Sports
The landscape of sports broadcasting is undergoing significant changes, particularly with the decline of regional sports networks (RSNs). While the NBA seems well-equipped to handle this shift, Major League Baseball (MLB) faces a more challenging future. As the sports world prepares for the NBA's All-Star weekend, CNBC is set to release its latest team valuations, highlighting the financial dynamics at play.
The NBA's Resilience
NBA franchises typically generate between $300 million and $800 million in annual revenue, with a small portion coming from RSNs—about $30 million to $40 million for most teams. The Los Angeles Lakers are an exception, earning around $150 million annually from their deal with Time Warner Cable. However, this outlier deal is not representative of the broader trend.
The NBA has a robust national TV rights deal worth $77 billion starting next season, which will significantly boost revenue for all teams. This, combined with a revenue-sharing system, provides a safety net for teams like the Utah Jazz and Phoenix Suns, which have transitioned away from traditional RSNs to streaming and broadcast TV models. Despite taking revenue hits—25% for the Suns and 50% for the Jazz—owners like Ryan Smith of the Jazz are optimistic about the broader reach and enhanced fan experience these new models offer.
Smith emphasized that while RSN revenue is important, it's just one of seven revenue streams for the Jazz. The team's new distribution strategy has increased viewership from 760,000 to 6.3 million, boosting attendance, concessions, and sponsorships. The Jazz have also seen success with their bespoke streaming service, Jazz+, selling about 31,000 subscriptions this season.
MLB's Vulnerability
In contrast, MLB is more exposed to the decline of RSNs. With 162 games per season, MLB teams rely heavily on RSNs for revenue, often receiving twice the rights fees of NBA teams. This makes MLB more susceptible to financial strain if RSN revenue drops significantly. Unlike the NBA, MLB lacks a massive national media rights deal to cushion the blow.
The potential loss of RSN revenue could lead to significant financial challenges for MLB teams, impacting roster construction and potentially prompting discussions about a salary cap when the collective bargaining agreement expires in 2026. As Karen Brodkin of WME Sports noted, a revenue drop of $100 million or more would be a drastic issue for baseball teams.
Conclusion
As the sports broadcasting landscape evolves, the NBA's diversified revenue streams and substantial national TV deal position it for stability. Meanwhile, MLB faces a more uncertain future, with its reliance on RSNs and lack of a comparable national media rights deal making it vulnerable to financial disruption.
Source:
Alex Sherman, CNBC https://www.cnbc.com/2025/02/13/cnbc-sport-if-rsns-crumbles-the-nba-will-be-fine-mlb-may-not.html
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