This year, ESPN and Amazon showed initial interest in a Pac-12 deal. Conference officials originally said they wanted to more than double the $250 million per year that ESPN and Fox were paying. The conference’s university presidents, who pushed for that increase, didn’t understand the changing marketplace, even as both ESPN and Amazon suffered through rounds of layoffs.
The Pac-12 ultimately received an offer from Apple that was not enough to keep the conference together.
The tightening sports rights marketplace also hit WWE, which sold its “SmackDown” series to NBC at a 40% increase. Financial markets, though, expected a bigger increase and punished WWE’s parent, TKO Group. Its stock price dropped 14% the day after the deal was announced and it hasn’t recovered.
Several big ticket sports properties are trying to sell their rights in this suddenly tight-fisted media environment.
WWE still has its top “Raw” package on the market, as does the UFC, which will see its current ESPN deal end in 2025. NASCAR’s new deals still aren’t finalized. And networks have begun talking about buying the added games from the expected College Football Playoff expansion.
Then, of course, comes the biggest non-NFL deal, when the NBA takes its rights to market. The league’s current deals with ESPN and Turner end after the 2024-25 season, and several network and sports business experts expect that deal to take a significant amount of money out of the market.
The NBA’s exclusive negotiating window with ESPN and Turner ends in the spring. Both companies have said they want to keep the NBA. NBC, Amazon, Apple, YouTube and Netflix are expected to engage the NBA once its exclusive window with ESPN and Turner is up.
Traditional media executives and their digital counterparts bristle at the idea that the current sports rights environment is a manufactured bubble that is bursting. These companies still place a lot of value on sports rights. It’s just that they are being more discerning on the types of sports they are willing to pay to have on their air.
It has created a situation where the biggest leagues and conferences — the NFL, NBA and top college conferences — still will command top dollar. The next tier of sports rights will be dependent on timing.
Turner, for example, took meetings about College Football Playoff rights. If it renews the NBA, it’s unlikely to be interested in the CFP. If, for whatever reason, it does not keep the NBA, it will be interested.
The bottom rung of sports rights is the one that will see rights fee money shrink considerably. In the current environment, networks are much less likely to take a flier on, say, a pickleball deal than they would have been in the past.
Media companies are making these decisions based on one main question: Will a sport drive distribution revenue or subscriber growth? Of course, the sport also has to generate viewership and ad sales.