All a Part of Its Vision
Tuesday, November 21, 2006
CULVER CITY, Calif. -- With a punch of his fingers on a telephone keypad and the snap of his sooty voice, Steve Bornstein can make millions for pro sports' wealthiest league. Network executives gush at the mention of his name, cable titans growl in disgust. Both cringe as he pries open their wallets.
But the NFL's executive vice president for media does not run the league's broadcast empire in luxury. Instead, he sits in the first-floor office of a building that might have been chic in 1978, and lounges on a sofa set that was bought by his assistant on low-bid auction at Jennifer Convertibles. Not far away, just behind a concrete pillar, looms the heart of his NFL Network, two sparkling 11,000-foot studios where football news, analysis and opinion is filmed and then beamed to just over 40 million homes -- a figure that is something short of remarkable for a network that is only three years old.
On Thursday night, word will come from a production booth in one of those studios, a signal will be shot to the sky and Bornstein's NFL Network will broadcast the first of eight Thursday-Saturday league games. It's a bold new venture for the league and the network, though not one that is without its tribulations. The NFL Network is not on three of the country's largest cable companies as they resist what they see as the league's heavy-handedness.
"If somebody else had done it, it would be great," Bornstein said. "But no one has done it. Right?"
The world he oversees is changing every day, faster than anyone in sports could have imagined. And a television network is only a small part. While this year the NFL will bring in $3.73 billion in television deals alone, there is another potentially more lucrative universe out there still mostly untapped, and it involves the Internet, cellphones and iPods. For want of a better term, the NFL calls this "new media" and has pinned hopes on its money-making promise.
It is Bornstein who must take his new network, sift through the haze of this wired planet and find a way to intertwine it all.
In 1980, when Bornstein was in his late 20s, he was brought to Bristol, Conn., to help a four-month-old sports network named ESPN grow. For the next two decades, he oversaw much of the station's development, first in the programming department and ultimately as an executive at ESPN and ABC through the 1990s. It was a stunning rise, that in some ways left those around him agape as ESPN blossomed beyond their wildest dreams.
"Clearly, Steve was somebody for whom the status quo was unacceptable," said John Wildhack, ESPN's senior vice president for programming, acquisitions and strategy, who was with Bornstein for much of the company's surge. "He kept asking, 'How do we do this better? How do we take calculated risks? How do we differentiate ourselves?' "
Peace and Prosperity
When the NFL first approached Bornstein in 2002, after a brief run as president of ABC television, there was no network, just a vision of something the league's 32 team owners felt was necessary yet did not know how to do. To build it they wanted someone who had created a network before, someone who would make their place unique. Bornstein was the obvious choice.
He said he sees a lot of similarities between those early days at ESPN and this new venture. Both have that unrestrained feeling, where every idea is wrought with head-tingling excitement. "Everybody has that razor focus," he said.
And yet when you get past the thrill of starting something that has never been done before, this remains a football network. And a professional football network at that. Unlike ESPN, where the borders stretch from Australian rules football to Sunday morning fishing shows, the NFL Network must live in a more confined world. Even as Bornstein constantly tries to point out that they are a "lifestyle network," not a football network, there is only so much football you can show.
Bornstein points to the exorbitant amount of money CBS, Fox, NBC and ESPN have paid to televise NFL games, repeats some of the anecdotal evidence of how networks have struggled when they dropped football and promises that no matter what next year's top-rated TV show might be, its ratings won't exceed that of the Super Bowl.
"There's no league that's been more successful in any way you measure that success than the NFL," Wildhack said.
But part of the reason for the NFL's triumph is the fact it has been mostly untroubled by labor strife. While baseball, basketball and hockey have been hit with crippling strikes and lockouts, pro football has sailed along, making billions of dollars. That bliss was tested this past spring when an unusual development occurred in the latest negotiation with the NFL Players Association: the owners bickered more with themselves than they did with the players.
The owners of the smallest-revenue teams felt they had fallen far behind those of the biggest money-makers. And even though all the teams equally share the league's enormous television and licensing contracts in addition to being restrained by a firm cap on player salaries, the disparity was showing itself in other ways. Franchises in bigger markets could generate money from suite sales that smaller-market teams couldn't touch.
Ultimately, they came up with a compromise. The players would receive at least 60 percent of every team's revenue, which created a bigger pool for the salary cap. But it caused a problem for the lower-revenue teams like the Buffalo Bills and Jacksonville Jaguars, which might see 70 percent of their intake going to player salaries while the New England Patriots and Washington Redskins would be spending only 60 percent. So to try and make up the difference, they agreed that the 15 highest-revenue teams would pay equally into a pot totaling $30 million to be redistributed to the 17 poorest clubs.
It only adds up to a couple of million for each small-revenue franchise. But at the same time the owners agreed that the 15 larger teams would also give up their profits from the league's new media ventures and share that money with the smaller-market teams as long as those small-market clubs dedicate at least 65 percent of their revenue to player salaries.
This is a confusing, but potentially significant clause.
As it stands now, the owners may take an option that allows them to blow up this latest labor deal in 2009, in part because some of the small-market teams still feel left out in the new contract, unsure how a trickle of money from the richer clubs is going to help them catch up. A potential solution -- and it could be a bit of a long shot -- is if there were a sudden flood of money from new media.
