Obama Plan Could Reap Ad Bonanza for Sports Market

Revenue to Soar if College Football Gets Playoffs and Chicago Scores Olympics

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NEW YORK (AdAge.com) -- Meet sports marketing's new best friend: President-elect Barack Obama.
President-elect Obama appeared in a video played by Chicago's bid leaders to the general assembly of the European Olympic Committees in Istanbul, Turkey.
President-elect Obama appeared in a video played by Chicago's bid leaders to the general assembly of the European Olympic Committees in Istanbul, Turkey. Credit: AP

Mr. Obama, who had already said he would do whatever he could to help his hometown of Chicago win the bid to host the 2016 Summer Olympics, on Friday made a personal appeal by appearing in a 90-second video played by Chicago's bid leaders to the general assembly of the European Olympic Committees in Istanbul, Turkey. The EOC comprises one of the largest voting blocs of the IOC.

Meanwhile, in a recent interview with "60 Minutes," he also said he would "throw my weight around a little bit" to lobby for an eight-team playoff to decide college football's national championship.

If he's successful, it could mean a huge boon for sports. "If he can help institute a college-football playoff, and if he's instrumental in bringing the Olympics to Chicago, the money is going to be staggering," said Don Hinchey, VP at the Bonham Group, a Denver-based sports marketing firm.

Financial big leagues
How staggering? Rights fees would surpass $1.5 billion for the International Olympic Committee, and ad sales for the network carrying the Chicago games stand to soar. In the event of a longer football playoff, ESPN, which paid $500 million over four years for rights to the Bowl Championship Series, would have to renegotiate its already rich contract -- but it would stand to reap about $350 million in ad revenue the first year, according to a network executive who asked not to be identified.

The executive said if the 2016 Olympics are awarded to Chicago -- the IOC will make its choice next year from among the Windy City, Madrid, Rio de Janeiro and Tokyo -- the rights fee to broadcast the games in the U.S. would probably start at $1.5 billion, a record.

And that could be lowballing it. "Given the attractiveness of Chicago, it being on U.S. soil, a favorable time zone, and the fact that Fox and ESPN have announced publicly that they're interested in bidding, you're talking about a significant increase from Beijing," the executive said.

NBC paid $894 million to televise the 2008 Summer Games from Beijing, but easily recouped its investment. The network had $1 billion in ad sales before the opening ceremonies, then sold another $25 million in ads in the first 10 days of the games when swimmer Michael Phelps captivated the world with his run to an Olympic-record eight gold medals.

The full 17 days of coverage from China drew a U.S. record 214 million viewers to NBC. There was no need for make-goods, "and there won't be in 2016, either, if the games are in Chicago," the executive said.

NBC holds the torch
NBC has one more cycle of Olympics. The network will pay a combined $2.2 billion for the 2010 Winter Olympic Games in Vancouver and the 2012 Summer Games in London. After that, bidding for the next cycle, starting with the 2014 Winter Games in Sochi, Russia, and the 2016 Summer Games, are up for grabs.

"What's most important about 2016 isn't necessarily that it could be on U.S. soil, but that it could be on U.S. time zones," said David Schwab, VP-media and marketing for sports representation firm Octagon. "It allows for live TV. You saw the success NBC had with Phelps swimming live every night. In Asia, it was actually easy. It was a 12-hour time difference, so it was either morning or night. In London in '12, that six-hour time difference is a problem."

As for a college-football playoff, that could be a tougher sell. Under the current system, the top two teams at the end of the year as determined by a complex computer system play for the national title. There are inherent flaws in that system, which has many fans -- the president-elect included -- calling for a three-week playoff of the top eight teams. Sort of a mini-NCAA basketball tournament.

But last week, Walt Disney Co.'s ESPN inked a four-year, $500 million deal with the Bowl Championship Series to televise the marquee post-season bowl games -- Fiesta, Sugar and Orange -- every year from 2011 to 2014, and televise the BCS national championship game in 2011, 2012 and 2013. The Rose Bowl, which hosts the rotating national title game in 2014, has a separate deal with ESPN's sibling network, ABC.

But if Mr. Obama pressures college presidents to change to a playoff, the contract will be renegotiated and the result could be, well, here's that word again -- staggering. The network executive said rights fees would be close to double what ESPN just paid, given that a playoff entails seven games over three weeks, and each game would be a compelling elimination game that would produce a true national champion.

Pricey commodity
And ad sales would nearly double as well. Fox charged $500,000 for a 30-second spot in one of its three BCS bowl games in January 2008, and $950,000 per 30-second spot for the national championship game.

"I have to believe that the number for a [30-second spot] in a true national title game would be $1.6 million, $1.7 million," the executive said. The take, he estimated: double the $178 million that TNS Media Intelligence said Fox reeled in this season.
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