The New NBA Season Raises Questions About the League’s Future

Uncertain NBA season
Cheyne Gateley/VIP+

When the NBA season tips off its 75th season today, there are more than a few reasons commissioner Adam Silver should be breathing easy. The pandemic that led to an abbreviated season in 2020-21 and the even bigger disruptions that rocked 2019-20 are behind him, and the damage done to the league did not prove ruinous.

If all goes well, the 2021-22 campaign should feel about as normal as the NBA can get, even with the sideshow of one of the league’s stars, Kyrie Irving, refusing to get vaccinated dominating the sport’s headlines.

But Silver knows all too well he can’t get comfortable anytime soon. NBA TV rights are set to expire in 2024-25, which may seem a ways away but really isn’t. The combined $2.6 billion that Disney’s ESPN and WarnerMedia’s Turner properties pay each year under their current deal will probably seem a pittance compared with what the NBA is expected to fetch next time around. A CNBC report earlier this year projected the total value of the next deal could easily triple — to $75 billion — over an eight-year period.

For a league that took quite a financial hit from the pandemic (revenues down 35% last year), the next deal will be most welcome; among the U.S. pro leagues, only the NFL is more valuable. But the NBA is decidedly not more popular than ever by any means. To the contrary, regular-season ratings in 2020-21 were down 25% compared with the last uninterrupted season in 2018-19.

So why is the NBA more valuable if it's likely to have fewer fans watching? To some degree, it's a reflection of a broader trend in the TV industry, which has been coping with dwindling audiences for many years but has still managed to charge advertisers the most ever for commercial time. Because while their ability to amass large viewerships has declined, there's no substitute in the marketplace for delivering live eyeballs at scale, even if that scale has diminished.

What's also driving up the value of NBA TV rights is the possibility that the league can shop those rights to other bidders, namely the tech giants like Amazon and Facebook, which have already demonstrated a willingness to pay up for the right package. That said, at this point there's little indication ESPN and Turner face any such threat, but that's almost beside the point.

Just the possibility that another deep-pocketed bidder could enter the fray is enough to prop up the price of those rights. Even if that doesn't actually happen, don't be surprised when the mere speculation that it could starts to surface and impact any negotiations.

For some time now, the TV industry has been anticipating a moment not unlike what occurred in 1993, when Rupert Murdoch made a stunning successful bid to grab NFL rights for his Fox broadcasting network. That masterstroke singlehandedly upended the sports world and put Fox on the map in one fell swoop like nothing else could.

Of course, that doesn't necessarily mean the same thing will happen in 2022 and that a tech company will use the NBA to upset the apple cart in just as dramatic a fashion. While the competitive balance between streaming and linear TV would be forever changed by such a move, so far we're not seeing the tech companies, which would be even more financially prepared to be that bold, do more than make incremental advances, like Amazon securing NFL rights for Thursday games.

But as the next rights negotiation approaches, the games in and of themselves may seem less important than how these telecasts evolve. As Variety Intelligence Platform noted in its special report in March 2021, "Sports' New TV Formula," there is an evolution in consumer appetites for sports that is just beginning to get underway that suggests younger viewers could have an entirely different set of expectations.

A survey VIP+ commissioned found that NBA fans 18-34 are less focused on the live-game experience than older cohorts and are much more engaged with all sorts of interactive applications that surround sports, including fantasy sports and gambling.

As the NBA figures out which programming providers to hitch its wagon to years into the future, it's surely not lost on anyone in those negotiations that the games themselves may be of diminishing value; it's hard to believe the NBA is going to be able to reverse its ratings slide the way the NFL has this season. But when you consider all the engagement and monetization opportunities that can surround the games, even in the worst-case scenario where ratings continue to go south, there will be a wealth of supplemental experiences to dramatically lift the ceiling on the revenue per user. Best-case scenario: Game ratings do improve precisely because telecasts are revitalized by the supplemental experiences.

This may all seem like long-term pie in the sky or innovations that won't be relevant to only true superfans, but it's really not. The complexion of sports TV isn't going to look different overnight, though slowly but surely it will radically change in the coming years.