After two months of speculation, negotiation and doomsday planning, it appears that major sports will be back this summer. Owners in the NBA, whose shutdown on March 11 was a turning point for the entire industry, are voting Thursday on a proposal to host 22 teams in Orlando for a modified regular season and playoffs.
The NHL has unveiled plans for a 24-team playoff, and the MLB is negotiating with players on a possible July return. Meantime the NFL, the most visible and valuable U.S. sports league, is re-opening facilities and planning to play in front of fans this fall.
The possible returns are the result of many developments, including increased virus testing, but the motivation is clear. The resumption of games in empty stadiums and arenas allows leagues to tap the most important revenue source in sports: media money.
The four major U.S. leagues take in more than $15 billion each year from TV networks and streaming services, and while that money has continued to flow, it’s a delicate balance contingent on games being delivered. While fanless games aren’t perfect, they are something, and viewers at home will likely be voracious consumers of it all.
“Viewer appetite for sports on TV will be extremely healthy,” said David Levy, who ran Turner Broadcasting from 2013-2019. “Everyone has already binged on what they wanted to with their streaming services, and there isn’t any new entertainment content to speak of. Sports will fill the void.”
Last week’s golf match featuring Tiger Woods, Phil Mickelson, Tom Brady and Peyton Manning drew an average of 5.8 million viewers, making it the most-watched cable golf telecast ever. Nascar’s return saw record ratings, as did ESPN’s 10-part Michael Jordan docuseries, which was the network’s most-watched documentary of all time.
Advertising executives also expect the market to be vibrant once LeBron James is dunking again. The COVID-19 lockdown has accelerated viewership trends that might make sports even more valuable, driven by deep-pocketed companies looking to spend. No U.S. league, save maybe the NFL, will deliver everything it owes its TV partners this year. But some can get close, and others will use bigger playoff formats and concessions in future years to preserve those relationships without too much disruption. Here’s a snapshot of where the four major U.S. sports leagues currently sit with their media revenue:
MAJOR LEAGUE BASEBALL
Total Revenue: $10.7 billion
National TV Revenue: $1.7 billion
Local TV Revenue: $2.1 billion
2019 Gate revenue: $2.86 billion, according to Forbes
No major U.S. sport is more reliant on game-day revenue than baseball. Its 162 games are more than any other sport, and the venues hold far more fans than the indoor arenas of the NBA or NHL. It’s partly why MLB owners estimated they would lose billions if they were to play half of a season without fans.
Chicago Cubs owner Tom Ricketts said recently the team gets about 70% of its revenue from game-day activities. The league makes about $1.7 billion annually from its national TV deals, and individual teams add at least another $2.1 billion in deals with regional sports networks (RSNs). While those national partners can manage a shortened season (ESPN will lose some Sunday night games of the week) most national partners make their return on the playoffs. The RSN contracts are a much bigger uncertainty.
Media deals with local stations like SNY, home of the New York Mets, or SportsNet LA, which carries the Dodgers, carry a minimum requirement of games. With the league discussing a season that’s 82 games or fewer, those minimums won’t be reached. Money will either need to be returned, or deals will be made to figure out how to give those RSNs more rights in the future. It’ll likely be even more complicated for teams like the New York Yankees and Mets, both of which own large stakes in their RSNs. The media company most at risk is Sinclair Broadcast Group, which last year took on billions of debt to buy 21 RSNs from Disney for $9.6 billion. Those networks had rights to 14 MLB teams, 16 NBA teams and 12 NHL teams.
NATIONAL HOCKEY LEAGUE
Total Revenue: $5.1 billion
National TV Revenue: $520 million
Local TV Revenue: Unknown
2018-19 Gate Revenue: $1.86 billion, according to Forbes
The NHL is in relatively good shape from a media perspective. Most teams played about 85% of their regular season, a number that should largely satisfy local media contracts, and the expanded playoffs will keep more teams relevant deeper into the year. From a national perspective, the league makes about $520 million each year from its major national TV deals with NBC in the U.S. and Rogers Communications in Canada. Though those networks lost a few regular-season games, they also make up a bulk of their return during the playoffs, which according to the league’s plan now features eight extra teams.
NATIONAL BASKETBALL ASSOCIATION
Total Revenue: $8.8 billion
National TV Revenue: $2.66 billion
Local TV Revenue: Unknown
2018-19 Gate Revenue: $1.95 billion, according to Forbes
The NBA’s situation is comparable to the NHL, only there’s more money on the line. The league’s national deals with ESPN and Turner are worth $2.66 billion per year, and their local deals tend to be more valuable as well. NBA teams played about 78% of their season before the shutdown, a number that should get them relatively close to satisfying most local contract requirements. But the league is also reportedly planning to have 22 teams play eight more regular-season games, a move that should help with playoff seeding and also provide added value to media partners. Of the non-playoff teams five — Atlanta, Charlotte, Cleveland, Detroit and Minnesota — are broadcast on Sinclair stations.
An added wrinkle: The NBA will likely resume play with every team at Disney World in Orlando, Florida. Disney also owns ESPN. It’s unclear how that hosting relationship will square with the media partnership.
NATIONAL FOOTBALL LEAGUE
Annual Revenue: $16 billion
National TV revenue: $7 billion
Local TV Revenue: Minimal
2018 Gate Revenue: $2.24 billion, according to Forbes
The country’s richest sports league is by far the least reliant on game-day revenue, and its season doesn’t start for another three months, giving it the ability to learn from the others. The media model is all national, meaning there are no RSNs to satisfy should games be disrupted.
The league takes in more than $7 billion per year for its television rights, and has more flexibility to fit in games than the other leagues. The NFL’s big media question is about the future. Its major deals expire in the next few years, and before the pandemic experts were predicting a massive windfall. Will the current financial struggles at companies like ViacomCBS and NBC parent Comcast affect their ability to bid on the NFL?
Executives in all four leagues are working to make up for lost ticket sales and other ancillary game-day money makers like parking, sponsorship and concessions. They include encouraging ticket holders to apply payments to next season, adding more space for sponsors on telecasts and repurposing their venues for events like drive-in movies.
They also share a concern that re-starting too soon, or in the wrong way, may lead to another period without games. The financial ramifications in that scenario would be further reaching, and likely much more impactful. “There is a bonanza of viewership out there if they can get started,” media consultant Lee Berke said. “But that’s the question — can they safely get started?”