Member Insights: Why the NBA’s media rights might not be worth as much as you think
March 29, 2023
The NBA’s current media rights cycle comes to an end in 2025. Our content manager Alex Brinton takes a look at why they might struggle to get the figure they want.
It is not for a humble fan of the NBA to tell one of the best-run, forward-looking sports organisations that they have got something wrong, but there are a few issues around the next round of media rights that I think might cause the NBA more problems than they expect.
Record-breaking media rights deals are being done with incredible regularity all over the sports business at the moment, as broadcasters look for something that will guarantee subscribers and viewers – nothing can compete with sport on that front.
The Premier League’s rights are out for tender and there is plenty of talk that Apple plan to enter the market, and that the price is expected to increase from the £5.1 bn deal signed in 2021.
The NBA are expecting a considerable increase as well. The ten-year deal they signed with ESPN and Turner Media (owned by Warner Bros. Discovery) worth $24bn in 2014 will run out in 2025, and it is reported they are looking for $75bn for the next decade.
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ESPN and Turner have been broadcasting the NBA for over 20 years, and to many Americans the networks are the home of the NBA. Turner’s Inside the NBA show has won a combined 17 Sports Emmy Awards and was inducted into the NBA Hall of Fame in 2021.
When the tender process opens, the money the NBA are reportedly looking for could price Turner out of the market. Despite handing huge contracts to the Inside the NBA team in October, including a ten-year $317m deal for pundit Charles Barkley, the CEO of Warner Bros. Discovery then said a month later: “We don’t need the NBA.”
The NBA already have a streaming platform of their own called NBA League Pass which gives subscribers access to every game, every night, for $49.99 a season. Despite this it wouldn’t be a surprise if one of the big streaming platforms decided to get involved, Apple and Amazon are said to be looking at the NBA as part of their expansions into sport.
So far, so good for the NBA in their pursuit of $75bn. Indeed, around the league journalists and teams are already looking forward to what a TV deal of this magnitude could mean to the salary cap. The NBA has a cap on players’ wages which is currently set at $123.655m per team. Income from media deals has a direct impact on the salary cap: when the income from the $25bn deal signed in 2014 kicked in before the 2016-17 season, the cap was raised by a record $24m. The cap increase allowed the Golden State Warriors to add All-Star Kevin Durant to their roster and create arguably the greatest team of all time. The franchises will be well aware of the opportunities created by a new, lucrative media rights deal.
I see a few potential bumps in the road, though.
Firstly, the viewing numbers for the biggest games are in decline. Since the last TV deal was signed in 2014, the NBA finals have attracted an average viewership of 15.4m. The highest came in 2017 when the Golden State Warriors, with the addition of Durant, took on Lebron James and the Cleveland Cavaliers and avenged their loss in the previous year’s finals.
Of the last nine NBA finals, the last three have had the lowest viewership. The 2020 Covid-related finals pulled in an average of only 7.45m, despite containing LeBron James and his Los Angeles Lakers team winning their first title in a decade. The 2021 finals saw a rise to 9.91m and last year’s finals rose again, but only to 12.4m.
The NBA All-Star Game is a marquee moment in the league’s calendar, but this year it flopped. Just 4.59m people tuned in to watch the game – an all-time record low. The previous lowest was 6.1m in 2021. This is the biggest decline from one game to another since 2000.
Looking at the figures, is it possible that the NBA have misjudged the appetite of the American public for live basketball?
The second problem the league faces is load management. For those not familiar with the term, it refers to players missing games to rest so that they are at the optimal level for when the play-offs begin. This has led to some star players missing large parts of the 82-game regular season. With an increase in ticket prices around the league, there have been complaints from fans shelling out for tickets without knowing whether or not they are going to be seeing the best players.
This problem has grown in the last few years. Of the 52 players to be awarded the regular season MVP, 35 have played in at least 80 games. In the 1970s, 90% of the MVPs played in at least 80 games, in the 1980s this fell to 70%. But of the last ten MVP winners only four have played 80 games and this trend will continue this year.
One possible solution is reducing the number of games, something commissioner Adam Silver hasn’t ruled out, although he certainly isn’t keen on the idea. “It’s something we have been talking a lot about the last few years,” Silver said before Game 1 of the 2022 finals. “I’m not against potentially changing the format of the season, possibly even shortening it a bit, if we can demonstrate that’s going to have a direct impact on injuries.”
If broadcasters can’t be sure the stars are going to be playing in the games they select, or even how many games are going to be in a season, they may feel uneasy about tripling the amount of money they will be paying to broadcast the games.
The NBA is all about its star players. This is one of the things it has over the NFL, because NFL players are required to wear their helmets, while they are on the field even during touchdown celebrations it is harder to market them. With NBA players you can see their emotions at all times.
Stars such as James, Steph Curry, Durant and James Harden are moving towards retirement age: it is time for the league to have a new face. After the Dream Team won Gold in the 1992 Olympics, basketball became a global game and the league has increasingly been filled with foreign stars. But now they are taking over: the MVP hasn’t been won by an American since 2018 and of the five main contenders for it this season four are from abroad. At the moment there are several candidates for taking over as the ‘face’ of the league; only two are American. In addition to this, next year’s projected No.1 draft pick, Victor Wembenyama, is French. The 7ft 4in Frenchman is predicted to revolutionise the NBA and is the most anticipated draft prospect since LeBron James entered the league back in 2003.
This is great for the NBA globally, but it will be interesting to see how the American audiences react to a foreign invasion, and whether or not it will put them off the sport.