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The NFL's Blackout Policy and Its 2012 Revision

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The NFL's Blackout Policy and Its 2012 Revision Unnecessary Roughness? The NFL’s Blackout Policy and its 2012 Revision A Thesis Submitted to the Faculty of Drexel University by Brian E. Laverty in partial fulfillment of the requirements for the degree of Master of Science in Television Management June 2013 © Copyright 2013 Brian E. Laverty. All Rights Reserved. i For the fans, and William Laverty. ii Acknowledgments I must extend sincere thanks to everyone who contributed to this study. I could not have done it without any one of you. Thank you to the Drexel community, my program director Al Tedesco, and especially my advisor Phil Salas, whose connections, guidance, and vision have been indispensable. Thank you Sharon Walz-Zelley and Perry Casciato at CBS3, and Terry Maher at Harmelin Media. Thank you Tom Spitz at KPIX, Andy Walton at Metrocast, and Mark Shearer of the Oakland Raiders. And to all the survey respondents: Thank you Raider Nation. iii Table of Contents List of Tables ................................................................................................................ v List of Figures .............................................................................................................. vi Abstract ....................................................................................................................... vii CHAPTER 1: INTRODUCTION ................................................................................. 1 1.1 Problem Statement and Plan of the Study ........................................................... 3 1.2 Research Questions ............................................................................................. 4 1.3 Definitions ........................................................................................................... 5 CHAPTER 2: LITERATURE REVIEW ...................................................................... 6 2.1 The History of Blackouts .................................................................................... 6 2.2 The Current State of Blackouts ........................................................................... 9 2.3 Studies on Blackouts ......................................................................................... 13 2.4 Avoiding a Blackout.......................................................................................... 16 2.5 Watching a Game that is Blacked Out .............................................................. 17 2.6 Pay-Per-View Buyrates ..................................................................................... 20 CHAPTER 3: METHODS .......................................................................................... 22 3.1 Setting................................................................................................................ 23 3.2 Sample/Participants ........................................................................................... 24 3.3 Intervention and Materials ................................................................................ 24 3.4 Measurement Instruments ................................................................................. 24 3.5 Data Collection and Procedures ........................................................................ 28 3.6 Data Analysis .................................................................................................... 29 CHAPTER 4: RESULTS ............................................................................................ 34 4.1 Survey Results ................................................................................................... 34 4.2 Willingness-to-Pay Regression ......................................................................... 47 4.3 Cost of PPV and Internet Streaming ................................................................. 50 4.4 Revised Blackout Rule Results ......................................................................... 62 CHAPTER 5: DISCUSSION ...................................................................................... 68 5.1 Questions Answered .......................................................................................... 69 5.2 Survey Discussion ............................................................................................. 73 5.3 Cost of Streaming and PPV Discussion ............................................................ 75 iv 5.4 Making a Paid Viewing Alternative a Reality .................................................. 77 5.5 Revised Blackout Rule Discussion ................................................................... 80 5.6 Limitations ........................................................................................................ 82 5.7 Recommendations for Future Research ............................................................ 85 5.8 Conclusions ....................................................................................................... 86 List of References ....................................................................................................... 88 Appendices .................................................................................................................. 93 Appendix A: Survey – Oakland Raiders and Blackouts ......................................... 93 Appendix B: Nielsen Overnights for San Francisco-Oakland DMA, 10/18/09 ...... 96 Appendix C: 2009-2012 Team Marketing Reports ................................................. 97 Appendix D: t-test results ...................................................................................... 101 Appendix E: Raw Data for WTP Regression ........................................................ 111 v List of Tables List of Independent Variables Included in Willingness to Pay Regression .................30 Survey Question 6 Descriptive Statistics .....................................................................35 Ordinary Least Squares Regression Results for Willingness to Pay ...........................48 Total Fan Revenue per Raiders Home Game in 2009 .................................................51 Ratings and Advertising Revenue Calculations per Raiders/Alternate Game – 2009 Season ..........................................................................................................................53 Raiders Blackout Alternate Programming for KPIX on 11/15/09 ...............................54 Raiders Blackout Alternate Programming for KTVU on 12/13/09 .............................54 Make-good Amounts due Local Station under Various Buyrates – 2009 Season .......55 Ratings and Advertising Revenue Calculations per Raiders/Alternate Game – 2010 Season ..........................................................................................................................56 Make-good Amounts due Local Station under Various Buyrates – 2010 Season .......57 Ratings and Advertising Revenue Calculations per Raiders Game – 2011 Season ....57 Cost of PPV and Streaming Per Blacked Out Game – 2009 Season ...........................59 Cost of PPV and Streaming Per Blacked Out Game – 2010 Season ...........................60 Cost of PPV and Streaming Per Household under Various Buyrates – 2009 Season .61 Cost of PPV and Streaming Per Household under Various Buyrates – 2010 Season .61 Oakland Raiders Home Ticket Sales and Capacity – 2012 Season .............................63 Total Cost Calculations for Oakland Raiders under Revised Blackout Rule – 2012 Season ..........................................................................................................................64 Total Costs under Various Chosen Sellout Levels – 2012 Season ..............................65 Oakland Raiders Home Ticket Sales and Capacity – 2011 Season .............................65 Total Cost Calculations for Oakland Raiders under Revised Blackout Rule – 2011 Season ..........................................................................................................................66 Total Costs under Various Chosen Sellout Levels – 2011 Season ..............................67 vi List of Figures Box and Whisker Plot for Willingness to Pay (in dollars). ..........................................37 How Survey Respondents Follow the Raiders When the Game is Blacked Out. ........40 Percentage of Oakland Residents Versus All Other Respondents in Income. .............43 Survey Respondents’ Distribution of Income by Age. ................................................44 Household Size Across Residential Location, Income, and Age. ................................45 Survey Respondents by Age. .......................................................................................46 vii Abstract Unnecessary Roughness? The NFL’s Blackout Policy and its 2012 Revision Brian E. Laverty The National Football League has instituted blackouts on its games since 1961. A blackout is the restriction of a game’s broadcast, enforced only when an NFL franchise cannot sell out its stadium. Unsold tickets represent a loss to NFL owners, and thus the blackout serves as encouragement to the local fan base to sell out the stadium or else they cannot watch the game on television. In July 2012, the blackout rule was revised so that franchises can choose a set capacity level (minimum of 85%) that their stadium ticket sales must meet in order for a blackout to be avoided. Blackouts are intended to protect game day revenues, not only ticket sales but all other ancillary revenues from concessions, parking, programs, and merchandise. But do they
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