Broadcast rights money has been the lifeblood of American sports for decades, and Tuesday’s news that Major League Soccer landed a 10-year, $2.5 billion global deal with Apple Inc. is the latest windfall for a domestic league.
It’s fair to wonder how MLS’ unique relationship with Apple — the deal will put most of the league’s matches behind paywalls as part of a forthcoming streaming service, with some non-exclusive deals yet to come for traditional TV broadcasts — will affect future rights contracts for other leagues.
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Specifically, the National Basketball Association.
The NBA is the last of the five major U.S. men’s leagues in line for new media rights deals. It currently enjoys two primary TV contracts, with ESPN and Turner Sports, that will have paid it a combined $24 billion by the time the pacts end after the 2024-25 season.
Since those contracts were announced in 2014 (they went into effect in 2016), the broadcast industry landscape has been roiled by new technology and shifting consumer habits. We’re now deep into the so-called streaming wars being waged by the legacy networks and tech giants like Apple and Amazon, and we’re also well into the cord-cutting trend that has seen U.S. pay-TV homes (cable and satellite) plunge from more than 100 million a few years ago to about 70 million today.
And while the NBA has seen its TV viewership decline — a trend that streaming has only partially offset — its games and the rest of live sports remain the industry’s darling because the secular declines aren’t as bad as the rest of television.
Hence, the money continues to flow. In the past couple of years, we’ve seen the TV behemoth NFL command new deals worth $113 billion through 2033. The NHL said its new pacts 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 that on the books, and with the bold and risky structure of MLS’ fresh global media rights deals, what can the NBA expect dollar-wise from its next round of rights talks?
Last year, CNBC reported that sources familiar with the league’s media rights plans pegged the hoped-for figure at around $75 billion — an obviously significant increase over the current $24 billion. Whether that’s purely a negotiating figure floated for winds-testing, and the league has a secret smaller number it finds acceptable, we’ll have to wait to see.
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Patrick Crakes, a media industry analyst and former Fox Sports executive, said he thinks the NBA’s media rights collectively will go for at least $50 billion if it’s a long-term set of deals like the present relationships.
“I think the NBA is looking at maintaining its established relationship and expanding new relationships,” he said.
It’s certain the league will 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, wagering and more that could appeal to different audiences.
The NBA declined to comment.
We do know the league stands to benefit from the media rights agreements struck over the past couple of years, which leave few top-tier sports properties left for broadcasters or tech giants to pursue. Rising tides lift all boats, even if only one boat is left.
“There are relatively few top sports properties coming onto the marketplace in the next few years,” said Lee Berke, president and CEO of Scarsdale, N.Y.-based sports media consulting firm LHB Sports, Entertainment & Media Inc. “If you’re a sports media company, you have to be focused on the NBA.”
He didn’t offer a dollar-figure estimate for what the NBA could land but agreed it’ll be a notable increase.
“We’re looking at multiples of increase in media revenue for the NBA,” Berke said. “They’re a highly desirable property that generates a substantial amount of viewers — especially young viewers. It’s going to be a very aggressive marketplace.”
Media consultant Ed Desser, a former NBA senior executive who has negotiated TV rights deals for teams across several major league teams and organizations, said the MLS deal is a “landmark” for the sports broadcast industry and noted a few elements could affect how the NBA structures its next media deals.
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He predicts there will be more streaming, perhaps centralized game production, and NBA League Pass could be folded in some way into the national deals. And the notion of Apple as a legitimate potential sports media partner is further cemented.
That said, there still is a bit of time before the NBA has to have its new deals in place, and it’s impossible to know what changes will occur in that time with technology, viewer habits, broadcast industry consolidation, the economy, etc.
“The existing NBA deals have three more seasons to go, so there will be further developments in the industry over that time frame,” Desser said. “The NBA has a very digital-savvy, young-skewing fanbase, so its allocation of digital rights will be especially important, in contrast to, say, MLB, which has nevertheless done several significant streaming deals. The NBA’s timing could turn out to be ideal, as some additional deals, particularly for college conferences and NASCAR, will be done by then.”
Unlike MLS, a major portion of NBA team-level revenue comes from regional sports network rights deals in their local markets — a model also used by MLB and the NHL because of their large game inventories. MLS local rights deals have been financially modest. A few years ago, MLS ordered its teams to sunset any local rights deals by this season so it could sell all of the league’s local, national and global rights in a bundle. And it did exactly that with Apple in an effort led by Gary Stevenson, who is MLS’ deputy commissioner and president of MLS Business Ventures and led the deal-making.
“Stevenson was shrewd to align all national and local deals to be co-terminus. That gave him the leverage to offer critical mass locally and nationally to a worldwide player. The NBA has a much higher starting threshold, and many existing local deals that go out for a decade or more, and a well-developed international operation,” Desser said.
The NBA is expected to continue its mixed model of separate local, national and international media deals.
“Since the league allows for teams to own rights to games that are not licensed on a national level, I don’t see an Apple-MLS style deal match up with their current configuration,” said Curt Pires, founder and president of Charlotte-based media management and consultancy CAP Sports Group. “That could change, but not currently. It does make rights owners rethink local team rights and how to maximize them in the future if they could be bundled together. Rethinking how to maximize local broadcast rights will be top of mind, especially with potential expansion on the horizon.”
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There also is a major differentiator between MLS and the NBA: Major League Soccer, which launched in 1996 as the U.S.’ fifth major men’s league, isn’t the most popular professional league in its sport in the United States — Britain’s Premier League and Mexico’s Liga MX command larger American soccer audiences.
The NBA is the world’s most popular basketball league by far. And that will help it command more money even if its 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 them isn’t a mystery: People still watch them, and the networks know they can sell that airtime to brands at premium rates (and use the eyeball-drawing sports telecasts and streams to promote other programming). That model still works even as people watch less TV in general.
Deals with tech companies come with different business goals, Crakes said. Amazon uses its sports deals to drive people to its ecommerce and on-demand video 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 in the service of that,” he said. Apple or Amazon may bid on NBA media rights because they believe bundling games with their core products and services will move the profit needle.
Those tech giants certainly can afford to get more into sports: Apple reported $365 billion in 2021 revenue while Amazon’s was $469.8 billion.
Whatever the NBA ultimately does, Crakes said he expects to see more streaming and probably with multiple partners, but nothing as radical as MLS-Apple TV.
“Streaming will get chopped up some more,” Crakes said. “I don’t believe that MLS’ complete pivot into the Apple system is what you’re going to see with the NBA.”
(Top photo: Kyle Terada / USA Today)