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The Toronto Maple Leafs and Toronto Raptors are mediocre professional sports teams, but location, not quality, counts when television dollars are involved.
The Maple Leafs, playing in the largest and wealthiest region of the country, fetch a TV rights fee of more than $700,000 a game from Rogers Sportsnet and TSN.
The NHL team's owner, Maple Leaf Sports and Entertainment, picks up the cost of producing the telecasts, but the networks earn revenue of no more than $250,000 to $300,000 a game, according to sources.
That means Sportsnet (22 Leafs games this season) and TSN (10 games) are losing $400,000 to $450,000 on each telecast.
In addition to advertising, the networks earn revenue from cable fees. But even with cable fees, ad revenue that falls below 50 per cent of expenses puts a cable show deeply in the red.
(The Vancouver Canucks charge between $250,000 and $300,000 a game for regional TV rights.)
Sportsnet and TSN pony up because the Leafs produce large audiences: 744,000 nationally on TSN, and 393,000 regionally on Sportsnet. Airing the games increases each network's overall viewership figures.
MLSE is unable to make the same case when it pitches TV rights to Raptors and non-Raptors NBA games.
The audiences aren't large. However, for a package of Raptors and non-Raptors NBA games, starting next season, franchise owner MLSE insisted on a rights fee and all the advertising revenue associated with it.
The network paying the fee, therefore, would be unable to recover costs because the ad time belonged to MLSE.
Chris Hebb, MLSE's head of broadcasting, declined to comment on the deal. The dollar figure for the rights fee isn't known.
But TV sources said they were surprised MLSE would be able to charge a fee and also scoop up the entire advertising revenue.
"It's amazing that [MLSE] is getting two revenue streams from the property," one media source said. "I can't think of any other content that is getting 100 per cent of the [advertising] inventory and a licence fee."
Sportsnet, which is in the final year of its Raptors and non-Raptors NBA deal, chose not to renew.
The network, after all, draws larger audiences for junior hockey telecasts than non-Raptors NBA games (65,900 viewers, compared with 53,300, respectively). It does almost as well with poker, which averages 52,000 viewers.
Sportsnet's TV simulcast of the Bob McCown Fan 590 radio show draws a larger audience, 54,800 viewers.
The Raptors games, of course, do better than non-Raptors games, averaging 167,000 on TSN, 153,000 on Sportsnet and 125,000 on the Score Television Network.
The audiences are growing, but they're still less than half of what the Toronto Blue Jays, CFL, NFL or a non-Canadian NHL matchup will produce on Canadian television.
MLSE did find a buyer for the Raptors and non-Raptors package: The Score, which next season will carry at least 30 Raptors games and provide NBA telecasts several nights a week.
With an audience average much lower than those of TSN and Sportsnet, The Score believes the Raptors-NBA package will push up its overall numbers.
The package also fits into The Score's programming strategy, which targets young viewers and basketball fans.
David Errington, the network's executive vice-president, wouldn't comment on the rights deal. It will not be announced for another week or perhaps longer. But he did note that basketball is a big part of The Score's programming strategy.
"It's something we think we can do better with than the other networks, which are hockey-centric," he said. "We think basketball is something we can win at, absolutely."
Madness begins
The U.S. National Collegiate Athletic Association men's basketball tournament begins today with TV coverage on CBS and The Score, which owns Canadian rights.
For the first two rounds, The Score will move from game to game, focusing on the most compelling matchup at a particular time. The Score's telecasts will be anchored by Tim Micallef, with guest analyst Rick Majerus, the head coach at Saint Louis University.
March Madness audiences in Canada are not large, but Errington says the tournament is a valued property.
"It fits right in with what we do," he said. "We skew young and we're urban. We sell it very well [to advertisers] and we produce it well."
The Score's cross-platform presentation will consist of television, online and mobile, as well as video on demand on Rogers Cable.
A tournament preview show will air today on The Score at 7:30 a.m., 9:30 a.m. and 11:30 a.m. EDT.
