What to look for in sports business in 2023: Streaming deals, NBA media rights, RSN bankruptcy and more
It’s been a busy year for the off-field business side of sports, and 2023 promises to be no different.
In fact, it may be one of the most important years in the history of the business of sports — and that’s critical for what occurs on the field, court, ice, and track.
Why? Simple: The Great Live Sports Streaming Experiment goes into overdrive with Major League Soccer moving almost entirely behind the Apple TV paywall and Google’s YouTube taking over NFL Sunday Ticket.
Live sports are the center of the streaming category because they’re proven to be the programming most resistant to the ongoing cord-cutting trend compared to almost everything else on TV. But that’s why sports leagues are able to wring so much money out of networks and tech companies that want live sports — how long will that be the case, though?
Here are some of the major sports business storylines to keep an eye on in 2023. If you think we missed something, let us know in the comments.
This is the big one. While linear TV continues to produce the most eyeballs and cash for live sports, the shift to streaming marches on. The past year saw Amazon Prime Video take over the NFL’s 15-game “Thursday Night Football” package and turn it into a paid streaming product. TNF on Amazon has averaged 9.57 million viewers in Nielsen-only audience measurements (with one game remaining), which is below the 12.5 million the streamer promised advertisers, but more than most critics predicted.
The Amazon deal runs through 2033, and I expect it to eventually reach the audience numbers that the company and NFL want within a few years. For now, plenty of fans complain about the TNF streaming quality while others say it’s great (I’ve been among the latter and wrote about it, to the annoyance of the former).
The NFL has been satisfied enough with streaming that it plans a TNF game on Black Friday in 2023, and earlier this month announced what’s reportedly a seven-year deal, at $2 billion a year, with Google Inc. to stream the out-of-market Sunday Ticket via YouTube TV and YouTube Primetime channels starting next fall. The Google deal has brought the NFL’s overall media rights to something like more than $120 billion over the next decade, cementing it as the nation’s most powerful sports and broadcast property.
Apple and MLB launched a streamed Friday doubleheader package this season, but we don’t know how it fared because, unlike Amazon and the NFL, Apple doesn’t disclose viewership numbers. How Apple and MLS answer questions of viewership transparency for fans, media, and advertisers is a major question for 2023. Why? Because viewership and revenue are inexorably linked.
And now we have MLS shifting its entire slate of matches to a forthcoming Apple TV streaming product. The entire sports world will watch how this 10-year, $2.5 billion deal plays out. Some MLS matches also will air on linear TV, but the league is all-in on streaming. While a different creature than the other U.S. major leagues, it’s a canary in the coal mine for live sports streaming, at least in the near-term. The other leagues have functionally only toe-dipped into exclusive streaming. If the MLS experiment is successful — its fanbase is said to be younger and more tech-savvy than the other leagues — look for more streaming deals in coming years.
One gigantic caveat: Streaming isn’t profitable for any of the major participants so far, and the media and tech industries have been hit by a wave of layoffs and cost-cutting. There’s been talk of consolidation among streamers, too, which could help fan-consumers with costs and confusion over the cable-like proliferation of paid streaming options. How all of that shapes the future of live sports streaming should come into more clarity as 2023’s calendar pages flip. And that leads us into …
MLS faces race against time to build broadcast operation ahead of Apple TV deal
Regional sports networks
The poster child for the embattled RSN industry that delivers most MLB, NBA, and NHL live game broadcasts to fans is Sinclair’s Diamond Sports. Its 19 Bally Sports-branded channels have the local TV rights to 42 teams, and with tens of millions of consumers dropping cable, the ability of RSN owners to pay the princely sums for those broadcast rights is strained. That money accounts for a big chunk of the revenue that baseball, basketball and hockey teams rely upon to pay players and cover expenses. The possibility of bankruptcy continues to loom over Diamond, which is attempting to limit parent Sinclair’s control of the RSN business while rolling out local streaming. There’s speculation that the leagues could end up buying the channels as a stop-gap measure. RSNs also could also get pieced off individually or bought at a discount by a deeper-pocket company.
