Group Created with Sketch.
Volume 21 No. 39
  • Created with Sketch.
  • Created with Sketch.
  • Created with Sketch.

Deal with MLBAM a game changer for league’s approach to digital

Major U.S. sports leagues tend to offer public platitudes to their rival properties, but engage in private sniping as they compete for fans, corporate sponsors and marketplace prominence.

With that backdrop, the NHL in August 2015 struck a most unusual deal with Major League Baseball, turning over its digital media operations to MLB Advanced Media in a six-year deal valued at more than $1.2 billion. The deal gave MLBAM control over the management and distribution of the NHL’s digital business and NHL Network, and provided the NHL with a nearly 10 percent equity stake in MLBAM subsidiary BAMTech.

By the time of the deal, BAMTech had already established a leading market position, working with top-tier clients such as HBO, WWE and Sony on digital and streaming media projects. But never before had a major U.S. sports league entrusted so much of its core business to another league.

Stephen McArdle, NHL executive vice president of digital media and strategic planning, said a pragmatic approach and fiscal opportunity drove the deal.

“We could have eventually got to where we wanted to be with the portfolio on our own. But we had a good sense of what this partnership could be, what the possibilities were, and what MLBAM was bringing to the table,” McArdle said. “This allowed us to plug into what BAMTech was doing and all the relationships they have around the industry with people like Apple, accelerate our progress significantly, and serve our fans better. The economic piece of this obviously was also very important.”

Indeed, BAMTech’s subsequent deal with the Walt Disney Co., in which the ESPN parent acquired a 33 percent equity stake, valued the operation at $3 billion, and the company has grown even further through newer partnerships with Discovery Communications and League of Legends parent Riot Games. As a result, the NHL’s BAMTech equity is worth well more than $300 million.

Bob Bowman, MLB president of business and media; McArdle; and others on both sides of the NHL-BAMTech partnership credit NHL Commissioner Gary Bettman and MLB Commissioner Rob Manfred for ignoring any ego considerations and focusing instead on the opportunities a partnership between the two could create. Both commissioners were deeply involved in the construction of the deal.

Manfred at the time said of the agreement, “All of us in sports share a desire to distribute our games and tell our stories as widely and broadly as possible. Because of our own experiences in delivering baseball to its loyal fans, MLBAM is uniquely suited to excel in a partnership of this magnitude.”

Nearly 18 months later, NHL Network has shifted operations to the MLB Network and MLB Productions headquarters in Secaucus, N.J. After a frantic runup to the 2016 NHL All-Star Game, the website, NHL mobile application and NHL Center Ice live-streaming package were each rebuilt, and then retooled again for the 2016-17 season.

The NHL also has been a regular entrant in monthly comScore rankings of the top digital destinations in U.S. sports, most recently ranking 11th in November with an audience of more than 11.1 million unique visitors. The league is also part of a large-scale deal MLBAM struck last summer with Twitter to bring weekly out-of-market games in both baseball and hockey to the social media platform, adding to deals MLBAM signed with Sportradar, TuneIn and Yahoo on behalf of the NHL.

And for MLB, the NHL partnership represented a key inflection point in the development of BAMTech.

“We knew we wanted BAMTech over the long term to not just be a vendor but also a rights holder, and that also being a buyer of rights was the best business model. So getting these rights has obviously been important,” Bowman said.

Future efforts in the NHL-MLBAM partnership will be focused on leveraging emerging technologies such as virtual reality and augmented reality, developing new applications to follow live hockey games more deeply, and navigating the fast-changing media. “There’s a lot more we intend to do together,” McArdle said. “We’re still really at the beginning, and there’s obviously a lot of change happening out in the market. But we’ve struck upon something that’s really been mutually beneficial, and good for our fans.”