ESPN to pay $15 billion for NFL rights

[tjkraz]

Saw this in the NY Post and couldn't help but think of this thread:

Well, if it's in the Post, it must be true.

Seriously, though, can't tell a whole lot from those figures alone since they focus on specific labels. I wouldn't call myself a beer connoisseur but it does seem that the major brewers have taken to introducing a wide variety of fringe products in recent years.

A decade ago I typically gravitated toward Bud Light but in the last couple of years it's usually Bud Select or Bud Select 55. Seems like they have other products featuring lime additives, wheat, Bud Ice (?), etc.

Here's a link to the article being cited:

http://247wallst.com/2011/09/09/the-eight-beers-americans-no-longer-drink/

As I suspected, it says absolutely nothing about overall beer sales. It simply comments on specific labels and highlights how consumers are moving from full-calorie products to light beers, small labels and imports.

 

[nytimez]

Well, if it's in the Post, it must be true.

Seriously, though, can't tell a whole lot from those figures alone since they focus on specific labels. I wouldn't call myself a beer connoisseur but it does seem that the major brewers have taken to introducing a wide variety of fringe products in recent years.

A decade ago I typically gravitated toward Bud Light but in the last couple of years it's usually Bud Select or Bud Select 55. Seems like they have other products featuring lime additives, wheat, Bud Ice (?), etc.

Here's a link to the article being cited:

http://247wallst.com/2011/09/09/the-eight-beers-americans-no-longer-drink/

As I suspected, it says absolutely nothing about overall beer sales. It simply comments on specific labels and highlights how consumers are moving from full-calorie products to light beers, small labels and imports.

It says quite a bit about overall beer sales -- not sure how you missed it, but it makes my point rather nicely. Thanks.

According to your link, overall beer sales are basically stagnant -- rising less than one percent between 2005 and 2010, with craft beers and imports selling more and the big brewers -- the ones so far willing to spend big on ESPN advertising -- selling less. It also specifically points out that these growing beers tend to be region-specific... so not exactly something you can count on to start picking up the ad slack on ESPN anytime soon.

 

[doconeill]

It says quite a bit about overall beer sales -- not sure how you missed it, but it makes my point rather nicely. Thanks.

According to your link, overall beer sales are basically stagnant -- rising less than one percent between 2005 and 2010, with craft beers and imports selling more and the big brewers -- the ones so far willing to spend big on ESPN advertising -- selling less. It also specifically points out that these growing beers tend to be region-specific... so not exactly something you can count on to start picking up the ad slack on ESPN anytime soon.

That's what I was thinking...the big names are losing to the crafts/micros, with Sam Adams being the big gorilla in the room without doing the expensive superbowl advertising.

It seems to me that A-B made the Michelob brand more of a niche brand back in 1997 when they introduced a bunch of varieties, as if in response to Sam Adams et al. so I'm not surprised at loss of market share there.

 

[nytimez]

That's what I was thinking...the big names are losing to the crafts/micros, with Sam Adams being the big gorilla in the room without doing the expensive superbowl advertising.

It seems to me that A-B made the Michelob brand more of a niche brand back in 1997 when they introduced a bunch of varieties, as if in response to Sam Adams et al. so I'm not surprised at loss of market share there.

Not to get off topic, but if you want to get further into this -- not the overall sales, but the growth of the craft beer market and the big brewers' attempts to push craft brewers out by introducing their own independent-looking labels to compete with them -- there's a documentary called "Beer Wars" that's worth a watch.

 

[tjkraz]

It says quite a bit about overall beer sales -- not sure how you missed it, but it makes my point rather nicely. Thanks.

According to your link, overall beer sales are basically stagnant -- rising less than one percent between 2005 and 2010, with craft beers and imports selling more and the big brewers -- the ones so far willing to spend big on ESPN advertising -- selling less. It also specifically points out that these growing beers tend to be region-specific... so not exactly something you can count on to start picking up the ad slack on ESPN anytime soon.

The "rising less than one percent" figure is a little more relevant to this discussion. Don't really see how it matters if one brand has declined by 73%, another by 64%, etc., if the slack has been taken-up elsewhere.

In the end, none of us are privy to the profitability of ESPN's contracts. However, given the standing and status of the NFL product as a whole, I doubt this is a situation where continued ad growth is required in order to make the deal a financial success.

In any contract negotiation, both sides have to compromise to some degree. Perhaps a 10 year deal is a bit risky for ESPN but if 10 years was a sticking point for the NFL, I'd say it's a risk worth taking. Depending upon the numbers, it's equally possible that ESPN is doing cartwheels over their ability to secure a full 10 years.

Stagnating beer sales doesn't strike me as a valid justification for scuttling the entire deal. Those breweries certainly won't see their market share grow if they refuse to advertise on NFL broadcasts. I won't pretend that ESPN can set whatever price point they wish regardless of market conditions, but at the same time the breweries NEED NFL football to sell their product. If the overall ad market permits ESPN to continue raising rates, the breweries will have to tweak their own business models such that they'll be able to afford the increases.

 

[lugnut33]

The "rising less than one percent" figure is a little more relevant to this discussion. Don't really see how it matters if one brand has declined by 73%, another by 64%, etc., if the slack has been taken-up elsewhere.

In the end, none of us are privy to the profitability of ESPN's contracts. However, given the standing and status of the NFL product as a whole, I doubt this is a situation where continued ad growth is required in order to make the deal a financial success.

In any contract negotiation, both sides have to compromise to some degree. Perhaps a 10 year deal is a bit risky for ESPN but if 10 years was a sticking point for the NFL, I'd say it's a risk worth taking. Depending upon the numbers, it's equally possible that ESPN is doing cartwheels over their ability to secure a full 10 years.

Stagnating beer sales doesn't strike me as a valid justification for scuttling the entire deal. Those breweries certainly won't see their market share grow if they refuse to advertise on NFL broadcasts. I won't pretend that ESPN can set whatever price point they wish regardless of market conditions, but at the same time the breweries NEED NFL football to sell their product. If the overall ad market permits ESPN to continue raising rates, the breweries will have to tweak their own business models such that they'll be able to afford the increases.

Exactly. It's not like the declines in those particular brands is leading to a decline in alcohol consumption on the whole. It's that people's tastes are changing to other beer brands and differnent kinds of alcohol. Now, instead of 3 or 4 solid targets for selling commecial time to, there will be 10 or 12. Win win for ESPN.