"It could be if new media was something substantial," said Bill Prescott, the Jaguars' chief financial officer.
Yet how much is substantial? No one really knows because no one has a grasp on exactly what new media are going to bring in, partially because the league is only starting to cut deals in this world, signing contracts for podcasts and cellphone telecasts. Just last month, the owners voted to operate the league's Web site, NFL.com, themselves. Previously CBS SportsLine held the contract.
"We hope that that [new media] will be a real contributor and hopefully it will ameliorate some of that" big-market/small-market tension, Jeff Pash, the NFL's executive vice president, said recently after testifying before a congressional antitrust hearing. "And also by bringing it in house we can keep that revenue as a league asset and share it equally among the 32 teams as opposed to having yet another revenue source that exacerbates revenue disparities between teams."
Or as Broncos owner Pat Bowlen said, "If [the media money] is coming from a league-owned asset, then it will be easier to cut it up and give it to the smaller market teams rather than to just take it from the higher-revenue teams."
The burden of this hope falls on Bornstein. He scowls at the suggestion of new media as a solution for the league's future labor woes, partially because he is dealing so much with the unknown. He is fond of saying "my crystal ball is no better than anyone else's," but his expertise is in running networks, not solving league labor disputes. Maybe using cellphones as a way to broadcast games or deliver breaking NFL news is a great idea. Maybe it isn't. Time will tell.
Still he feels it's important to slowly collect these technologies, hire people to develop them and see what they have.
"The league has always been really prescient about getting this stuff right and not be the first one in," Bornstein said. "I think they got it right."
It's a delicate balance. The NFL needs its revenue quickly to try and fill some of the gulf between big- and small-market owners, yet its instincts say not to grab too fast.
"There's going to be peaks and valleys and some acceleration and deceleration [in new media]," said David Katz, the head of sports and studios at Yahoo!, which currently streams NFL games on the Internet overseas. "The NFL has proven to be the best at exploitation and management of their assets. I have no doubt they will continue to be good at what they do."
In a way, Bornstein and the NFL are perfect for each other. Both are audacious, assured and accustomed to getting their way. "With Steve you always knew where he stood," Wildhack said.
So it probably shouldn't come as much of a surprise that in the last television deal, Bornstein and the NFL pulled eight games from the Sunday afternoon lineup and said they were going to place them on Thursday or Saturday and put them up for bid. The Outdoor Life Network (now called Versus) reportedly offered $400 million for those rights. An outlandish sum, if you think about it. But rather than take the easy money, Bornstein and the league decided to put them on the NFL Network, a move that league officials believe drove up the price of the other network's bids.
By putting its own games on TV, the league has leverage, something it has never been shy about using. A few months ago, with the games in hand, it turned to the cable companies and reportedly said the price per customer for the network would rise from 20 cents to 70 cents. The cable companies balked and a fight ensued that has left the NFL Network off three of the country's major cable systems -- Time Warner, Cablevision and Charter, meaning almost all of New York City will not get Thursday night's Denver-Kansas City game, barring a last-minute deal. Bornstein said such a development is unlikely.
The dispute with Time Warner surrounds the company's insistence that it put the network and the games on an expensive sports tier of service that would cost extra for subscribers. The NFL wants to be on the standard tier.
"We would certainly like to carry the network, we have a number of football fans," said Time Warner spokesman Mike Harrad. "But because of the price it's a niche-type service."
What Bornstein won't say, but some league officials will confide, is that the NFL is sure it can win a stare-down with the cable companies. When Thursday night comes and New York can't get the game, the NFL figures enough fans will be so outraged that Time Warner will come crawling to the bargaining table.
Likewise, the two bowl games the NFL Network is showing (the Texas Bowl on Dec. 28 and the Insight Bowl on Dec. 29) are not part of a strategic plan to show college football in the future, a league source said. Rather, the hope is a school from one of the markets served by a holdout cable company will be in the game. And when fans find out they can't watch their beloved State U in its bowl game, the cable operator will be besieged with angry calls.
It's a gamble, but one the NFL is willing to take, figuring fans will have to take sides. Either they choose the league with the highest ratings or the local cable company that is often a monopoly. The NFL thinks it can win that fight every time.
Even if the crapshoot doesn't pay off, the NFL Network has already won. It has managed to take a piece of the lucrative market that its games produce, it has already forced itself onto many of the country's cable systems as well as both its top satellite providers and it has subtly forced football further into the American consciousness.
Rich Eisen, the NFL Network's main anchor who worked seven years at ESPN, knew the NFL Network had changed ESPN when he turned on his old station on the night of the NBA draft in June and ESPN was doing a program ranking the NFL's pass defenses -- just minutes before the NBA's draft.
"I had to look at the bottom of the screen to be sure it was ESPN," Eisen says. "When I was at ESPN, I would say in April, 'We should be doing something on the NFL,' and they laughed at me. Now on the night of the NBA draft, they were doing the best pass defenses in the NFL. We have definitely challenged them, no question."
In his office, Bornstein talks about the station he has built from nothing and about how it will help feed the Internet, cellphones, iPods and whatever else has yet to be invented. He calls these connections "pipes." And he knows these pipes, when filled, and under the NFL's control, have the real potential of making his bosses in the NFL very, very happy.
"I'm a guy that likes winning, right?" he said. "One way you can measure this is: can you make money? I've found personally that's where I can excel."