Words that came easily Monday to the men announcing the NBA’s new blockbuster media-rights deal – like “collaborative,” “ascendant” and the ever-popular “partnership” – might be in shorter supply in the summer of 2017.
That’s when the league’s owners and/or its players can re-open their collective bargaining agreement, hammered out only after another rancorous lockout three years ago.
It all hinges on how the two sides – management vs. labor, historical adversaries regardless of how much “kumbaya” vernacular gets floated now – react to a massive increase in revenues when the new TV contract begins in 2016. The nine-year deal to keep and expand the NBA’s relationships with Turner Broadcasting System, Inc., and with ABC/ESPN will run through 2024-25, starting after the current agreement’s final two years.
According to multiple outlets, the deal is worth an estimated $24 billion, nearly three times what the league reaped from its current package with the two networks. Under the current CBA, the proceeds from these contracts (as from other sources of basketball-related income, or BRI) would be split roughly 50-50, with roughly $12 billion added to the players’ pot over the life of the deal and $12 billion to the owners’.
The devil, as usual, is in the details. And in the not-so-distant future.
Some might consider that a skeptical or glass-half-empty perspective on what, by almost all other measures, was a brilliant day for the NBA and its broadcast partners. The league didn’t just cash in by tripling the price of its rights fees; it solidified and enhanced partnerships that have been in place for decades. For example, Turner president David Levy noted that, thanks to TV deals dating back to 1984, the broadcast company will have been in business with the NBA more than 40 years by the time the new contract ends. ESPN will be at 23 years by then.
The average annual value of the combined deal, according to the New York Times, increases from $930 million to $2.66 billion. Divvy that up, minus certain costs, among 30 teams and the per-team share jumps from about $30 million to something closing in on $90 million.
While the owners and Silver met with other potential suitors, there were no outside negotiations and the league doesn’t feel it undersold itself by not hitting the open market. It was important to Turner and ABC/ESPN to land a new contract before the existing one lapses, to fend off competition from the likes of Fox Sports and NBC Sports/Comcast while committing to new programming, formats and technologies.
“Sports rights continue to be more and more valuable,” ESPN president John Skipper said during the Q&A portion of a news conference in Manhattan. “David and I agree that it’s the only thing that you have to watch live and the only thing live you watch that you watch by appointment. … We’re quite content that we’ve done an outstanding deal here.” (more…)