Do you know the Business of Hockey, Part III?

Question

You are an NHL owner. The commissioner has presented you with two potential Television deals.

Deal A)

$20-30MM/season for 5 seasons

96% home penetration

Deal B)

$65MM/season for 5 seasons

71% home penetration

Which TV deal do you pick?

Why do you pick it?

Note: If you are the owner of the Philadelphia Flyers (a publicly traded corporation), SEC rules require you to pick option B, option A would be a violation of shareholder value and the subsequent lawsuits would sue you into oblivion

If you pick option A, how do you tell your fans that you can't sign Jean-Michel Hockeystar because you don't have the money?

Answer 1

How do you NOT take the higher number?  Versus was always going to have upside (it's owned by Comcast so they can push it pretty easily).  I mean, this is pretty simple math.

Keep in mind that Comcast also owns the Golf Channel; with their 15-year deal with the USPGA Tour, they own rights to two sports (hockey and golf) that "should" have synergy, and that have solid audiences.  

If I were Versus, I'd want a flexible scheduling option for the last month of the season- let them get away from games with no meaning, and show games that have real playoff implications.  

Answer 2

I'd have to agree with cnd24 on this one. Take the cash (plan B) The way things have been going in the markets the PPV has cut the penetration down anyways. Take the 5 years at 65 mil.

Answer 3

I have a hard time not picking option B as there is twice the money, my home fans still get 71% of the games.  I may still be able to make a deal with local networks to get those games televised.

It is a business I have to take the money

EDIT

Okay now I understand the 71% home penetration, meaning only 71% of homes have this carrier.  Does that change my desision, no as I hockey will get a better treatment on this network than playing second third or 7th fiddle to Basball football nascar and dart championships on the more established network.

Answer 4

It's pretty obvious but as a fan I could still whine that I'd want the games on ESPN.