Sports Rights Revenue to Surpass Ticket Earnings by 2019: Study
The PricewaterhouseCoopers report comes on the heels of Turner and ESPN ponying up $24 billion for NBA television rights
A version of this story first appeared in the Oct. 17 issue of The Hollywood Reporter magazine.
Sports rights in the U.S. will overtake ticket revenue by 2019 to become the biggest money generator in the sports industry, according to a PricewaterhouseCoopers study released Oct. 6. So it should come as no surprise that the NBA's renewal of its rights packages with Time Warner's Turner Broadcasting and Walt Disney's ESPN, both announced that same day, total a combined $24 billion over nine years.
The new arrangement will run through 2024-25 and amounts to about a 190 percent fee increase for each outlet. Turner will get rights to 64 regular-season games each season — 12 more than in previous years — more playoff games and it will continue to manage NBA Digital. Analysts view Turner's continued relationship with pro basketball as crucial, given that its coverage has accounted for nine of the top 10 programs on TNT in the past decade. "There was strong return on investment in the previous deal, and there will be strong ROI in this one, too," says Turner Broadcasting System president David Levy.
ESPN gets 100 regular-season games — 10 more a season — and it is negotiating to launch an over-the-top digital offering in which the NBA would own an interest. Sister net ABC will remain the exclusive home of the NBA Finals.
PwC's report says the U.S. sports industry will generate $60.6 billion in revenue this year, with the gate responsible for the largest percentage, followed by media rights, sponsorship and merchandising. But media's 9.1 percent annual growth rate dwarfs gate's 2.6 percent. "For the first time in history, we'll be talking about media rights becoming the largest segment by 2019," says PwC's Adam Jones. Those numbers include a record $27 billion for NFL rights in multinetwork deals running through the 2022 season, including CBS' $275 million bet this fall on Thursday Night Football.
The only question is when sports rights fees will hit a ceiling as networks continue to chase "DVR-proof" programming. "The sports rights frenzy is a very large onetime reset," says Steven Birenberg of Northlake Capital Management. "The leagues have the upper hand in negotiations and are taking advantage of the networks."