The NFL is about to completely alter the media rights landscape for every other sports property in the United States.
With The Shield prepared to renegotiate its broadcast deals several years earlier than initially anticipated, thereby gobbling up a huge chunk of the content budgets for its respective media rights partners, non-NFL leagues are preparing to face a difficult market for their own media rights. Certain properties like the NHL and PGA Tour have already held talks with potential broadcast partners, attempting to renegotiate their own deals early, before the NFL squeezes the networks dry.
One network executive is openly acknowledging the difficulty other leagues will face in the midst of the NFL’s early negotiations. Olek Loewenstein, Univision’s global president of sports, recently spoke with Sports Business Journal about the challenges “non-premium” leagues will face in the current market.
“Every single non-premium right in the U.S. is going to struggle,” Loewenstein told SBJ. “It’s going to be an inflection point for a lot of these rights holders, to a certain extent, in starting to deploy direct-to-consumer options.”
The Univision executive is likely correct to point towards direct-to-consumer streaming options, particularly those owned by tech giants like Amazon, Apple, and Netflix, as the best chance for leagues to secure higher rights fees. So much of the legacy networks’ budgets will be tied up in NFL rights, they will have to be very selective when it comes to which other properties to sign and for how much. That will likely spell opportunity for companies that have the means to pay more.
However, not all streamers are created equally. Those owned by the legacy networks, like Peacock or Paramount+, will have a difficult time competing with their well-funded peers.
Ultimately, the NFL squeeze will mean fewer potential broadcast partners in the marketplace for non-premium leagues.
The legacy broadcasters will be very selective, only buying properties that they believe can move the needle. That doesn’t bode well for leagues. Media rights revenue is generally a function of how many bidders are interested in airing a certain property. Taking a handful of potential buyers out of the market decreases leverage for the leagues.
It’s fair to predict that many properties will struggle to secure meaningful increases to their current broadcast deals when it comes time to renew. The economics of streaming have yet to come close to matching the economics of the old pay TV bundle. And the tech-owned streamers know that most of the leagues are “nice to have” not “have to have” for their services. Not to mention, streaming is practically a vanity business for the likes of Apple and Amazon. It’s not critical to their core operation.
For years, some have speculated about a “bursting” of the sports rights bubble. So far, that hasn’t happened. But it’s not unreasonable to believe that leagues will find it more difficult to find rights renewals during the next go-around than they have in previous cycles.