Put down your scone and secure your monocle (lest it fall into your caviar) since it will shock you to find out what sport has the wealthiest audience in the United States.
While the posh country clubs and endless ads for luxury cars during broadcasts might lead you to assume that the Professional Golfers Association would have the richest fans, golf, falls behind a much less genteel sport when it comes to the wealth of its audience. And though the PGA has the oldest audience in general as well as the highest share of fans 55 and older, according to Nielsen's 2013 Year in Sports Media Report, it's the National Hockey League's audience that's the richest.
That might seem hard to believe of a sport famous for fights, goons, and holding onto the mullet as a viable hairstyle, but one third of all NHL viewers make more than $100,000 a year, compared to about 19% of the general population, making them the richest sports audience.
And while the numbers are small compared to what other sports get in rights fees, the NHL has leveraged its wealthy fan base to a surprisingly lucrative TV deal on a per-viewer basis.
Audience size matters too
Hockey, which has a U.S. TV deal with Comcast's NBC Sports Network, has a tiny audience compared with pretty much any other sport. According to Nielsen, NFL games -- which air on NBC, Disney's ESPN, Fox , DirectTV , and The NFL Network -- average 17.4 million fans a game. NHL games, on the not-so-easy-to-find NBCSN, average half a million viewers.
The NHL, which not that many years ago wasn't being paid anything for national rights to its games (there was a revenue split) now has a U.S. TV deal worth around $200 million a year, which runs through 2021. The league does better in Canada, where it has a 12-year, $5.2 billion deal with Rogers Sportsnet (roughly $430 million a year). In the U.S., however, which is the market Nielsen examined in the report cited above, NBC is paying roughly $400 per hockey fan (though that cost is mitigated by the playoff audience, which rises to an average of 5.8 million during the Stanley Cup Finals.
Still, that's a very high rate per fan -- perhaps justified by their wealth -- compared to what the NFL takes in from its various TV partners. According to the Los Angeles Times, the NFL, as of 2014 will take in an average of $3.1 billion a year in television rights fees. With the league, according to Nielsen, averaging 17.4 million fans per televised game, that equates to rights-holders paying roughly $172 per football fan. Add in the Super Bowl, which this year drew 111.5 million fans, according to Nielsen, and the value per fan is much higher.
So, while hockey fans might be richer and NFL fans are certainly plentiful, TV networks are, in a sense, getting a deal on football rights.
TV needs sports
Sports is not only big business for the teams and leagues, it's huge business for the television industry. Sports, according to Nielsen's report, accounts for 1% of all television programming, but 7% of the total cost of pay-TV. ESPN leads the pack in this area, charging cable companies more than $5 per subscriber (deals vary by cable system), according to Forbes.
"ESPN charges a high fee per subscriber by tapping the demand for sports programming in the U.S," the Forbes article said. This demand is evident from the fact that other sports networks such as Fox Sports are also able to charge substantially higher fees per subscriber as compared to the regular cable networks such as Nickelodeon, MTV, TNT, TBS, and The Disney Channel.
Live sports is also one of the draws keeping cable customers from dropping their subscriptions and switching to a service like Netflix .
Can it end?
While the value of sports rights has gone up because live sports are generally considered the one thing that is DVR-proof, the average cable customer (whether you watch or not) can be sure that the networks will not be bearing these costs alone.
Sports fees paid by cable, satellite, and telco TV companies are on pace to increase 12% in 2013, to $17.2 billion, according to research firm SNL Kagan as reported by Variety.
These increases will ultimately lead non-sports fans forced to pay for programming they don't watch to drop their cable subscriptions. That will then force cable companies to spread the cost of live sports over even fewer customers, forcing some of them to leave, which might ultimately halt the cycle.
"When you see upstream rights deals increase by multiples, that's a formula that is unworkable for consumers," DirecTV Chief Content Officer Dan York told Variety. "At the end of the day, the money that ends up in the pockets of the athletes, (team) owners, and networks — it comes out of the pockets of the fans and nonfans."
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The article Which Sport Has the Richest Fans? The Answer Will Surprise You originally appeared on Fool.com.Daniel Kline has no position in any stocks mentioned. The Motley Fool recommends DirecTV, Netflix, and Walt Disney. The Motley Fool owns shares of Netflix and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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