Major League Baseball finds itself on the precipice of a major media rights restructuring, and its commissioner is looking towards the NBA for guidance.
Come 2028, MLB will be returning to market with its full suite of national media rights packages. At the same time, upheaval in the local media rights marketplace has the league eyeing a nationalized strategy for that inventory. And commissioner Rob Manfred is taking notes from a peer league, the NBA, on how to both maximize MLB’s revenue potential, while ensuring franchise valuations for owners grow more in line with its basketball counterpart.
Speaking at Braves Investor Day on Wednesday, Manfred spoke to why the NBA’s media rights model, which focuses on national inventory, can serve as a blueprint for MLB in three years, and increase club valuations in the process.
“Because of the changes in the media market, it’s clear we need to have a more national media strategy,” Manfred said, per Sports Business Journal. “And what that means is you’re going to generate more central revenue. When franchises get valued, the more central revenue you have, the higher multiple is applied to the revenues. And the reason for that is simple: [Potential buyers] see it as more predictable, as opposed to local things like ticket sales that go up and down. You make these 10-year deals, everybody knows you’re getting X in central money, and that increases the multiple that gets applied.”
SBJ‘s Mike Mazzeo suggests that there’s quite a large gap between the revenue multiple applied to MLB franchises and NBA franchises when they get sold. Per Mazzeo, MLB valuations are between 4-11x a team’s implied revenue, while NBA valuations fall between 10-15x a team’s implied revenue. Manfred believes that’s because more of the NBA’s revenue is centralized and shared equally between its teams, while MLB clubs are more reliant on local, team-specific revenue like ticket sales and local media rights.
The commissioner has made clear that by 2028 he’d like to centralize as many teams’ local media rights onto one platform as possible. The theory is that a combined package of local rights can draw a bigger paycheck from the likes of an Amazon, Apple, Netflix, etc., than if each club sold its local rights individually. Now, Manfred is saying this strategy has the added benefit of predictability, which improves franchise valuations.
NBA commissioner Adam Silver has also expressed his desire for a centralized local rights package, perhaps on an even quicker timeline than MLB. But the portion of revenue the NBA generates from its national packages, especially under its new 11-year $76 billion deals, is far greater than the portion of revenue MLB generates from national packages. That is, at least partly, what explains the discrepancy in the multiples given to team valuations.
At the end of the day, Manfred’s job is to make as much money for the owners as humanly possible. Owners make the most money when they sell their teams, so it’s no surprise Manfred is tailoring the league’s next media rights agreement in a way that will maximize how those teams are valued.
About Drew Lerner
Drew Lerner is a staff writer for Awful Announcing and an aspiring cable subscriber. He previously covered sports media for Sports Media Watch. Future beat writer for the Oasis reunion tour.