Why ESPN Pays Bill Simmons $3 Million Plus, Even Though His Traffic Is So Tiny
This prompted us to ask sources around the sports-media industry what they made of the situation.
The scuttlebutt: Simmons's was so angry with his bosses that when his current contract with ESPN concludes next year, he wants to strike out on his own. Specifically, we heard that he wants to "go independent but get investment, promotion, sales, tech platform from a partner."
Next, we heard that as big of a name as Simmons is, some media-industry executives don't think he's worth the more than $3 million a year he makes from ESPN.
The reason: the traffic to Grantland, the separate media brand Simmons runs for ESPN, is super-tiny.
According to ComScore, Grantland reached 4.8 million people in August 2014. That's pretty small compared with the 25 million people the Gawker Media sports website Deadspin reached in the same month.
Finally, we came to this question: If Grantland's traffic is so tiny, why does ESPN so happily pay Simmons more than $3 million a year?
There are two reasons, according to a source familiar with ESPN's thinking:
- Bill Simmons's "halo effect."
- Grantland's "engagement."
"Halo effect" is jargon used to describe how having Bill Simmons on its roster makes the rest of ESPN look better.
ESPN CEO John Skipper talked about this effect at a recent Re/code conference.
Skipper: Bill Simmons and Nate Silver help our brand. That helps people think about ESPN. One of the biggest things we face is that we are big, and big companies are not lovable. You've got to find other things - 30 for 30, Grantland, FiveThirtyEight - that people love and feel passionately about.
Interviewer: So the value of those things, even though they're not revenue drivers, they help humanize you.
Skipper: Yes, And bring talent.
This source said the other reason ESPN is happy to pay Simmons so much is that even though the total number of people coming to Grantland is very small relative to other new media sports brands like Deadspin, SB Nation, or Bleacher Report, is that when Grantland readers visit the site, they spend much more time on it than they do the others.
Grantland readers spend 12 minutes a month on the site versus 8.7 minutes for Gawker.com readers, 4.3 minutes for Deadspin readers, and 2.8 minutes for SB Nation readers.
This source says that ComScore numbers show Grantland users spent 58 million minutes on the site in July - more than the 37 million minutes they spent on SB Nation that month.
We were slipped the following chart on Grantland engagement by our source. It looks like it might be from the pitch deck ESPN sends to potential Grantland advertisers.
As you can see in the text box on the lower left, it uses data from Chartbeat to show that Grantland visitors spend, on average, 2.6X more time on the site in one week than they do on comparable sites in a month.
ESPN
Now that we know what ESPN values in Simmons, a couple thoughts jump to mind.
The first is that suddenly it makes sense that Simmons' columns are so, so long - great for engagement!
The second is that if Simmons really does want to launch a new-media venture with investment from a digital-media partner, he is going to have to change his value proposition. It makes a ton of sense that ESPN values him for his halo effect and engagement metrics. But those are things only an already gigantic media company with hoard of existing ad inventory will overpay a star to get.
Those kinds of companies aren't really in audience-growth mode; they are in audience-optimization mode.
If Simmons wants to start a sports site that lives on its own inventory, not the premium it provides to an adjacent pool of inventory, that sports site is going to have to have a much bigger audience than just three million people per month. He's going to have to be in audience growth mode. Right now, Simmons doesn't ask his writers to worry about traffic. That would have to change - especially if Simmons wants to bring his Grantland staff with him AND pay himself more than $3 million a year.
Simmon is an internet-media genius, so it's entirely possible he could recalibrate his efforts toward building out a huge, independent audience.
But boy would that be a lot of work.
It seems a lot more likely that he'll stay in his lane and leverage the value he provides to ESPN to get a better deal from them, or one of its competitors, such as FOX or NBCSN.