Friday Dump 🥟 - $21B NFL lawsuit, Closer to NBA media clarity, Bloomberg's Wolves

Welcome to the Friday Dump 🥟 we got fun and games 

Each Friday, we’ll breakdown 3 sports business stories that have caught our eye throughout the week. They will be assembled in the following format:

🔴 - Stories that make us stop, think, and question.

🟡 - Stories with a hint of risk and unpredictability.

🟢 - Stories that make us feel good to go and empowered.

Ready for Paradise City? Us too.

🔴 Sunday Ticket becoming a real pain in the NFL’s ass. Order! Order! Can we get some order in the court?! (We always wanted to say that 💁🏻‍♀️) What started in a San Francisco bar in 2015 as a minor complaint revolving around how the NFL handles their out-of-market broadcasts, is now turning out to be quite the class action lawsuit nearly a decade later. A group of ~2.4M residential and 48K commercial subscribers to NFL “Sunday Ticket” on DirecTV is taking the league to court and could be awarded ~$7B in damages. What’s crazy, under federal rules that dollar amount could triple leading to a $21B legal bill 😳. Let’s break this down more to understand how this all works…

• It’s a Sunday afternoon in the fall, you’re a football fan who just wants to watch the pigskin get thrown around, you turn on the TV and you’re essentially stuck watching up to 2 games at a time — whether that’s on CBS or Fox. Why is that?

  • CBS and Fox only air regional games during Sunday afternoons (1pm & 4:30pm EST) in the regular season.

    • For example: if you live in New York and you’re a Seattle Seahawks fan, you’re unable to watch your Seahawks unless they’re playing the New York Giants or Jets. Why? Because you’re not watching from the Pacific Northwest region!

  • Now, there’s always a workaround — hello, NFL “Sunday Ticket”, where you can pay a subscription to watch your team play at any time out-of-market. This is where the lawsuit comes into play…

• The plaintiffs allege the Sunday Ticket structure artificially drives up prices as it’s the only way for fans to watch out-of-market NFL games.

  • Crystal clear fact 💎: Sunday Ticket is not under DirecTV anymore, after signing a 7-year, $14B deal with YouTube TV last year.

  • Current costs with YouTube TV start at $349 per year for the residential packages.

• This brings together a very sticky situation…

  • If the plaintiffs win, NFL teams would be able to make their own individual and market-specific rights deals, and consumers would likely get the ability to purchase individual games or team-specific packages.

  • For the NFL, they will argue the whole point of Sunday Ticket is that it’s a premium-level product expanding consumers’ access to games.

🟡 Another day, another NBA media rights deal report. Honestly we don’t know how everyone continues to go about their day as the clouds begin to darken, the slight chill in the air hits your skin, and rumor mill sirens ring with NBA media news swirling from town to town. One day we hear TNT is screwed, the next we hear there’s still a chance, the following day we’re preemptively mourning the eventual break-up of “Inside the NBA” on TNT. Wtf is going on?! Well according to the most recent report from The Wall Street Journal on Wednesday, the NBA is closing in on deals with NBC, Disney (ABC/ESPN), and Amazon that would bring in $76B (~$7B/year) in media revenue over an 11 year period 🤑 (my goodness cha-ching Commissioner Adam Silver! Have yourself a day!). So what would this look like?

• Disney is expected to pay ~$2.6B annually for the league's "A" package.

  • This would include the NBA Finals, a conference final, weekly primetime games, primetime WNBA games, and shared international rights.

  • According to “plugged in peeps”, this amount is up from $1.5B under the current deal.

• NBC would hold rights to the "B" package which is said to be worth ~$2.5B annually.

  • This would include ~100 games/season (with potentially half those games on Peacock), a "Sunday Night Basketball" broadcast following the NFL season, a total of two primetime windows a week, conference semifinals, and a conference final.

• Amazon’s deal would be worth ~$1.8B.

  • This would include the Emirates In-Season Tournament, the SoFi Play-In Tournament, first-round playoff games, some WNBA games, and international rights.

• Now, of course, the deals aren’t done until we see pen to paper, 0:00 on the clock, or until the fat lady sings (ok fine, we’re done with the deadline puns 🤓).

  • According to Front Office Sports reporter Michael McCarthy, Warner Bros. Discovery (TNT) is in negotiations to secure a possible 4th media-rights package.

    • This could end up being a smaller, less-expensive package that includes regular season/playoff games.

    • Or maybe it’s saying “bye-bye” to RSNs and airing some locally televised games from teams and turning them into national games on TNT.

    • Ultimately, this could keep the “Inside the NBA” team together, which is expected to be a devastating loss for WBD CEO, David Zaslav.

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🟢 A-Rod’s new injection of choice: Bloomberg cash. Over a month ago, we walked through the odd sequence of current Minnesota Timberwolves owner Glen Taylor experiencing seller’s remorse after initially agreeing to sell the team to a new ownership group run by Alex Rodriguez and Marc Lore. On Thursday it was reported by The Athletic, that former three-term New York City mayor, 2016 presidential candidate, and billionaire, Michael Bloomberg, reached an agreement to join A-Rod and Lore in their escapade to own the Land of 10,000 Lakes…and by extension the NBA franchise. Bloomberg brings his much needed checkbook as he’s considered the 12th-richest person in the world. Let’s breakdown how this will work…

• A-Rod and Lore purchased 20% of the T-Wolves in July 2021 (Payment #1). The agreement then included three future payments:

  • Payment #2: Buy 20% piece (completed in 2023).

  • Payment #3: Buy 40% chunk (payment that “wasn’t made” and would have granted majority control of the team).

  • Payment #4: Buy the final 20% (for 100% ownership).

• Each option needed to be exercised by the end of the calendar year, with a closing of 60-90 days later (the 90-day closing period was on March 27, 2024).

• Taylor alleged A-Rod and Lore lacked the capital to make Payment #3 for $600M.

  • A-Rod and Lore have said they had the money and deserved a 90-day extension.

  • But…Taylor didn’t see the money so he nixed the deal.

• Commissioner Silver wanted the NBA to stay out of this, so the two parties went to mediation about a month ago.

  • Unfortunately, that failed to produce a solution, and then moved on over to arbitration.