Even though the Internet sports-media rights auction is in it's infancy, it already shares a common trait with its TV counterpart: significant price escalation.
The National Football League last week signed a multifaceted, five-year Internet marketing and content deal with AOL Time Warner Inc., Viacom Inc.'s CBS subsidiary and Sportsline.com last week for $110 million in cash. The deal carries another $200 million in non-cash value, according to a source close to the negotiations.
That marks a geometric jump from the NFL's three-year, $10 million Internet deal with ESPN.com that expired earlier this year. And it's the second Internet deal that ESPN.com has lost, or passed on, in the past year. The National Association for Stock Car Racing (NASCAR) had parked a six-year, $100 million deal with Turner Sports to produce and host its Internet site.
ESPN officials said the fee increase from a little over $3 million a year to more than $20 million a year was more than it was willing to spend for the content it would have received.
But AOL and SportsLine believe ESPN's loss was their gain.
"This is an incredibly powerful partnership that will certainly change the landscape of the new-media business as it relates to sports," said SportsLine founder and CEO Michael Levy in a statement.
SportsLine (whose flagship Web site is CBS SportsLine.com) will produce and host NFL.com, Superbowl.com and NFL- Europe.com. The former is part of the league's Internet Network, which also includes the Web sites for all 32 NFL teams. SportsLine will become "the official online sports partner of the NFL," and can use logos and league assets in its marketing efforts.
AOL's participation is largely promotional. As the "Official ISP of the NFL," CBS will promote AOL during its game telecasts. The ISP will also get plugs on NFL Films programming, the NFL Sunday Ticket out-of-market package, and the NFL Experience interactive theme park at the Super Bowl.
In turn, AOL will promote the NFL Internet Network on AOL's main screen, sports pages and Kids and Teen Channels. AOL also will be able to offer certain NFL video clips, contests and sweepstakes. CBS will promote the NFL Internet Network during its telecasts and on other NFL programming.
The NFL currently posts 75 to 100 pieces of video content to NFL.com each week. The content ranges from two to three minutes of video-clip highlights from each weekend game, posted on Sunday night after the last game ends, as well as press conferences, behind-the-scenes footage and other video content produced throughout the week.
The league, which is in the midst of an eight-year, $18 billion TV rights deal with ESPN, ABC, Fox and CBS, has no plans to stream games domestically via the Internet, either live or after the fact, a spokesman said. Such a move would set off howls of protests from the league's TV rights holders and jeopardize the larger TV revenue pie.