Cowboys: How ESPN’s demise impacts the Cowboys and pro sports

Mar 2, 2017; Boulder, CO, USA; General view of an ESPN broadcast microphone before the game between the Stanford Cardinal against the Colorado Buffaloes at the Coors Events Center. Mandatory Credit: Ron Chenoy-USA TODAY Sports
Mar 2, 2017; Boulder, CO, USA; General view of an ESPN broadcast microphone before the game between the Stanford Cardinal against the Colorado Buffaloes at the Coors Events Center. Mandatory Credit: Ron Chenoy-USA TODAY Sports /

The Cowboys, and the rest of televised sports for that matter, may not be able to escape ESPN’s failures unscathed.

Over the past month Cowboys Nation has seen many of their favorite sports reporters lose their jobs due to cuts at ESPN. The cuts that fired over 100 ESPN-employed broadcasters, reporters, and analysts impacted nearly every avenue of sports, from professional to collegiate.

The bad news is these cuts are more likely the canary in the coalmine rather than the disaster itself.

Outkick the Coverage’s Clay Travis has been predicting the demise of ESPN for quite a while now. What caught many of us off-guard last month was easily predicted by Travis.

"“ESPN is losing 10,000 subscribers every day so far in 2017. In the past six years they have lost 13 million subscribers and that subscriber loss is escalating each year. That’s billions of dollars in lost revenue. Every year for the next five years ESPN is spending more and bringing in less.”"

Just looking at the numbers it’s easy to see the layoffs did virtually nothing to improve ESPN’s financial situation. So why even do it? Because senior management had to do something to show their stakeholders and board of directors they were trying. The sad truth is these actions were merely symbolic and it’s likely a matter of “too little — too late”.  Continued Travis:

"“ESPN is spending over eight billion dollars on sporting rights this year and by 2021 I believe they will be losing money regardless of how many people they fire. ESPN can’t fire employees into profitability. It’s just not possible. These firings are going to become a yearly thing and they still aren’t going to prevent the business from dying.”"

ESPN isn’t just a website and network that recaps, highlights, and analyzes sporting events. They are a live sports broadcaster and they pay enormous sums of money for that right. They have committed billions of dollars into future events and couldn’t escape these money-losing deals even if they wanted to. And believe me, they want to.

With subscribers leaving by the day, it’s going to be hard to escape the inevitability of their demise. That doesn’t mean ESPN is going to disappear, it just means it has to do something huge to change their fate –Something much bigger than laying off workers. In fact, ESPN could fire every single employee and they’d still be a sinking ship.

What this means for the Cowboys

ESPN’s demise impacts the Dallas Cowboys, the NFL, professional sports, and televised college sports significantly. The money that we, the consumer, pay in subscriptions sets the value on broadcasting rights. ESPN (and other networks) based their bids to these sports entities based on these numbers. But they committed to the future and didn’t foresee the customer base disappearing.

All of these sports entities then base their internal markets on the revenue they get from ESPN. Salary caps, players’ salaries, college coaches’ salaries, etc… aren’t just based on ticket sales. TV dollars account for a giant share.

In the short-term the Cowboys and other televised sports teams will be unaffected. ESPN owes the money whether they as a network are profitable or not. They aren’t going to file for bankruptcy and close up shop any time soon so they’ll probably just take their potential losses on the chin.

But once the broadcasting rights expire and negotiations begin on new exclusive deals, things will change considerably.

Related Story: How the Cowboys pass-rush is 3rd worst in the NFL

Good News

The good news is this market burst will affect everyone. If broadcasters start paying less, NFL revenues drop, the salary cap drops, and player salaries drop. But they will all drop together for all the teams, so competitive balances should largely be unaffected. Teams that have players under large dollar, long-term deals may regret it if the salary cap drops, but generally speaking, most will be prepared and be able to adapt.

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Things will not bounce back

The important thing for broadcasters to accept is that things will not just magically bounce back. This isn’t a trend but rather a progressive shift. Numbers show people are unplugging across the board. People are cutting out the middle man (cable and satellite) and finding other ways to view their games/shows.

ESPN and other broadcasters will have to innovate if they want to survive. The love for sports remains so half the battle is already won. ESPN just needs to find a new way to make money off of it.

ESPN, the canary in the coalmine

As stated earlier, this is just the beginning. The trouble ahead is unavoidable and it’s going to have repercussions in the sports we love whether that’s the Cowboys, Mavericks, Rangers, Stars, or any other professional or college team that makes revenue from broadcasters.

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Things are changing and the changes are customer driven. But our teams will be just fine as long as they do what ESPN failed to do…look down the road and adapt.