $12 for at Fenway Park in 1990 now goes for $300. Those prices will flatten attendance in a hurry, but drive revenue through the roof. In most cases, teams have added amenities to improve the live game experience to help justify the price. A lot of it, though, is that die hard fans had always been willing to pay more, but prices were set to get the casual fan in the door to fill oversized stadiums. Now prices are set closer to what the market will bear.

With respect to TV, ESPN and Regional Sports Networks have been successful in using the rabid nature of fans to leverage themselves onto basic cable tiers at premium prices. As competing methods of video programming delivery gain traction, there is a risk that these networks will not be able to sustain their current arrangements. However, there is no reason to believe that this will lead to a collapse in TV rights payments, although possibly a flattening. My view is that, if this occurs, a greater burden will be placed on the die hard fan to pick up these costs.

Looking at ESPN specifically, they collect around $6 billion per year in cable/satellite subscription fees. However, most of this goes to pay the NFL ($2 billion), MLB ($700 million), NBA ($500 million), and the College Football Playoff ($540 million). In an unbundled world, the most valuable of these, like the NFL and CFP would move to a Pay Per View model. Specialty channels, like the SEC Network, would move to a premium tier with monthly subscriptions charged only to those who want the channel. The remainder, including a variety of regular season games, would be placed on advertiser supported channels, either over the air or a subscription free cable/internet video channel.

The bottom line is that sports has characteristics that make it extremely valuable tv programming. It needs to be watched live. It has great demographics. Its viewers are highly loyal. Indeed, there is something primal about fan loyalty that transcends other forms entertainment. Look at the passion of European and South American soccer fans, Canadian hockey fans, or Indian cricket fans. Interest in individual sports may vary, but the passion for sports is a constant. From there, it's only about building the business model to tap into that passion.