🏀 The NBA's Media Rights Decision

The future of the NBA rides on what pretty media company they take to the ball.

It’s officially the end of April, and you know what that means: longer days of sunshine, warmer weather, more sneezing from all the damn pollen, and of course, the start of the NBA and NHL playoffs. Good luck to all the partners out there, because if your lover has a team fighting for their playoff lives, just be ready for sleepless nights, random cranky days, and them constantly checking their pulse and heart rates 😖.

Even though us as fans might prioritize these games differently, the NBA, as a league, is dealing with its own pressures. The fact is the future of the league is in the hands of one decision: Which media companies will the NBA choose to get in bed with once their current deal expires after the 2024-25 season? Today, we’ll examine that future NBA media rights deal. Who are the players that could be involved? What’s at stake for their current partners? And what will the future of the league look like once this deal is signed?

Let’s get after it…

What does the current media rights deal look like and why should we care?

• In 2014, the NBA agreed to a 9-year, $24B deal ($2.7B annually) with both ESPN/ABC and TNT to become the exclusive broadcast partners of the Association.

  • For context, the previous deal was for $930M annually — which means this deal is nearly a 3x jump from their last go around.

• Monday was officially the end of the NBA’s negotiating window with parent companies, Disney (ESPN/ABC) and Warner Bros. Discovery (TNT), meaning that other media companies can start flirting and presenting offers to the league for new deals.

• But there are 2 main reasons why this is important:

  1. This is the 1st major sports league media rights deal that’s expiring as streaming services have officially outpaced linear TV in viewing usage within the U.S.

  2. This could be the last media rights deal we see linear TV being involved in negotiations. Why? Because streaming services have more money to a) offer the league and b) use on marketing + reach to make games a priority on their platform. They also tend to possess better data analytics teams to measure viewing success compared to traditional media companies.

• Last year’s NBA playoffs was the most watched in 11 years across TNT, ABC, ESPN, and NBA TV, according to Nielsen.

• The league also just finished up its most-watched regular season in 4 years, averaging an audience of ~1.1M. Resulting in a 1% increase from last season (no, it doesn’t sound like a massive jump but any positive news will used to swing a deal during negotiations).

Who is in the running for this next deal?

• Disney: ESPN losing NBA rights altogether would be shocking. As of now, Disney pays $1.4B a year for a package that includes 100 regular-season games, nearly half of the playoff games, and the NBA Finals.

• Warner Bros. Discovery: CEO David Zaslav has publicly said WBD doesn’t need the NBA to survive (lol, ok DZ 🙄), but it would be surprising if TNT didn’t keep some rights, especially given the launch of their live sports tier on their Max streaming service.

  • Separately, in 2022, TNT agreed to long-term contract extensions with the cast of Inside the NBA (pictured above). Their deals reportedly totaled nearly $200M over 10-years 💰 (they might already know something we don’t because it clearly costs a pretty penny to keep the most popular sports studio show together!).

• Amazon: Prime Video already has multiple international NBA deals, and sources indicate with their recent success being the home of the NFL’s “Thursday Night Football” + their 200M global viewers, this might be the perfect combo the NBA is looking for. Separate from the NFL, Amazon already has a diverse sports portfolio that includes the NWSL and WNBA.

• NBC: NBC last had league rights in 2002, and apparently they’re feeling a little left out. Maybe we’ll be able to hear the old school NBA on NBC theme song again…? But seriously, NBC has shown in the last year they can utilize Peacock to their advantage when it comes to live sports.

• Netflix: Even though it might seem less likely, the streaming giant is slowly but surely making it’s way into live sports. Just recently, Netflix agreed to a 10-year, $5B deal with the WWE and has produced multiple one-off events across golf, tennis, and boxing. But if there’s any time to make a splash, it would be now!

• Apple: The 2nd most valuable company in the world has a type and it’s all about partnering with leagues so it can acquire rights on a global scale, not just a single package in one market. Apple wants control. It’s why they currently hold 100% of the rights to the MLS. But they also know that same model won’t work with the NBA, so why not own all rights outside the U.S.?

• Google: Google recently hopped into the exclusive sports rights business in 2023 after its $14B deal with YouTubeTV and NFL Sunday Ticket. It’ll be interesting to see if Google would want to own the broadcasting rights, but what could be more in-line is if they purchase the rights to NBA League Pass (similar to NFL Sunday Ticket).

