Right now, over-the-top local and national television deals are fueling the NBA — the league’s salary cap is going to jump $40 million a year per team in the next two years because of a new national television deal. On the local level, oversized deals with regional sports networks that need the programming — or in some cases, such as the Lakers’ $4 billion deal, the local stations are wholly based around the team — pump truckloads of cash into the system.
But the future is streaming, and everybody knows it. Already you can stream any NBA game, some for free, or you can pay for a League Pass broadband subscription, and that market is growing quickly.
Which brings us to the Clippers’ emotional owner Steve Ballmer, who rejected $60 million a year from a local Fox Sports property to consider starting his own streaming service, reports the New York Post.
Steve Ballmer, the owner of the Los Angeles Clippers, has turned down a $60 million-a-year offer for local TV rights and is forging ahead with a plan to start his own over-the-top streaming network, The Post has learned.
If he follows through on the plan, Ballmer, the former CEO of Microsoft, would be the first owner of a major US sports team to deliver games direct-to-consumer via a Web-based service and not through traditional cable or satellite companies, sources said….
(Fox Sports) Prime Ticket currently pays the team a rights fee of $25 million a year — and offered a 140 percent increase, to $60 million, but the billionaire Ballmer turned it aside… Some observers think the bombastic Ballmer is merely using the threat of forming an over-the-top network as a play to wring more money from an RSN.
I would bet on that last sentence being true. Streaming may well be the future, and it certainly is now some fans (particularly under 25) watch games, but the money right now is still in television. He’s working to gain leverage and open the door to other competitors, but in the end he’s not going to shun that money all for his startup risk. Plus, he knows Fox Sports needs to keep the Clippers — they have lost the Lakers, Dodgers, Galaxy, Sparks and other properties in recent years — and will overpay to do so.
However, teams controlling their own streaming could well be the next big thing for NBA owners trying to wring every drop of revenue out of their team.
Right now that streaming is part of the rights package that regional sports networks purchase. To use an in-house example here at Comcast/NBC, if you are a Comcast Sportsnet subscriber in cities where we have local NBA rights — Philadelphia, Boston, Portland, the Bay Area, Washington D.C., and so on — you can stream your local team’s games through the local CSN websites (and find links here on NBCSports.com to all of that). This is pretty standard across the RSNs in the league. These regional outlets like streaming because it is another place you can sell advertising where the audience is captive (you can’t just fast forward through the ads like on a DVR).
Eventually paying for those streaming rights will cost the RSNs a lot more money, and if it is profitable enough teams will take them over. Ballmer may just be ahead of the curve on this.
Although, after watching his years guiding Microsoft, he’s swung and missed on more than a few things, too. So we’ll wait and see.