ESPN In The Zone
Jan 20, 2013 (The Hartford Courant - McClatchy-Tribune Information Services via COMTEX) --
When ESPN went on the air in 1979, there was no running water for the couple of dozen employees at the Bristol headquarters, and they used port-a-johns and worked long hours fueled only by vendor carts at the construction site.
The entire operation was run from one half-finished building, about the size of a super pet store.
The fledgling network was on the air just under 24 hours a day on cable television, then barely used, or understood.
That first 20,000-square-foot building still stands, but it has been expanded several times. The structure is now just one of 18 on a campus that has grown to 123 acres and nearly a million square feet -- almost the size of Westfarms mall -- so large that ESPN had to add a shuttle bus for employees and visitors five years ago.
"We went from Camp ESPN to Little City ESPN," said Chuck Pagano, ESPN's chief technology officer, who ran the control room when the business began.
Finally, after 33 years, it's done.
The last of 45 land acquisitions in Bristol and Southington -- all involving a mix of businesses and modest homes -- was wrapped up late last year. The last holdout, the owners of a 1,200-square-foot ranch house, had seen the campus draw increasingly near and finally flank their property on three sides.
Now, the campus is the size that it is likely to remain for the next decade, perhaps longer.
While the expansion stretches back to ESPN's earliest days, it has accelerated since 2000. The construction of the 120,000-square-foot Digital Center, opened in 2004, equipped ESPN to compete in the era of HD -- high definition -- and provided the most modern studios for its flagship SportsCenter broadcast.
On ESPN's first broadcast on Sept. 7, 1979, SportsCenter reached about 30,000 viewers. Today, ESPN averages 115 million viewers a month.
Construction continues full-tilt at what is known as ESPN Plaza, with the building of a second digital center -- the 19th building -- that will be able to adapt to rapidly changing technologies. The construction is being financed partly by a $17.5 million loan under Gov. Dannel P. Malloy's "First Five" program. A portion of the loan won't have to be paid back, depending on how many workers are hired in the next decade at ESPN, which now has nearly 4,000 at the campus.
How much the new digital center and, for that matter, the overall expansion itself, is costing isn't being disclosed by ESPN, a unit of the Walt Disney Co.
But there have been some indications of the scope of the price tag. In 2000, ESPN committed to a five-year, $500 million expansion of its campus as part of an agreement with the state for a permanent, $15 million annual state tax break. ESPN said it easily met that commitment.
As heady as the expansion is, economists and others say ESPN is facing growing competition for its long dominant position in sports programming. Both NBC Sports and Fox Sports are launching aggressive moves to beef up their offerings. Multiple cable channels, the web, tablets and mobile applications for cellphones are all potential battlegrounds.
"ESPN is the 800-pound gorilla," said Fred Carstensen, director of the Connecticut Center for Economic Analysis at the University of Connecticut. "Any time you are extraordinarily successful, you have to keep thinking about how to stay ahead of the competition. ESPN has to work hard to protect its franchise."
ESPN will have to manage the convergence of the web, tablets and cellphones as well as negotiate the most favorable contracts with cable providers that carry their programming, Carstensen said.
ESPN is well positioned for the challenge, said Mike Soltys, who heads ESPN's communications.
"Through our 33 years, there has always been strong competition," Soltys said. "In the early days, there were the three broadcast networks. As cable grew, there were more sports channels. Now, there is broadcast, cable, Internet and radio. There has been increased recognition of the value of live sports."
He adds: "But the competition that comes from others is as strong as it has ever been, but we've built a strong business that has many aspects that have become very successful."
ESPN's expansion in Bristol and, later, across the town line into Southington, has spread in all directions from the original location just off Middle Street. A dish farm created in the past decade, with 20 satellite antennae, replaced the ones that once stood along Middle Street. The shell of one remains there, a nod to the company's roots.
Portions of streets -- Birch, Town Line -- have been gobbled up by ESPN's expansion to the east. Old, one-story industrial buildings were acquired and either leveled for parking or expanded for office and production spaces. And where homes once stood, studio broadcasts now originate in huge buildings.
