Will Verizon Wireless cash in on its NFL bet?

With free agency in full swing and the college draft looming, the National Football League is in the dealmaking phase of its annual offseason slate, but the biggest announcement to emerge so far doesn't involve a feared pass rusher or a highly touted rookie quarterback. It's Verizon Wireless replacing Sprint as the NFL's official wireless service sponsor and exclusive mobile media partner--per terms of a bombshell four-year sponsorship agreement reported [1] earlier this week, Verizon will introduce to mobile NBC's marquee Sunday Night Football broadcast as well the NFL Network's NFL RedZone channel, which supplies live look-ins of every touchdown and signature play from the Sunday afternoon games. Verizon will also simulcast the NFL Network's own Thursday Night Football matchups, with the cable channel's related football programming airing live 24/7/365; the operator's NFL Mobile package is additionally slated to include on-demand video and analysis from the NFL Network and NFL Films, fantasy information, news and statistics, and customizable alerts, ringtones and graphics.

According to The Wall Street Journal [2], the Verizon Wireless/NFL deal is valued at $720 million, including a rights fee and advertising spending--the earlier Sprint package was valued at $120 million. Sprint may save millions in letting go of the NFL, but it also loses a significant dimension of its corporate identity--the carrier prominently featured league players and trademarks in its advertising efforts. Sprint initially launched NFL Mobile in the fall of 2005, upgrading [3] to the NFL Mobile Live application--complete with live radio broadcasts of all regular season games as well as all eight Thursday Night Football matchups--three years later. The NFL Mobile Live app went on to set the company's single-day record for downloads on Sept. 7, 2008, the first Sunday of the NFL campaign. "After a thorough review of terms and costs involved in renewing this sponsorship agreement, we determined it was in Sprint's best interest to part ways with the NFL," said Sprint vice president of corporate marketing Steve Gaffney in a prepared statement issued after the Verizon deal came to light. "Employees and customers should know that we are thrilled with the popularity of NFL Mobile Live and the exclusive content Sprint brought to the NFL fan base. To that end, we are developing a new football application that will include both professional and college football coverage, and we will continue to provide a fan-friendly experience and other sports-related apps and content."

It's impossible to calculate how much losing the NFL will impact Sprint's subscriber numbers--from a historical perspective, consumers have changed carriers because of coverage concerns, pricing plans and handset availability, not exclusive content deals. But the NFL is a unique commodity. Verizon Wireless committed highway robbery compared to what the networks pay for their NFL rights--in 2006 CBS, Fox and NBC forked over a combined $11.6 billion to broadcast Sunday's games through the 2011 season, and cable's ESPN ponied up another $8.8 billion to air Monday Night Football through 2013. Both CBS and NBC know from experience how devastating losing NFL rights can be: When Fox unexpectedly usurped CBS's NFC deal in late 1993, CBS lost affiliates in several major U.S. metropolitan markets, and ratings suffered across the board. Likewise, when CBS wrested the AFC rights from NBC in 1998, the Peacock Network faltered, trying to fill the void with wrestling magnate Vince McMahon's short-lived XFL and later plugging in the Arena Football League.

And for all the obvious differences between television and mobile, sports programming is as much a draw on handsets as it is on TV sets. Look no further than Apple's App Store, where as of Thursday afternoon, two of the top 10 highest-grossing iPhone applications spotlight live sports content: Number two on the list, MLB.com At Bat 2010, offers live radio coverage of all regular season and postseason Major League Baseball matchups, live streaming video from MLB.TV and in-game highlights for $14.99. The fourth top-grossing release, the CBS Sports: NCAA March Madness on Demand app, promises live streaming CBS television and Westwood One radio coverage of the annual men's college basketball championship tournament (airing from Mar. 18 to Apr. 5), and sells for $9.99. (CBS first launched the app last year, priced at $4.99--this year's edition, introduced [4] earlier this week, adds 3G/EDGE support.) There's no question subscribers will pay for sports content--the question is whether that content will influence their choice of service provider. Verizon Wireless is making a huge bet that it will. But football is all about gambling on the future: Sometimes you get Peyton Manning, and sometimes you get Ryan Leaf. You never know what might happen. That's why they play the game. -Jason [5] [5]