The regional sports network model is dying, but there’s still no great alternative for teams. That might be best highlighted by the NBA’s Utah Jazz, who last season opted to ditch its regional sports network, Root Sports Utah, in favor of airing game on local over-the-air affiliates.
The move was widely praised by fans, who no longer needed to purchase a cable or satellite subscription to be able to watch the team. But for the Jazz, it’s proving to be a questionable business decision.
According to a report from CNBC’s Alex Sherman, the Utah Jazz have lost around 50% of its average annual media rights revenue since moving off of Root Sports. It was long expected that teams who took this route would be trading revenue for reach, but the drop off in revenue was not expected to be this severe.
Although a declining business, regional sports networks are still able to pay substantially more in rights fees than their over-the-air counterparts due to the revenue they’re able to generate through carriage fees. Teams that have made the switch to over-the-air have done so knowing that media rights revenue would go down, but hoped by reaching more people, revenue in other areas like ticket and merchandise sales would go up.
In speaking with CNBC, Jazz owner Ryan Smith said, “You couldn’t pay me enough money to go back to the old model.”
Per the report, Jazz games used to be accessible to about 760,000 individuals on Root Sports Utah. Now, the team’s games reach 6.3 million people on its broadcast affiliates throughout the state.
“You have to zoom out a little bit beyond just the RSN revenue stream,” Smith told CNBC. “Our team has about seven different revenue streams, and the other six are enhanced by broader distribution of our games. The more people watch, the more people come to games, the more we sell in concessions, the more money we bring in with sponsorships.”
Unfortunately for Smith, it’s unclear if that strategy is paying off. According to a recent report in Sports Business Journal, local Utah Jazz television viewership has declined 44% versus last year as the “novelty” of watching games on free over-the-air TV has worn off and the team underachieves on the court.
Utah isn’t the only franchise struggling with the new model. CNBC also cites the Phoenix Suns, who were the first NBA team to jump ship from their regional sports network back in 2023, have lost about 25% of its media rights revenue.
It all goes to show just how difficult it will be for teams to maintain the levels of revenue generated from the cable bundle. That’s why, for many teams, staying on their RSN until the bitter end is the most prudent business decision.
