Download the Repositories Installer - http://passion-xbmc.org/addons/?Page=View&ID=plugin.program.repo.installer - copy the file to the Apple TV (I use WinSCP - don’t ask me how to use it, Google is your friend) then Go To System => Settings => Addons => install from zip, then browse to where you saved the Repo Installer zip file.
After installing the Repo Installer, it will be available under Programs on the main menu. You can then install as many repos as you like - I’m not sure which one has ESPN3. You’re not finished yet, you need to then chose Videos from the main menu, then choose Addons, then Get More… ESPN3 should be available from the list of available addons if you have the correct repo installed (I think it’s bluecop’s repo but I’m not sure). Choose ESPN3 then choose Install. Easy - ish!
Please be aware that not all addons will work - some were written for older versions of XBMC and haven’t been updated but, the last time I checked, ESPN3 was OK.
Of course all of this will mean nothing if you haven’t installed XBMC for the Apple TV 2 and the easiest way to do this is by using ATV Flash black. Don’t worry if you haven’t, it’s very, very easy to install. Once you’ve installed ATV Flash black you can install XBMC from the Manage Extras menu.
And yes, XBMC is free but ATV Flash black must be paid for (although it is very cheap during this late beta phase).