NBA media rights
The NBA is the last of the five domestic major professional sports leagues yet to ink a new set of national media rights deals. Currently, its deals with ESPN and Turner Sports will have paid it a combined $24 billion by the time the pacts end after the 2024-25 season. The league is said to want up to $75 billion for its next batch of rights, which likely will be a multi-partner set of deals with traditional broadcasters and with streamers — a blend that provides the safety of proven partners and the risk of new delivery methods. That’s similar to the current NFL distribution model. Look for talks to heat up by this summer. Who lands the rights? Expect the contender mix to include many of the familiar names already in the space: ESPN, Turner, HBO, Google, Apple, Amazon, etc.
Crypto and NFTs
The implosion this fall of cryptocurrency exchange FTX — a company that used sports as a significant marketing tool — has served to functionally ice much of the digital asset spending with teams, leagues and athletes. The FTX scandal comes atop a series of crypto collapses and loss of value over the past year, and a sharp decline in consumer spending on non-fungible token collectibles such as NBA Top Shot. Watch for lawsuits and efforts to regulate the crypto space over the next year-plus. There may be more moves to adopt blockchain technology behind the scenes for business functions such as ticketing rather than splashy deals for NFTs, fan tokens, and the like as many consumers and critics view them akin to the Beanie Babies and Dutch tulip bulb bubbles.
The past several years have been a boom for sports trading cards and other collectibles, with retail giant Fanatics gaining future control of MLB, NBA and NFL card licenses and ownership of iconic card maker Topps Inc. What’s in store for 2023 is a major question, particularly the future of Topps’ chief rival Panini, which will lose its NBA card licenses but retail in a global soccer sticker business, and Upper Deck that produces NHL cards. Will Fanatics face questions from anti-trust regulators? Will its card products continue to appease collectors? Will the uncertain economy bite into the trend of monied investors who see cards and collectibles as assets like real estate, rare art, wine, cars, and coins? Will NFTs ever bounce back? And will someone break the new $12.6 million price record for a card?
RSN struggles, the future of streaming, trading cards: Sports Business Mailbag, Part I
USFL 2.0 vs. XFL 3.0
Does the American sports landscape have room for two developmental pro football leagues? We’re gonna find out! The eight-team USFL that’s controlled, financed and partially owned by Fox Sports returns in April with plans to play in multiple cities rather than just Birmingham, Ala., as it did in 2022. Its games will again be broadcast or streamed on Fox, FS1, NBC, USA and Peacock. The league takes its name and team monikers from the 1980s challenger to the NFL but the new version isn’t otherwise related and isn’t attempting to be on par with the NFL.
Then there’s The Rock. Dwayne Johnson and his business partners bought the latest version of pro wrestling impresario Vince McMahon’s XFL after it was mothballed by Week 5 during the 2020 pandemic. It showed viewership promise and was less of a flamboyantly silly product than McMahon’s 2001 XFL that lasted a full season but was a flop financially. The third version of the XFL (which has broadcast deals to air games on ESPN, ESPN2, ESPN+, ABC, and FX) kicks off Feb. 18 with eight teams.
Both leagues use new and retread coaches but also serve as football and broadcast laboratories for such broadcast innovations such as drone cams, additional microphones on players, coaches, officials, etc., and for rules that could eventually work their way to the NFL.
Expect to see continued racial, gender and other social justice efforts, and labor efforts, by athletes seeking a more genuine level playing field and treatment on many fronts. While some activism has shifted out of the spotlight, and some question how much is window-dressing by leagues and teams, social justice efforts are here to stay. This is reflected in increased promotion, investment, public consumption of women’s sports, and also investigations and legal actions over abuses, mistreatment and inequality. Social justice efforts in sports tend to be triggered by events outside of sports (but certainly sometimes within them) as athletes use their platform to bring awareness to an issue. Which, of course, produces backlash from some fans, who see sports and athletes as their entertainment escapism, and powerful corporate and political interests that seek to preserve the status quo.
