Despite the expiration of a soft deadline on April 1, four NBA teams are reportedly poised to renew media rights deals with Main Street Sports Group, owner of the FanDuel Sports Networks.
According to a report by Tom Friend in Sports Business Journal on Monday, the Atlanta Hawks, Miami Heat, Minnesota Timberwolves, Milwaukee Bucks, and, to a lesser extent, the Cleveland Cavaliers, are likely to re-up local media rights agreements with FanDuel Sports Network for next season. Per Friend, the artificial April 1 deadline has been “pushed into this summer or beyond,” allowing teams more time to evaluate the local television and streaming landscape before deciding to renew current agreements.
The primary riff between the two sides seems to be the length of a potential new agreement. Main Street Sports Group, which emerged from a prolonged bankruptcy proceeding last year, wants teams to sign two-year agreements, affording the company some stability as it tries to grow as a viable business. The teams, however, would like to ink one-year agreements so they can have flexibility to join a future national streaming service the NBA is reportedly negotiating with the likes of Amazon, YouTube, Apple, and others.
Per the report, that type of streaming service is unlikely to manifest in the near-term. The league “has informed team executives that the streaming RSN is not immediately imminent,” and to “stay patient.”
For the individual franchises involved, the decision of whether to stay on FanDuel Sports Network comes down to dollars and cents. Some NBA teams have opted to forego carriage on traditional regional sports networks that require a pay TV subscription, instead airing games on free over-the-air channels and paid streaming services. That method, Sports Business Journal reports, has often generated only half of the local media revenue that traditional regional sports networks like FanDuel can provide.
Thus, while teams are naturally limiting their reach by remaining on regional sports networks that are increasingly more difficult and expensive to access, they are able to retain more of their local media revenue.
Sports Business Journal classifies the Hawks, Heat, and Timberwolves as “almost certain” to renew with FanDuel Sports Network for next season. The Bucks, the report suggests, are “likely” to extend their current deal.
The Cavaliers are more of a question mark. Cavs owner Dan Gilbert launched an over-the-air regional sports network called Rock Entertainment Sports Network last year, with the plan being to air the team’s games on the channel in the future. But given the current economics of local media rights deals, where a shift to over-the-air likely means a significant reduction in rights fees, the Cavaliers “may simply return to FanDuel Sports Network,” the report suggests.
The saving grace for NBA franchises struggling to maintain local media revenue is the start of the league’s lucrative new national media rights agreements with ESPN, NBC, and Amazon next season. Teams will reportedly receive $142 million each starting next season, with 7% increases every year for the remainder of the 11-year deals. For reference, local media agreements for the five teams currently involved in renewal talks with FanDuel range between $24 million and $55 million per year.
That windfall from the national TV deals makes the regional negotiations a bit lower stakes. Nevertheless, these types of negotiations are make-or-break for regional sports networks as they fight for a seat at the table of whatever future streaming solution leagues like the NBA, MLB, and NHL come up with.