What is the NBA looking for in this new deal?

• We could end this newsletter now and just say it’s all about the CA$H MONEY BENJAMINS 🤑! But there’s a little bit more nuance to it…

• The NBA is looking to double its last media rights deal of $24B by adding new partners and charging more for rights.

  • With the popularity of the league growing, more competitiveness within the league, the inevitable bidding wars between multiple different media companies, and the possibility of adding two more franchises in Seattle and Las Vegas…we wouldn’t be surprised if their new deal isn’t double (or even triple) the current amount 😳.

• The league wants to continue thinking big. That means incorporating global rights in negotiations so growing demographics in Asia, Africa, and the Middle East can easily watch these games.

What does the future hold after this deal is complete?

• Incorporate more media players, charge more money. It’s no secret Disney and WBD still want to be involved with the league and they’ll do everything they can to do that because they want to stay relevant (as linear TV slowly dies). But the league is looking for a large increase in fees, and neither company wants to carry the full burden of paying significantly more than what they are now (take a look at their financials, and you’ll know why 😬). That could allow the league to bring in another 1-2 parties. Maybe the NBA could sell its new in-season tournament package to a separate streamer (like an Apple or Netflix). Or maybe Western Conference and Eastern Conference playoff games can be played on separate networks or streaming platforms up until the NBA Finals.

• Don’t forget about the WNBA. The current NBA deal only covers part of the WNBA’s rights. But ESPN CEO, Jimmy Pitaro, fully expects the WNBA to be part of any renewal that his network signs with the NBA. Even though the WNBA could technically look for separate partners, the NBA has been a close confidant to the women’s game since its inception and this would not be the time to branch away from that. Especially since the WNBA has more currency in these negotiations with Caitlin Clark’s arrival, booming ticket sales, highest viewing season ever in 2023, and league expansion right around the corner (and yes, this will inevitably help raise WNBA players salaries!).

• Streamers itching for the live sports prize. Money is obviously going to make a difference when it comes to giving the NBA what it wants during negotiations. But these streaming companies understand that while it might cost an arm and a leg for the NBA media rights, year-round content couldn’t be more attractive. Which is why paying for these rights will grow the value of their service. The value of live sports programming has increased because of its value to advertisers. While ad-free subscription streaming services have increasingly become the home for popular scripted programming, sports are still predominantly watched live, forcing viewers to see commercials which means advertisers will pay more for commercial time.

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Quick Hitters

• 🍎 Speaking of media rights, two years after Apple agreed to a 10-year, $2.5B deal for the MLS’ global streaming rights, The New York Times reported the company Steve Jobs built is nearing a deal with FIFA for the worldwide television rights for its new Club World Cup, which will debut in the summer of 2025 as the U.S. will play host. The tournament itself has been years in the making and faced many delays, most notably the pandemic, which prevented it from being played in China in 2021. It’s unclear if the games will be behind an Apple+ paywall, but the deal will be FIFA’s first time selling rights to one company instead of slicing them up in several packages across the globe.

• 📦 Come on over corporations, there’s plenty of room in this NIL world! FedEx has agreed to commit $25M over the next five years on the name, image, and likeness of University of Memphis athletes. The company generates $90B in annual revenue and will direct $5M annually primarily to support initiatives with football, men’s and women’s basketball, and other women’s sports. FedEx is based in Memphis and has a long relationship with the university, co-creating the FedEx Institute of Technology on campus as well as a degree program for FedEx employees. Billionaire chairman Fred Smith has also been a high-profile booster of the Memphis Tigers and personally donated $50M to renovate the school’s football stadium.

• 🦬 As the Buffalo Bills are set to open their new stadium in 2026, they might also be on the verge of a sale to add some more money in their pockets. According to reports, owner Terry Pegula (also owner of the NHL’s Buffalo Sabres) has hired investment bankers, Allen & Company, to handle the potential transaction. Valuations in the NFL continue to skyrocket. The last three sales have included:

  • Carolina Panthers ($2.3B in 2018)

  • Denver Broncos ($4.7B in 2022)

  • Washington Commanders ($6.1B in 2023)

• With the building of the new stadium, the Pegulas are on the hook for any cost overruns that was initially projected to cost $1.4B. However, industry experts forecast the final price tag will be closer to $1.7B. According to Forbes, the franchise is valued at around $4B.