ESPN's impressive expansion has been dependent on cobbling together a patchwork of smaller properties. For example, in 2000 alone, ESPN acquired 14 properties that added just 15 acres to ESPN Plaza.
Buying the properties has not always been easy, or inexpensive.
In 2012, the last of 20 homes identified by the company was purchased. The owners of 50 ESPN Dr., the former Town Line Road, were made offers previously, but held out until last September, when ESPN agreed to pay $525,000 for the modest ranch just over the Southington line and an accompanying acre of land. Even with the land, the price represents a hefty premium over the typical sale price for a comparable house in the town.
Susan P. Presutti, who manages the Bristol office of Prudential Connecticut Realty, said a similar house elsewhere wouldn't likely sell for much more than $200,000 in the current market.
"A far cry from $525,000," Presutti said. "Sounds like someone really didn't want to sell, but at the right price, anything is for sale."
The owners, who now have a home in Higganum, declined to comment.
Soltys said ESPN was willing to pay the price because the property was seen as key to creating an additional 285 parking spaces for its growing workforce. Construction of the lot -- on the southern tip of the complex -- will help ease a parking crunch on campus, a problem in recent years. The same area will contain a 5,000-square-foot check-in center, expected to open later this year or early in 2014.
"People didn't want to go out to lunch because they were afraid of losing their parking space," Soltys said.
Despite its modest roots, ESPN's value is now estimated at roughly $42 billion, the biggest chunk, by far, of Disney's overall worth of about $99 billion, according to a recent earnings report from Wunderlich Securities in Denver. Disney owns roughly 80 percent of ESPN; an ABC Inc. subsidiary and The Hearst Corp. hold the remaining interest.
When Disney purchased ESPN in 1996 as part of the deal to buy the ailing Capital Cities/ABC, Disney saw potential for ESPN. That purchase came before ESPN expanded into ESPN2, ESPN The Magazine, ESPN Radio and the international arena.
ESPN now contributes billions of dollars each quarter to Disney's revenues through lucrative affiliate fees. The fees are paid by cable companies to channel owners each month. And among all Disney's cable channels, ESPN is the most profitable.
Not everything ESPN has touched has turned to gold, however. Its foray into sports-themed restaurants, ESPN Zone, fell flat, forcing all but two to close. It abandoned plans to open one at Hartford's Front Street, instead deciding to contribute $5 million to help foster the entertainment district's development.
Even so, the growth in Connecticut has been especially strong, even through two recessions. Since 2001, the workforce has more than doubled, from 1,700 to nearly 4,000 in Bristol. ESPN has another 2,500 employees worldwide.
ESPN pays nearly $9 million in property taxes a year in Bristol and leads the city's top 10 taxpayer list. ESPN's tax bill is more than the nine below on the list combined.
In addition to ESPN Plaza, ESPN leases another 400,000 square feet a few miles to the north off Middle Street where there are more offices, a cafeteria larger than the one on the main campus, a Starbucks and a storage library with more than two million videos and DVDs.
Bristol Mayor Art Ward said ESPN founded its operations just as General Motors was closing up its New Departure division in the city.
"For all intents and purposes, ESPN has continued the existence of the city of Bristol," Ward said.
Bust to Boom
ESPN made its mark quickly, securing the rights in early 1980 to televise the early rounds of the NCAA basketball tournament. Viewer response was enthusiastic and is a major reason the tournament later developed into the national phenomenon known as March Madness.
But by 1982, ESPN was losing money -- $40 million that year alone -- and came dangerously close to liquidation. Advertising was not covering production costs, and the network had to pay cable companies to carry ESPN programming.
The company was saved when cable companies, under pressure from ESPN's growing audience of sports junkies, agreed to pay for ESPN programming.
From those early days, Pagano said he never could have imagined the growth that would follow.
"None of us had it in our wildest dreams," Pagano said. "In the early days, you carried your resume around in your back pocket."
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