How the new USWNT and USMNT collective bargaining agreements achieved equal pay
War and peace and recession
The NBA and China remain a contentious topic because of the brutality of the authoritarian communist regime, particularly in a destabilized world. The league and players have faced criticism for investment in China as a major growth market and revenue source while generally remaining quiet on Beijing’s repression of human rights — particularly athletes that promote domestic social justice causes while not risking backlash by being vocal about China. A major question is China’s latest belligerency with democratic Taiwan, which it considers a rogue territory. If China attempts to invade Taiwan, the United States is very likely to aid longtime ally Taiwan’s effort to repulse the offensive — and where does that leave the NBA and the rest of the world when the two remaining superpowers go to war or a proxy war?
In Europe, Russia’s bungled but deadly invasion of Ukraine was the geopolitical backdrop for the nine-month detention of WNBA player Brittney Griner, who was finally released in a prisoner exchange in early December. That situation highlighted the risk of WNBA players’ need to play overseas to earn money, and it also led to the isolation of Russia from much of the sporting world, including the Olympics and in ice hockey. It also has played out as the pandemic-era global supply chain issues have improved but inflation hit hard in 2022, with the Federal Reserve boosting interest rates to bring down prices but raise the chances of a recession early next year.
And when things are more expensive, that cuts into spending by sports fans on things like tickets and streaming services. Economists are warning of a recession early in 2023 — sometimes the Dismal Science is right, sometimes not — while debating the length and severity.
Elon Musk’s chaotic stewardship of Twitter looms over the sports world. While not the biggest social media platform, Twitter is important for breaking sports news, and athletes, teams, leagues, organizations, governing bodies, governments, media and fans rely on the platform to communicate and consume news in near real-time. Musk’s $44 billion deal — recall that he quickly tried to back out of it in the spring until a court forced him to honor the contract — has been followed with a series of seemingly random and arbitrary decisions about Twitter’s functions and rules, including allowing previously banned hate-speech accounts to return. Many advertisers have pulled out or halted spending, and Musk has warned of bankruptcy amid a billion-dollar debt load. He also fired much of Twitter’s workforce and may be running afoul of U.S. and European regulators.
Other sports biz topics to watch in 2023:
- Could we see a Michigan-Ohio State rematch, with possible record-setting viewership, in the CFP title game?
- Like 2022’s game broadcast, Super Bowl LVII is almost certain to have 2023’s biggest U.S. television audience.
- The new Big Ten media rights deals begin next summer.
- Formula 1 continues to grow U.S. viewership.
- NIL rights continue to be a major and developing factor in the future of college sports (even as coaches whine while doing the same job/money hopping).
- Fanatics and owner Michael Rubin, who have created a vast sports empire (with plenty of fans and detractors) plan to enter the sports gambling market.
- The 2023 season is the final year of the four-team College Football Playoff before expansion to 12 teams in 2024.
- Does metro Detroit wholesale mortgage tycoon Mat Ishbia’s purchase of the NBA’s Phoenix Suns (and WNBA’s Mercury) at a $4 billion valuation usher in expansion talk to take the league from 30 to 32 teams (and maybe for WNBA expansion, too)?
- A bunch of other pro sports teams are for sale.
- Where do the Oakland A’s end up: With a new local stadium or joining the Raiders in Las Vegas?
- The NFL will continue to encroach on the NBA’s Christmas Day sports viewership stranglehold.
- Easter Sunday continues to become a sports TV day like Thanksgiving and Christmas.
- The LIV Golf tour, backed by gargantuan amounts of Saudi government money in what’s been billed as a sportswashing effort by the regime, will begin its second year of open conflict with the PGA Tour
- Like questionable sovereign wealth funds investing in major league sports, private equity continues to pour money into non-controlling shares of pro teams. While that can provide financial stability, critics wonder how long before PE brings its notorious budgetary scalpels to the industry in the name of profits.
- Waiting game: After mothballing it in 2013, EA Sports will revive its college football franchise in 2024 instead of the anticipated summer 2023 relaunch — bummer! — but look for development news about the game next year.
(Photo: Kevork Djansezian / Getty Images)
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