Monday, April 11, 2005

More on the Economics of the CCA-CBC Deal

An exercise in marginal/incremental studies:

The 2004 -5 curling season is now over, with Canada having soundly defeated Scotland in the finals of the World Championship on Sunday with a record-breaking two five-enders.

I would like to take some time, now, to explore more about the outrage so many curling fans felt about the television deal made between the Canadian Curling Association and the CBC.

At most championships, there are three draws (games) each day for the round-robin portions of the tournaments. In the past few years, the Canadian sports network, TSN, had televised all three of the daily draws during the week, leaving the semi-finals and the finals to CBC on the weekend.

This season, when fans began trying to watch the early games of the round-robin tournament for the The Scott Tournament of Hearts, we were stunned to learn that the Canadian Curling Association had signed a contract with CBC allowing CBC to telecast only two games per day; further, CBC decided to broadcast some of the evening games on a digital channel that not many people subscribed to. Fans were livid. At the time, I wrote:

I couldn't believe it! I was so distressed, I fired off the following letter to the Curling Canada Association:
Okay, folks. Whose wise idea was it to show curling on CBC's extremely lame "Country Canada"???? We don't get it where we live, and we will now miss a LOT of curling. I sure hope CBC paid somebody a lot of the taxpayers money to make sure that fewer Canadians now have less access to watching curling on television.

I was wrong; we can get Country Canada here if we sign up for digital cable. And so this morning, we committed ourselves to spend a lot extra over the next few years to get digital cable boxes so we can watch curling. As I said, I was furious.
I have since learned that when TSN made a bid to for the broadcast rights to all the championship series, their bid was also for only two games per day, rather than all the round-robin games. The reason both TSN and CBC made such an offer to the Canadian Curling Association was, I suspect, a strictly marginal one:
The expected marginal revenue of carrying the third game each day (ordinarily, but not always, a game not involving Canada's team, since each team usually had only two games per day) was likely to be quite low, especially if the third game to be carried would have been the morning draw. Meanwhile, the expected marginal costs of carrying a third game each day were considerably higher (on a per-game basis) than the those of carrying the second game each day. Carrying a third game would involve dramatic overtime expenses for the broadcasters and crew or necessitate having a complete second team in place to telecast the third game each day. Either way the marginal costs of carrying the third game skyrocketed in comparison with the first two games.
The above is not the explanation offered, but it seems plausible. Neither network wanted to carry all three games each day.

But the Canadian Curling Association [the CCA] is still displeased with the deal they negotiated with the CBC. See here for details and additional links.

My take: It looks as if the CCA should consider suing its lawyers for lack of due diligence if, in fact, the CBC made decisions that the CCA would have opposed but were not covered in the terms of the contract. That, or it should be asking serious questions of its own negotiators.

[a similar piece is posted on the Sports Economist]


At 4/13/2005 12:45 p.m., Blogger Listen to ME!! said...

If you look here you will see that the CCA (and anybody else paying attention) knew before July, 2004 that the weekday games would be broadcast on the limited audience Country Canada Digital Channel, a decision worthy of one of the greatest customer outcries since Rogers’ negative billing arrogance of a few years back.

In positioning themselves as being unhappy with the CBC, the CCA is seeking to shift the blame for a decision they made with eyes wide open - or at least as wide open as they can force them to be.

As in the case of Brier revenues (the CCA still refuses to come clean on just how profitable this event is - a bone of contention in previous disputes with the player-led World Curling Tour - they do not to my knowledge include land office profits from the Brier Patch for instance), the CCA saw $$$ and closed off discussion.

Power at the CCA rests with Warren Hansen (who, as an aside, has had a lifelong bone to pick with Ray Turnbull, partly due to Turnbull's earlier successful efforts to create a private sector educational program for curling - the world events are viable due to Turnbull's ground-breaking coaching and training of Nordic curlers) whose my way or the highway philosophy continues to do harm to the sport.

Serious delays implementing the offense-generating, audience-pleasing free guard zone is only one of many wrong-headed decisions that rests at the feet of Hansen, the latest of which is acquiescing to the changes at the World championships, resulting in the fiasco that was the poorly attended, under-covered Women's finals in Paisley, Scotland.

They can blame their lawyers if they like, but the fault rests squarely on the shoulders of the CCA, and in particular, Warren Hansen.


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