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Are Sports Prices Too High To Deliver Return on Investment?

April 7, 2013

Along with death and taxes, add spiraling sports costs to the certainties of life. During good times and bad for advertising, prices keep climbing for the ultimate reality TV: live sports. But recently companies like DirecTV are pushing back against rights fees and marketers like Anheuser-Busch InBev are struggling with ways to justify them, it raises the question: Can sports continue to defy gravity?

Reliant on dependable ratings winners at a time when nothing else is a sure thing, TV networks and cable and satellite operators are shelling out double, or more, what they used to spend to carry live games from the National Football League, Major League Baseball, the National Basketball Association, Nascar, college football and basketball and other sports.

Consider the size of some recent deals: Starting in 2014, MLB will roughly double its annual payday thanks to national-TV renewals worth $12.4 billion with ESPN, Fox and TBS. After the 2014 regular season, ESPN will pay an estimated $7 billion to televise college football's new national playoff through 2026. Time Warner Cable will spend an estimated $8 billion over 25 years to create a new regional sports network around the Los Angeles Dodgers, according to Sports Business Journal.

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