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When the Dallas Mavericks’ 2024–25 season tipped off, the team found itself taking a $50 million hit in media money. Of that, $45 million was the annual earnings the team would have received if its broadcasting partner Diamond Sports Group, a subsidiary of Sinclair, hadn’t defaulted on its debt and fallen into bankruptcy. The balance was the team’s capital expenditure to launch a new media plan, which includes a free streaming service and a deal with Tegna to broadcast across 14 regional channels.
The move was necessary. Expensive, but necessary. The Mavs aren’t the only team grappling with the loss of media revenue. The NBA franchise was part of Diamond’s 42-team portfolio encompassing organizations across the MLB, NBA, and NHL. The Dallas Stars and Texas Rangers were also in that portfolio and have since cut ties with Diamond. (Twenty-nine franchises across the three leagues stuck it out with Diamond, now known as Main Street Sports Group, as it transitioned out of bankruptcy to end 2024.) The Stars’ former deal with Diamond reportedly paid the team $20 million for a 70-game slate each year. The Rangers’ contract, orchestrated in 2010 in congruence with the stabilization of cable TV subscriptions and the team’s performance, was reportedly worth $3 billion over 20 years.
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The Mavs' TV deal with Tegna has grown the number of Texans who can access games to about 14 million.
The erosion of Diamond’s media assets, sold to them by Fox Sports, which purchased the assets from ESPN, can be attributed to a few things: Diamond’s parent company, Sinclair, loaded up the operator with $8 billion of debt to get the deal across the finish line. Couple that with the fact that since 2019, about 20 million people have cut the cord and transitioned to streaming. “All of a sudden, that’s millions of people not paying [for cable] anymore,” says Jon Heidtke, the former general manager of Fox Sports Southwest. “Companies had to pivot to figure out what the new economics would be. Unfortunately, Sinclair got a business where revenues were declining and were under the gun from the get-go.” Diamond began to miss payments on its debt, which eventually triggered a Chapter 11 filing.
“Cable was an idiot-proof business,” says Stars President and CEO Brad Alberts. “But when people started to say they didn’t want to pay for cable, that put pressure on the regional sports network economic model.”
Led by Alberts, the Stars fully embraced streaming by partnering with A Parent Media Co. on a seven-year deal to stream all regional games free of charge during the 2024-25 season through its direct-to-consumer service, Victory+. APMC took on much of the financial obligations of standing up the service, essentially “de-risking” the plan, Alberts says. As a result, the Stars became the first pro sports team to offer a free direct-to-consumer streaming service. The Anaheim Ducks followed the Stars and are now aired on Victory+, too. Being free, Alberts says, was the most important part.
“We all have subscription fatigue,” the CEO says. “I don’t want to go and fill out the forms and put the credit card down. Also, nobody on a local sports level has proved that charging fees has even worked or if they’ve generated real revenue.”
Nobody on a local sports level has proved that charging fees [to watch games] has generated real revenue.
Brad Alberts, Dallas Stars
Numbers Game
Stars president and CEO Brad Alberts says the team will need a couple of years to understand the economic possibilities for Victory+, but the early viewing returns are promising. After launching last fall, the service has sparked more than 500,000 app downloads and reached three times as many households. Through its over-the-air deal with Tegna, the Mavericks expect that roughly 14 million people in Texas and parts of Oklahoma and Louisiana will have access to 70 regionally televised games. Although it will take a lot to replace the millions generated from the team’s previous media contract, the deal is one of the largest sports franchise footprints established by a local broadcast group.
The Mavs took a twofold approach to addressing its TV conundrum following the crumbling of Diamond. Last September, the organization reached a deal with broadcast conglomerate Tegna to air all non-nationally televised games for free across six regional channels, nearly tripling the number of households the Mavs reached before the deal.
Within a month, the Mavericks inked an expansion with Tegna to get its games on eight more regional channels. Now, 14 million people in the region have access to non-nationally televised games. In December, the team launched its free streaming platform, MavsTV. “If we want the Mavs to be looked at the same way as the Cowboys from a brand standpoint,” says Theo Hodges, the Mavs’ chief revenue officer, “this gives us the best opportunity to do that.”
The Rangers, on the other hand, have moved the slowest, but the team found its way in January. When Fox Sports Southwest aired the games, Heidtke says the team was “night in, night out, Dallas’ most watched event.” Under its original deal with Fox Sports, the Rangers raked in $110 million annually. Last year, it was forced to discount that by $20 million to earn $90 million. Industry experts believe annual revenue from the Rangers’ next media deal to land somewhere around $60 million.
And now, the organization has found its plan. It is taking a two-pronged approach, with one riding the coattails of the Stars. The 2023 World Series champs partnered with Victory+ on a direct-to-consumer subscription model that will cost fans $100 for the season. A few weeks after that news broke, the team announced it will launch the Rangers Sports Network to distribute its games to DirecTV, DirecTV Stream, AT&T UVerse, and Spectrum customers.
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Aside from national games, the Stars can be watched free of charge via its Victory+ app.
The shift to airing the games on free streaming services or local channels may please fans, but it doesn’t remedy the losses in revenue. “We in the industry have to come up with new and different ways to grow top-line revenue,” Alberts says.
Teams across the country are trying to solve the gap in a variety of ways, but in North Texas, the answer, for now, is mixed-use real estate. The shift is one of the reasons Mark Cuban—who made his fortune in media and technology—sold his majority stake in the Mavericks to the Adelsons, the family behind Las Vegas Sands Corp. “For us, mixed-use is the right way to go,” says Patrick Dumont, president and COO of the company and new Mavs governor. Another remedy comes in the form of gambling, whether it be online sports betting or casino gambling. Neither is legal in Texas yet, but with the Adelson family’s influence (and deep pockets) pushing the cause, the odds seem better than ever that it could change.
As organizations and leagues attempt to adjust on the fly to continue to reach fans, all while maintaining cash flow by replacing the well-worn path that for so long served as a reliable revenue stream, one thing is for certain: The industry is in a state of uncertainty.