Throwback Thursday: The TV Deal That Created Modern Sports

(Editor's note: Each week VICE Sports will take a look back at an important sports event from this week in sports history. We are calling this regular feature Throwback Thursday, or #TBT for all you cool kids.)

If the modern sports landscape has a Big Bang moment—the inflection point that sent sports stuff spinning off into the surrounding empty space, spawning everything we love and hate about the games we play and the financial activity that buzzes and hums all around them—it arguably happened 45 years ago this week.

June 9th, 1960. The American Football League and American Broadcasting Corporation agreed to a television deal worth just under $2 million annually. At the time, it was a watershed moment for the AFL. The revolutionary deal established revenue sharing across the entire league, money that was critical in keeping all of its member clubs solvent and competitive with the then-monolithic National Football League.

Of course, none of that is what makes ABC-AFL deal the most significant business transaction in professional sports history.

We know what you're thinking. Two million dollars? Chump change. Revenue sharing? Duh. Sports on television? What sport—or sport-like substance—isn't on television? The AFL? Didn't it merge with the NFL? Fair enough. But think things though. Go back in time.

In 1960, sports were massively publicized, a standby in newspapers and on the radio. That said, they hardly qualified as big businesses. Even as late as 1971, Stanford sports economist Roger Noll told the San Francisco Chronicle, "Professional sports is not very big as an industry… It's something like half the size of canned soup."

Sports owners and executives were dreaming much, much bigger than canned soup. Enter the ABC-AFL deal, which turned television not just into a new way for fans to watch their favorite teams, but also gave the league a massive revenue stream from a source that wasn't dependent on butts in stadium seats.

NFL commissioner Pete Rozelle swiftly realized his league needed to get in on this action, but a two-year, $9.3 million exclusive contract with CBS for the 1961 and 1962 seasons was blocked after stations that had entered into rights agreements with individual teams successfully challenged it under the Sherman Antitrust Act. The AFL didn't face this problem—as a new league, there were no pre-existing partners to challenge its deal. By contrast, the NFL's effort to pool all of its rights deals and sell them as one package was ruled to be monopolistic, suppressing market competition for media rights.

Naturally, the NFL wasn't going to let something as trifling as federal law stand in its way. Rozelle lobbied his buddies in Congress and within a few months, Public Law 87-331 was on President John F. Kennedy's desk, waiting to be signed. This piece of legislation is better known as the Sports Broadcasting Act of 1961, and it was the single most important law in transforming American sports into the 24-hour televised circus it is today.

The Sports Broadcasting Act ruled that antitrust laws "shall not apply to any joint agreement… by which any league of clubs participating in football, baseball, basketball, or hockey contests sells or otherwise transfers all or any part of the rights of such league's member clubs in the sponsored telecasting of the games… engaged in or conducted by such clubs."

In other words, the NFL's pooled TV rights deal, like the AFL's, was now legal.

The transition into the televised sports era began in earnest here, as sports leagues realized the power of television in both spreading their games and as a revenue stream. Over the next decade, the sports industry ballooned in size. The professional football ranks—AFL and NFL combined—grew from 12 teams to 26 and Major League Baseball expanded from 16 teams to 24. Revenues grew in kind, as monopoly profits tend to do. The professional ranks were not the only beneficiaries, as ABC and the NCAA entered into a $12.1 million per year deal, one that led UCLA sociologist Dr. Harry Edwards to claim television was "the savior of collegiate sports" in his 1973 work Sociology of Sport.

Without the Sports Broadcasting Act, the NFL's $1.9 billion per year contract with ESPN and $1 billion per year contract with DirecTV, the NBA's upcoming nine-year $24 billion dollar deal with ESPN and Turner Sports, and MLB's upcoming eight-year, $5.6 billion deal with ESPN would all be illegal under antitrust law. These deals guarantee franchises in the tiniest media markets—or franchises that are consistently losing or just poorly run—can stay afloat. "What Pete Rozelle did with television receipts," legendary Packers coach Vince Lombardi said of the Sports Broadcasting Act, "probably saved football in Green Bay."

Believe it or not, while leagues and owners have profited immensely of this arrangement, its beneficence is much less clear for the rest of the sports world. The costs of these gigantic rights deals are passed down to cable subscribers—sports fans or not—to the tune of somewhere between 75 and 110 dollars per year as calculated by the website What You Pay For Sports (and detailed here by our own Patrick Hruby), rates that will only rise as the next wave of deals kicks in. The power granted by the Sports Broadcasting Act has also made it difficult for upstart leagues like the World Football League and United States Football League to get mainstream broadcast television space, and it has even been used—albeit unsuccessfully—as lockout insurance for NFL owners.

Television created what it means to be a sports fan for many Americans—most of us born after 1961, and Millennials like myself in particular—and gave us unprecedented access to our favorite teams. It also created a world in which the monopoly power of the major sports leagues was only enhanced, leading to the largesse and excess that defines American professional sport today. The future of televised sport is unclear, as the Internet is threatening to throw the sporting landscape into disarray in the same way television did half a century ago. But whatever happens, the AFL-ABC deal and the televised sports revolution that followed changed the path of sports history forever.