Take that argument to it's logical extreme then Tegal.
No one would go to the ground.
Everyone would watch on TV.
The TV rights would be maximised.
Kids would never experience the thrill of the atmosphere of being at the game (as opposed to watching it on TV).
I believe that part of the long term decline in TV ratings for rugby is that people are no longer engaged with the teams in the way they were 20 - 30 years ago (when going to the game was norm).
PART of the reason for this is once you educate the populace that watching the game on TV is the norm, as opposed to going to the ground you risk two things happening.
Firstly if the game is going poorly, or is not that high quality (i.e. it's a relatively boring game as opposed to an edge of your seats cliff hanger) people can (and at least some WILL) change channels or switch the TV off and do something else. Yes, I agree people walk out of sports venues early when those two things happen, but I am also confident that on the whole people at grounds have more of a vested interest in continuing to watch (staying until the end) than people watching on TV do. For one thing the TV audience can switch to another sporting event on another channel in an instant, whereas the at the game crowd are committed. So, I think if the norm is "go to the game" as opposed to "watch it on TV" you lose less people to disinterest/boredom/disappointment - on average. This then means that more people are still tuned into what is going on in the game if/when the spectacle picks up/miraculous comeback is mounted. This leads to a stronger bond between the fans and the team.
Secondly with the norm as "watch it on TV" sooner or later (over the course of a decade perhaps in the case of NZ rugby) punters are gradually exposed to other sports they never used to get exposed to. By changing channel during a team's event or even just by being conditioned that sport is something they watch on TV (by default) then even when the team is not playing they will turn to TV to watch sport... which is PRECISELY what Sky TV wants them do. However, over time this means that people who used to JUST watch rugby (by going to the games usually) now get to see baseball, NASCAR, Basketball, more gold, more cricket, more netball etc. And some percentage of those people will go "Hey, these other sports are not so bad after all..."
And over time rugby's dominance of the NZ sports market is lost.
Kids grow up watching sports of all kinds on TV. Rugby is just one of them. They don't go along to the games much, certainly not as much as kids used to when the kick off times were family friendly (2.30pm on a Saturday versus 7.30pm on a Friday). They don't get to collect signatures as much as they used to. They don't get "the bug" as much as they used to.
Eventually this leads to less demand (on the whole) for match tickets, and softer demand for jerseys and merchandising.
I think sports are better to accept less for TV rights, EVEN IF the revenue they gain/retain from tickets and merchandising is initially not as great. In the longer term engagement with your supporter base is more valuable than a fat TV rights cheque, because eventually, when the interest in watching the game on TV begins to deteriorate (as it has begun to do so for Super rugby in the last 3 seasons) then in the even longer term the revenue from TV rights then begins to tail off too.
At that point you've actually killed your market share, lost your fan base. You can't just turn the passionate supporter culture back on.
I don't think it's a simple $ vs $ equation.
"Phoenix till they lose"
