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Volume 21 No. 47
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Digital media embraces sports with recent rush of deals

It’s not Google buying “Sunday Night Football.” It’s not Apple picking up a national baseball package. It’s not even as significant as Yahoo’s one-game NFL streaming deal from 2015.

But a flurry of recent sports rights deals by digital media companies has energized league executives that the presence of these competitors to traditional television companies will keep rights fees high during the next round of media negotiations.

“It feels like it’s finally getting here,” said Doug Perlman, CEO of Sports Media Advisors, who consults with properties such as NASCAR and the U.S. Tennis Association. “There has been a drumbeat of deals over the past few weeks that suggest digital media companies are more engaged than before. It will be interesting to see how the size and nature of these deals evolve.”

It’s hard for league executives to hide their enthusiasm from the fact that companies have struck at least four digital rights deals in recent weeks: Twitter’s two-year pact with the National Lacrosse League, Facebook’s one-year deals with the Word Surf League and Univision/MLS, and Turner’s UEFA Champions League deal.

Dealmakers:

Twitter and Facebook

Twitter: NFL ‘Thursday Night Football;” MLS; NBA; Copa America via Univision and Fox; Wimbledon; MLB and NHL games via MLBAM; PGA Tour; UFC 207; NLL

Facebook: NBA D-League: USA Basketball exhibition games; MLS via Univision; World Surf League; CONCACAF Champions League; Liga MX via Univision; IOC; PGA Tour; College Coach’s Corner Series presented by Nissan; MLB World Series pregame shows via Sports Illustrated and Fox; Conference USA football via BeIN Sports; Atlantic 10 basketball; WTA Dubai Duty Free Tennis Championships via BeIN Sports

Source: SportsBusiness Journal research

Most executives are encouraged by the fact that digital media companies — ones that typically have been resistant to paying for content — increasingly are sticking their toes in the sports rights waters. Speaking both on the record and via background, more than a half dozen media and league executives interviewed for this story were careful not to overstate these moves ­— it’s laughable to compare the World Surf League to the NFL, of course.

“I wouldn’t come to the conclusion [that these deals mark the start of a trend] based solely on the English-language deal that we just did with Univision and Facebook,” said Gary Stevenson, MLS Business Ventures president and managing director. “But it certainly could portend for the future.”

These aren’t the first digital deals cut by Facebook and Twitter. Twitter has deals with several top properties, including MLB, the NHL and PGA Tour. Facebook has put a priority on live video and has deals with smaller properties such as the NBA D-League and Atlantic 10 basketball.

Last month’s bidding for the UEFA Champions League shows just how much the rights fee environment is changing with digital rights. Turner Sports will spend more than $60 million per year for UEFA Champions League rights, a deal that was made more with Bleacher Report and over-the-top considerations than television. Surprisingly, the second-place bidder was not a traditional media company. Rather, it was BAMTech, which also wanted the UEFA Champions League rights for an over-the-top service.

As a sign of how far these digital companies still have to go to be significant players for sports rights, ESPN’s programming team took the lead in helping BAMTech develop its bid, sources said. ESPN’s parent, Disney, owns a 33 percent stake in BAMTech.

“It’s not ready now, which is why you’re seeing World Surf League deals instead of ones with bigger leagues,” said longtime media consultant Lee Berke, president and CEO of LHB Sports Entertainment and Media who consults with the San Francisco Giants, Carolina Panthers and University of Oklahoma. “But these are toes in the water. These are baby steps. The steps are only going to get louder. The ground is being prepared for a number of these digital platforms to be making bids for the major properties and for packages as they come up in the early 2020s.”

Observers describe the World Surf League and NLL deals as tests for Facebook and Twitter, as they figure out whether the stream will work, how much it will cost and if their audience even wants it.

The deals are more than simply tests for many smaller properties, however. In many cases, these digital outlets provide bigger-than-expected audiences and the younger viewers that advertisers want to reach.

Some of the bigger leagues, though, have been reluctant to sell big programming packages to digital companies, worried that they do not have enough bandwidth to handle 15-20 million simultaneous viewers. MLS had to scuttle a deal with Twitter early last year because the service was not ready to host the league’s live game video.

That stance, though, rapidly is changing, as later in the year Twitter received plaudits for the high quality of its NFL “Thursday Night Football” video.

“The bandwidth is getting prepared and developed,” Berke said. “It’s getting cheaper.”

The Univision-Facebook deal that Stevenson referred to illustrates how these digital media companies increasingly are looking for sports rights. The deal, which will see Facebook carry 22 regular-season Univision games in English, was led by Facebook executives who had approached the league earlier this year, looking for any kind of live programming that it can put on its Facebook Live application. MLS, which has contractual commitments with ESPN, Fox and Univision through 2022, came up with the idea of Univision’s telecasts. Eager to expand the reach of their games, Univision executives quickly agreed as part of a deal that pays MLS a small rights fee.

“Our ESPN and Fox games are shown in both English and Spanish on their respective English and Deportes networks,” Stevenson said. “In this case, our solution in Univision games has always been the SAP button on your remote control, which is a clunky user experience. This gives English-speaking fans an opportunity to have a better user experience for the Univision games.”

Choices for the sports consumer clearly are increasing in this new media landscape. But how that landscape evolves and what it means for major sports rights holders still remains the big unanswered question.

“The digital platforms are increasingly aggressive,” Berke said. “It’s feels like a startup industry for media again.”