Cleveland Cavaliers' local TV home is also a hot ticket

Cleveland Cavaliers' local TV home is also a hot ticket in Crain's Cleveland noted that FOX Sports Ohio is heading into 2014-15 season having already sold all but 5% of its ad inventory. Here's the article:

Cleveland Cavaliers' local TV home is also a hot ticket

Fox Sports Ohio is heading into 2014-15 season having already sold all but 5% of its ad inventory

LeBron James and the Cleveland Cavaliers drew a sellout crowd, along with a huge local TV rating, for an Oct. 20 game in Columbus.
Fox Sports Ohio isn't joining the Cleveland Cavaliers in revamping its roster, but the NBA team's local TV home since 1989 is rapidly running out of advertising inventory.

Fox Sports Ohio is on pace to sell 95% of its ad inventory by the start of its first regular-season broadcast — the Cavs' second game of the season, Friday, Oct. 31, at the Chicago Bulls.

Francois McGillicuddy, the general manager and senior vice president of the Broadview Heights-based arm of Fox's vast regional sports umbrella, told Crain's the network is “way ahead” of its pace from previous seasons.

“The demand for Cavs inventory started earlier than we've seen in the past,” McGillicuddy said. “There is a strong interest from a variety of categories — the auto industry, fast food, retail — and it's a great combination of local and national (companies). We've never been at this sellout level this early.”

The sellout theme is a common one for any product associated with the Cavs, who reached their self-imposed cap of a little more than 12,000 season tickets fewer than eight hours after LeBron James announced his return on July 11.

The Cavs, Las Vegas' prohibitive choice to win the franchise's first championship, open the season Thursday, Oct. 30, against the New York Knicks in a game that will be exclusively broadcast by TNT.

The next night, Fox Sports Ohio gets into the act. By then, almost every ad, including those associated with pregame and postgame shows, and ancillary broadcasts such as “Cavaliers in the Paint,” will have been sold.

McGillicuddy said because James' comeback is “a story that transcends sports,” the anticipation for the season has carried over to companies that want to be associated with Cavs programming.

“That's part of what's driving this,” he said. “It appeals to businesses of all kinds. Everyone can understand the pull of coming home.”

Ratings juggernaut

The Cavaliers' three preseason games at Quicken Loans Arena all drew more than 19,000 fans, as did their sellout contest against the Chicago Bulls in Columbus on Oct. 20. Those numbers are 3,000 to 4,000 ahead of the team's attendance norms for the last three regular seasons.

The enthusiasm was every bit as evident on local TV.

The first six Cavaliers preseason broadcasts on Fox Sports Ohio and SportsTime Ohio averaged a 3.33 rating, which is 84% ahead of the norm for the 2013 preseason. The figure doesn't include a 2.0 rating for the broadcast of the Cavs' preseason finale on Wednesday, Oct. 22, but even that game — with James resting up for the regular season and ESPN pulling more than 40% of the viewers away from Fox Sports Ohio with its broadcast of the contest — had a larger audience on Fox Sports Ohio than a typical preseason event.

Two Cavs preseason broadcasts generated ratings of 4.1 or higher on Fox Sports Ohio and SportsTime Ohio. Last season, when the Cavs were 33-49 and again wound up as prominent players in the NBA lottery, their broadcasts on Fox Sports Ohio ranked seventh in the league with an average rating of 2.79.

McGillicuddy said the robust preaseason ratings “bode very well” for the type of audience the network will attract for its regular-season broadcasts.

Using James' first tenure with the organization as a barometer, the Cavs' local TV ratings could at least triple this season.

In 2008-09 and 2009-10, the two seasons preceding James' free-agent exit, the Cavs' local TV ratings were the best in the league, and it wasn't close. The 2008-09 campaign produced a record 8.79 ratings norm — 40% ahead of the average for the San Antonio Spurs, whose ratings were the NBA's second-best. The following season, the Cavs' local TV broadcasts topped No. 2 San Antonio by 27%.

McGillicuddy said it wouldn't surprise him if the Cavs' ratings this season “end up back there again.”

The skyrocketing viewership — James' final five seasons in Cleveland produced ratings that were between 45% and 215% ahead of Fox Sports Ohio's norm for the 2013-14 season — comes with an increased cost for anyone who wants to do business with the team and its local TV affiliate.

Eric Wright, president and executive director of research for Joyce Julius & Associates, an Ann Arbor, Mich.-based company that measures the impact of corporate sponsorships, said he assumes Fox Sports Ohio raised its advertising rates, “so things are going pretty well.”

McGillicuddy wouldn't comment on the network's rates, but said “with increased demand comes increased pricing.”

'Everyone is willing to pay'

When Forbes analyzed the NBA's largest local TV deals in January, the magazine reported that the Cavs had the league's seventh-richest contract, with Fox Sports Ohio paying the team a reported $27 million per year. The 10-year contract, which started with the season in which James led the Cavs to their first NBA Finals (2006-07), runs through the 2015-16 campaign.

Assuming James, as he has repeatedly stated, is here for the long haul, the Cavs would seem to be able to command much more in their next TV negotiations. But Joyce Julius' Wright said “there is a cap” to the amount of money teams can receive in local TV deals — a rule that doesn't seem to apply to the national TV contracts that have soared into the billions.

Earlier this month, the NBA agreed to a nine-year extension with ESPN and Turner Sports that will begin in 2016-17 and raise the average annual value of the combined contract from $930 million to $2.66 billion. According to Forbes, the NBA's 30 teams collected a combined $628 million from regional sports networks in 2012-13, accounting for only 33% of the league's $1.9 billion in media revenue.

The national TV revenue soon will be almost three times as great as the current contract, but that doesn't necessarily mean the local deals will follow in the same manner.

“Each market is unique as to what the local brands can pay,” Wright said. “Cleveland is not New York and not some other markets that might be able to pay a larger number like that.”

Forbes' research showed the Los Angeles Lakers, whose 20-year deal with Time Warner Cable is worth a reported $200 million per year, are the only NBA team with a local TV contract that exceeds $45 million annually. Two spots ahead of the Cavs at No. 5 on Forbes' list of the richest local contracts are the Detroit Pistons, who have a 10-year contract with Fox Sports Detroit that reportedly is worth $350 million.

Does that mean the Cavs will be able to fetch at least $10 million more per season in their next contract with Fox Sports Ohio or another provider?

McGillicuddy wouldn't comment on the network's contract with the Cavs, and the team would only say that it has a “multiyear partnership in place” and Fox Sports Ohio “has been and continues to be a great broadcast partner.”

Wright said he doesn't have enough data to venture a guess on what the Cavs' next TV contract could bring. What is certain, he said, is that the Cavs and Fox Sports Ohio are operating from a position of power.

“If it's the hot item, everyone in the sponsorship game wants to be there, and everyone is willing to pay,” Wright said. “They feel like they're going to get a bang for their buck that way.”