Broadcast rights money has been the lifeblood of American sports for decades, and Tuesday’s news that Major League Soccer struck a 10-year, $2.5 billion global deal with Apple Inc. is the latest gain. unexpected for a national league.
It’s fair to wonder how MLS’s unique relationship with Apple (the deal will put most of the league’s games behind paywalls as part of an upcoming streaming service, with some non-exclusive deals yet to come for TV broadcasts) traditional) will affect future rights contracts for other leagues.
Specifically, the National Basketball Association.
The NBA is the last of the top five US men’s leagues online for new media rights deals. He currently enjoys two major television contracts, with ESPN and Turner Sports, which will have paid him a combined $24 billion by the time the deals end after the 2024-25 season.
Since those contracts were announced in 2014 (they went into effect in 2016), the landscape of the streaming industry has been affected by new technology and changing consumer habits. We are now immersed in the so-called broadcast wars being waged by legacy networks and tech giants like Apple and Amazon, and we are also in the cord-cutting trend that has seen US pay TV households (cable and satelite). ) plummet from more than 100 million a few years ago to about 70 million today.
And while the NBA has seen its television audience decline, a trend that broadcasting has only partially offset, its games and the rest of live sports remain the darling of the industry because secular declines aren’t as bad as the rest of the world. television.
Therefore, the money keeps flowing. Over the past two years, we’ve seen the NFL television giant land $113 billion worth of new deals through 2033. The NHL said its new deals with ESPN and Turner helped fuel a record $5.2 billion in revenue. this season. Baseball’s new deals are worth $12.24 billion.
So with all of that on the books, and with the bold and risky structure of MLS’s new global media rights deals, what can the NBA expect in dollar terms from its next round of rights talks?
Last year, CNBC reported that sources familiar with the league’s media rights plans pegged the expected figure at around $75 billion, an obviously significant increase over the current $24 billion. Whether it’s simply a trading figure put out to test winds, and the league has a smaller secret number it deems acceptable, we’ll have to wait and see.
Patrick Crakes, a media industry analyst and former Fox Sports executive, said he believes the NBA’s media rights as a whole will reach at least $50 billion if it comes to a set of long-term deals like the current relationships.
“I think the NBA is looking to maintain their established relationship and expand new relationships,” he said.
The league is sure to get a nice raise under a deal or deals that are expected to be a mix of traditional linear TV and streaming, possibly with creative elements involving social media highlights, data, betting and more that could attract players. different audiences.
The NBA declined to comment.
We know the league will benefit from media rights deals struck in the past two years, which leave few top-tier sports properties for broadcasters or tech giants to pursue. Rising tides lift all ships, even if only one remains.
“There are relatively few major sports properties coming to market in the next few years,” said Lee Berke, president and CEO of Scarsdale, New York-based sports media consultancy LHB Sports, Entertainment & Media Inc. “If you It’s a sports media company, you have to be focused on the NBA.”
He didn’t offer a dollar estimate of what the NBA could get, but agreed that it will be a notable raise.
“We’re looking at media revenue growth multiples for the NBA,” Berke said. “They are a highly desirable property that generates a substantial number of viewers, especially young viewers. It’s going to be a very aggressive market.”
Media consultant Ed Desser, a former top NBA executive who has negotiated television rights deals for teams from various organizations and major league teams, called the MLS deal a “milestone” for the broadcast industry. and pointed out some elements that could affect how the NBA structures its upcoming media deals.
He predicts there will be more streaming, perhaps centralized game production, and NBA League Pass could be incorporated into national deals in some way. And it further cements the notion of Apple as a potential legitimate partner of sports media.
That said, there’s still a bit of time before the NBA has its new deals and it’s impossible to know what changes will happen in that time with technology, viewer habits, the consolidation of the broadcast industry, the economy, etc.
“Existing NBA deals have three more seasons left, so there will be more developments in the industry during that time frame,” Desser said. “The NBA has a young and highly digital-savvy fan base, so its allocation of digital rights will be especially important, in contrast to, say, MLB, which has nonetheless made several major broadcast deals. The timing of the NBA could be ideal as some additional deals will be done by then, particularly for college conferences and NASCAR.”
Unlike MLS, a significant portion of the NBA’s team-level revenue comes from regional sports network rights deals in their home markets, a model also used by MLB and the NHL due to their large game inventories. . MLS local rights deals have been financially modest. A few years ago, MLS ordered its teams to cancel any local rights deals for this season in order to sell all of the league’s local, national and global rights in one package. And it did exactly that with Apple in an effort led by Gary Stevenson, who is the deputy commissioner of MLS and president of MLS Business Ventures and led the deal.
“Stevenson was clever in lining up all the national and local agreements to be co-terminal. That gave him the clout to offer critical mass locally and nationally to a global player. The NBA has a much higher start threshold, and many existing local deals that last a decade or more, and a well-developed international operation,” Desser said.
The NBA is expected to continue its mixed model of separate deals with local, national and international media.
“Since the league allows teams to own the rights to games that are not licensed nationally, I don’t see an Apple-MLS-style deal matching its current setup,” said Curt Pires, founder and president of MLS. Charlotte- Consulting and media management based on CAP Sports Group. “That could change, but not currently. It makes rights holders reconsider the rights of local teams and how to maximize them in the future if they could pool together. The most important thing will be to rethink how to maximize local broadcast rights, especially with potential expansion on the horizon.”
There is also an important differentiator between MLS and the NBA: Major League Soccer, which launched in 1996 as the fifth-largest men’s league in the US, is not the most popular professional league for its sport in the United States. : the Premier League of Great Britain and that of Mexico. Liga MX commands the largest US soccer audiences.
The NBA is by far the most popular basketball league in the world. And that will help him get more money, even if his next set of deals mirrors some of what MLS did this week.
Why traditional media companies (Disney-owned ESPN/ABC, Warner Bros. Discovery-owned Turner Sports, etc.) want live sports and are willing to pay princely sums for it is no mystery: People still watch it. and networks know they can sell that airtime to brands at premium rates (and use attention-grabbing broadcasts and sports broadcasts to promote other programming). That model still works even as people watch less TV overall.
Deals with tech companies come with different business goals, Crakes said. Amazon uses its sports offerings to drive people to its e-commerce and video-on-demand business. Apple uses sports to drive customers to buy new devices and services (and you can expect to see the MLS streaming service bundled with those Apple products).
Apple is a device maker, Crakes said, and sports deals are never going to replace that.
“The media business has to be at the service of that,” he said. Apple or Amazon may bid for NBA media rights because they believe combining games with their core products and services will move the profit needle.
Those tech giants can certainly afford to get more involved in sports: Apple reported $365 billion in revenue in 2021, while Amazon was $469.8 billion.
Regardless of what the NBA ultimately does, Crakes said he hopes to see more streaming and probably with multiple partners, but nothing as radical as MLS-Apple TV.
“Transmission will go down a little bit more,” Crakes said. “I don’t think the full turnaround of MLS on the Apple system is what you’re going to see with the NBA.”
(Top photo: Kyle Terada/USA Today)