In looking for a place to live, the decision to rent or buy a place can be among the most difficult parts of the process. Both options have inherent pros and cons. Renting a place requires less capital, allows for flexibility in terms of not being tied down in a certain location long-term, and is much less of a burden in terms of general upkeep. On the other hand, buying allows a person to build equity and be invested in a tangible asset and gives them the freedom to personalize the property.
Depending on where you are in life, both buying and renting can make a lot of sense. In the world of sports media rights, however, the distinction is way more cut and dry. It’s much better to be a buyer than a renter.
There’s no better example of this dichotomy than the College Football Playoff. ESPN, of course, owns exclusive rights to the entirety of the expanded CFP from the first round all the way through to the National Championship. This year and next, ESPN will sublicense two first-round games to TNT. And starting in 2026, TNT will air two quarterfinal games in addition to its pair of first-round contests.
Why would ESPN do this? Well, the obvious answer is money. According to a July report in Sports Business Journal, ESPN originally had no intention of sublicensing any of its CFP inventory. That is, until TNT made them an offer they could not refuse. In a bout of desperation from TNT after it became clear they would lose rights to broadcast the NBA, the network offered a nine-figure deal to ESPN for a small package of CFP games. The deal was too good for ESPN to pass up.
A huge payout isn’t the only great part of this deal for ESPN. The network also gets to pick which games it sublicenses to TNT. In other words, ESPN can keep the best games for themselves and sell TNT the scraps at a premium. This year that means giving TNT two games that go head-to-head with blockbuster NFL matchups on Fox and NBC. And the icing on the cake? ESPN also gets to keep all of the advertising revenue TNT generates from these games.
If that’s not savvy enough for you, let’s take a look at another example in college football: Fox controlling all of the Big Ten’s inventory. While not as straightforward as a simple sublicensing agreement, in practice, Fox exerted the same amount of ownership over Big Ten rights when those new deals came together a couple of years ago.
The Big Ten conference is unique in the sense that all of its media rights are owned by Big Ten Network, which in turn is majority-owned by Fox. So when networks began negotiating a new set of deals with the conference in 2022, they were really negotiating with one of their direct competitors: Fox.
As such, Fox secured itself the most desirable package of games while charging a premium for CBS and NBC to get a piece of the pie. In the current setup, Fox chooses the top three Big Ten games each year before CBS or NBC picks a single game. Furthermore, Fox is also locked into the most advantageous window to air these games: noon. By airing its best games at noon, Fox is avoiding the stiff competition of top SEC games in the afternoon and primetime windows. Conversely, CBS and NBC are forced to compete directly with the SEC’s best games even though their packages of Big Ten games are decidedly weaker than Fox’s.
The quality of Fox’s arrangement was apparent in this year’s ratings. Fox’s Big Noon Saturday window averaged 5.58 million viewers this season while NBC’s primetime window (which featured primarily Big Ten games) averaged just 3.47 million.
Seeing why it’s better to own than rent?
Ownership grants a level of control that renting simply does not. In both examples, Fox and ESPN can secure the crème de la crème of the inventory available, while pushing less desirable games onto their competitors, often making them pay higher rates for worse inventory.
For the renters, there’s essentially no other option. If CBS and NBC wanted to be in the college football business with a “Power-2” conference, they had to negotiate with Fox. If TNT wanted to ensure it had enough meaningful inventory on its network to avoid a collapse in carriage fees, it had to overpay for something like the College Football Playoff.
There are plenty of smaller examples of these arrangements too. Fox sublicensed a set of Euro 2024 matches to Fubo earlier this year that were played in unfriendly TV windows. ESPN sublicenses a package of third-rate ACC football and basketball games to The CW, essentially discounting what it pays for its own package of better games.
In all of these cases, the owner has the luxury of doing what it wants when it is convenient for them.
We’ve even begun to see this relationship play out when it comes to studio shows, but often in reverse. Look, for example, at how The Pat McAfee Show licensing deal has worked out for ESPN. The network pays a boatload of money for a show that they have no creative control over. That has led to numerous controversies like McAfee calling former ESPN executive Norby Williamson “a rat” live on air, or Aaron Rodgers suggesting that Disney’s late-night host Jimmy Kimmel is connected to Jeffery Epstein, while on a Disney-owned channel.
Sure, ESPN would still claim that McAfee has been a net success for the network. But if ESPN actually owned and operated a show as successful as McAfee’s, they wouldn’t have to deal with these sorts of headaches. For McAfee, the owner, the arrangement is great. He gets paid handsomely and maintains all of the leverage in how he programs his own show. If ESPN cracks the whip he can simply take his show somewhere else, likely getting paid the same or more.
How about TNT owning and licensing Inside the NBA to ESPN next year? Most have chalked this up as a huge win for ESPN, who now has solved an issue that has plagued the network for years: finding a watchable NBA studio. But how about TNT? The network was able to unlock value practically out of thin air. It’s unlikely that Inside the NBA would’ve existed in any form on TNT airwaves next season given that they won’t have any games. But in owning the show, and having its talents under contract, TNT was able to secure a package of Big 12 games from ESPN, along with various digital and international rights for the NBA that they wouldn’t have had otherwise.
As sports media continues to evolve, expect content owners to continue these sorts of arrangements.
While owning the content is clearly more advantageous, interestingly enough, the throughline of many of these relationships is that they are mutually beneficial.
TNT needed CFP inventory and got it. CBS and NBC needed Big Ten inventory to be relevant in college football. Smaller platforms like Fubo or The CW get substantial lifts from carving out small portions of major properties for themselves. And ESPN has massively upgraded its daytime and NBA studio setups.
Owners are becoming less possessive and more opportunistic when these types of propositions arise. The reality is, there’s a lot of value out there for owners who are willing to make sensible, clear-eyed decisions on what programming is core to the operation and what can be auctioned off to the highest bidder without hurting their own bottom line.
Some of this will certainly end in confusion and frustration for consumers. No doubt there will be loads of people wondering why there are College Football Playoff games on TNT this weekend. But it all makes sound business sense.
It’s fair, however, to be wary of those who are overly reliant on renting. While it can help fix problems in the short term, it’s clearly not as sustainable as buying the inventory yourself. Renters always get stuck with the short end of the stick, be it worse windows, worse games, or inability to renew when a property comes to term.
As is the case in housing, time and time again, it always proves best to be the landlord.
