By the time next September rolls around, there will be a
television station that will carry games for Las Vegas’ first professional
sports team. As pre-season games kick off, there will a local avenue for fans
to watch outside of T-Mobile Arena. It is not yet known exactly how it will be
rolled out, nor does anyone know if there will be any partnerships with current
professional or collegiate teams on a regional sports network (RSN), but there
have been some interesting articles published at Awful Announcing recently that
are points of interest for Las Vegas residents as the team eyes a network
partner.
The
first article makes mention that the Las Vegas franchise could partner with
one of the four Major League Baseball teams that can claim Las Vegas as part of
their viewership area. The reason Vegas is so important to those four teams
(the Dodgers, Angels, Padres, and Diamondbacks) is the same reason that Vegas
was such a strong candidate for expansion, there is a market of more than 2
million people. Whether those fans watch or not, their local television
carriers pay for the games on their networks and those costs are passed on to
subscribers.
The article has a key flaw, however, in that for any one of
those four teams to overtake Las Vegas as a sole provider of baseball (remember
that MLB is a federally sponsored monopoly, and that providing baseball is a
service in the same vein as electricity or telecommunications), they would have
to pay for the right to own the market. The Padres for instance, if they wanted
to own the Las Vegas metropolitan area (and make no mistake, it’s about the
market as a whole, not just Las Vegas proper), they would need to make
restitution payments to the other three clubs, if such a deal was approved by
the other league’s owners. The Oakland A’s tried to do something similar with
possibly moving to San Jose, which was in the territory of the San Francisco Giants,
however that deal was squashed by Commissioner Selig quickly. So in short, that
avenue won’t happen. Las Vegas will continue to be serviced by multiple MLB
teams.
Another article published
Monday explains of dire times coming for RSNs. The subject is nothing new,
and the topic recently gained steam shortly after the SEC and ESPN agreed on
their most recent rights deal, in which ESPN paid an estimated $2 BILLION over
15 years to basically become the Nationwide Leader of SEC Football (including
the SEC Network). At the time, it was viewed as ESPN maintaining it’s perch as
the leader in sports programming. Since then however as more and more cable subscribers
have left traditional cable/satellite providers in “cutting the cord”, which
has significantly impacted not only ESPN but their parent company Disney as
well. Since 2013 it has been estimated that ESPN
has lost 10 million subscribers.
Based on these numbers over the past four
months ESPN lost an average of 10,400 subscribers a day. – Neilsen data
May 2016
ESPN and Disney have a multi-national profit infrastructure
in place that allows them some coverage on these losses, however the trend is
in motion that traditional television is in a regressive pattern thanks to
internet-based avenues to watch events and programs. With all of this in mind,
at this writing, it has just been announced that ESPN
and the ACC have just penned a 20-year agreement.
To what do these have to do with Las Vegas hockey? How will the new team be able to keep its head above water, given the recent market shifts?
Part of a RSN for Las Vegas will need to borrow live events from another entity. UNLV, Minor Legaue Baseball, and maybe the Mountain West Conference seem to be the only opportunities. It could be also that a Sin City sports network would be able to partner with Major League Baseball in a way that it would allow for the channel to schedule all of the teams that claim Las Vegas (though highly unlikely). The partnerships involved in the network would would allow a better revenue stream for Bill Foley as he could own the
channel outright in the same manner than in Chicago with their RSN, Comcast, is
owned by the Blackhawks, Bulls, White Sox, and Bears. It is what the NHL did to
assist the expansion team though that in my mind shows just how dedicated the
league is to Las Vegas’ success.
Like other sports, the NHL has its own map of what teams claim as their home-team territories,
and at the GMGM press conference last week, Bill Foley gave information about
what the Las Vegas territory would look like. Areas of eastern California (and
the LV metro area) will be given to the new team via the Kings and Ducks,
northwest Arizona will be obtained via the Coyotes, and the Avalanche will lose
areas in Idaho, Montana, and Utah (according to a quick peek at estimated
census data, this area includes about 7+
million people).
To monetized this market, let’s assume that the Las Vegas
RSN would command a reasonable $.40 per subscriber, and that would net about
$2.8 million PER MONTH. That hypothetical total would not include the fees paid
for the teams to broadcast (which is the part would go towards Vegas’ addition
to hockey related revenue). Could such a network, even in Moody’s bearish
forecast be a business move Foley would undertake on his own? Most likely he
could, if for no other reason that it would provide control over content, and
the costs could be off-set by the manner in which his team would charge his
network via book-keeping slight-of-hand. In any case, the network would be able
to provide a profitable enterprise and a key impact to the community in growing
the sport.