Why the $24B NBA TV Deal Totally Changes the Next Labor Agreement
Late last night, while NFL fans were watching the Patriots get their mojo back and MLB fans were reveling in the idea that two American League teams prove that a big payroll is no indicator of playoff success, the NBA signed off on a new deal with Disney (which owns ESPN) and Time Warner — the parent company to TNT — regarding a broadcasting agreement that will be good for $24 billion, per The Wall Street Journal (story behind a pay wall). The deal is worth $24 billion over nine years, and this is the point where we’d like to bring up, again, that the NBA owners were completely and utterly full of it when they locked out the players in 2011 and claimed they were losing money.
What does this mean for 2017? It means that we won’t have a lockout, but we’ll almost certainly have a strike. The players, who wound up making all the concessions last time out after trouble in the union and a PR campaign for the ages on behalf of the ownership, are going to be out for blood when it comes to the new negotiations, particularly when it comes to the division of BRI, or basketball related income. They’re down to 51 percent of the BRI down from 57 percent, and with a serious uptick in income all but assured by this new deal. It’s going to be a strike, in other words, and it’s as guaranteed as LeBron’s marketing viability.
Perhaps counterintuitively, this is the best opportunity for the owners to push through their new objectives — more comprehensive testing (read: blood tests) for HGH and raising the age limit for NBA players. By being willing to sacrifice some of the BRI — and let’s be clear here, the players should easily win that argument — the teams can further their own agenda: a continued relationship with the NCAA as well as a more fleshed out Development League; two birds killed by the single stone of raising the age limit for the NBA proper.
Even then, that’s not the most exciting part of the new deal. On the ESPN side, a company that’s no stranger to online video services, its deal with the NBA will be setting up a new streaming situation that doesn’t require a TV subscription — cable or satellite. This is massive, especially for a company that makes a majority of their money from paid television like ESPN. It’s worth noting, though, that this really doesn’t affect anything other than regular season games. Think of it as a compliment to the NBA’s League Pass. Playoff games are still going to be on normal TV from all indications.
This is huge for the league, obviously, and even as they’ve been ahead of the curve when it comes to broadcasting and distribution of content (remember, they were the first to embrace the Internet and YouTube, and they’re still arguably the most present online) giving away even some of their games for free, and being paid by ESPN for the privilege to do so, shows just how much growth the NBA has experienced over the last decade or so. There’s a reason why the Los Angeles Clippers are being sold for more than the Buffalo Bills, and it’s not exclusively the difference in media markets. Well, not entirely. Anyway, we’ll see how it all shakes out in 2017, but so far things are looking up for the owners, the fans, and the players alike.