SBJ/August 22-28, 2011/Franchises

Settlement puts Nets games on YES Net through 2031-32

YES Network and the New Jersey Nets quietly settled their cable rights fee dispute in May, several weeks before an arbitrator was due to rule on it.

The new deal gives YES the Nets’ TV rights through the 2031-32 season – a 10-year extension that was the main reason why the Nets originally took the dispute to arbitration, sources said. In order to secure such a long-term extension, YES agreed to a healthy rights-fee increase, around $20 million a year initially, with moderate annual increases, sources said. It’s not known how much YES had been paying the Nets in the previous contract.

YES and the Nets had been in the middle of a 20-year deal that originally was supposed to end with the 2021-22 season. That deal, which was signed when YES launched in 2002, contained a standard provision that allowed each side to reopen it and reset the rights after this past 2010-11 season.

“We reached an amicable agreement with the Nets outside of the arbitration process, and we look forward to a long, productive relationship with them,” said YES Network spokesman Eric Handler.

YES Network refused to comment further. The Nets also declined to comment.
While cable rights fee disputes are common between RSNs and cable operators, it’s rare that they ever go to arbitration. In fact, it is believed that no fee dispute between an RSN and a cable operator has ever been resolved by an arbitrator. The Portland Trail Blazers are in arbitration with Comcast SportsNet Northwest, but that proceeding is about the RSN’s distribution and does not involve its rights fee, sources said.

YES and the Nets had been negotiating a new deal earlier this year. They appeared to reach an agreement in February, but the Nets wound up walking away from the deal, resisting the 10-year extension, sources said. The team opted to seek an arbitrator to set the price; contract terms did not allow the Nets to shop its rights to other networks.

Sources said the new deal does not differ much from the one that was on the table in February. YES would not have offered such big increases without the long-term extension.

The long-term nature of the deal follows the Boston Celtics’ expected 20-year deal with Comcast SportsNet New England and the Los Angles Lakers’ recent 25-year deal with Time Warner Cable. The reason for the recent spate of these kind of long-term deals is a desire on both sides to provide cost certainty in the media rights marketplace.

YES President and CEO Tracy Dolgin and Nets Sports and Entertainment CEO Brett Yormark led the negotiations for each side.

The timing of the reset did not come at an opportune time for the Nets, which last season posted the NBA’s lowest local rating by far with a 0.29 rating. The second worst rating belonged to the Los Angeles Clippers with a 0.99 rating that still was three times higher than the Nets.

Over the past three years, Nets ratings on YES have been lower than every MLB, NBA and NHL team, except the Florida Panthers.

But the Nets, under new owner Mikhail Prokhorov, are looking to revive their business with a move from their temporary home at the Prudential Center in Newark to the Barclays Center set to open next year in Brooklyn.

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