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On his terrific podcast, Plain English, Derek Thompson, covering the NBA’s new media rights deal, offered an analogy that I think works quite well:
“If you walked into your boss’s office and he was like, “Look, John, your performance is getting worse by about two percent a year, and that’s why we’re tripling your salary,” that’d be a very weird conversation to come home and explain to your family.”
This analogy is excellent for explaining the NBA rights deal, but it’s a pinch off in its current form. The better analogy is that your boss had been raising your salary by 12% per year, but going forward, he’s lowering that raise to 10% a year.
Interestingly, using Thompson’s numbers, the decline feels proportional. The boss saw a 2% decline in performance so lowered the raises by 2% going forward. But it’s worse than that, as I explained last week. Not only is your boss cutting your pay, he’s also demanding that you have to work 33% more than you did before. So the exact analogy is a slight pay cut, but also you’re going to be working longer hours.
Well, now this deal doesn’t seem nearly as great. And as I’ll discuss today, the analogy gets even worse for this hypothetical worker.
I originally planned to include all of my NBA analysis in one article, but once that first article reached eight pages and over 3,500 words, I knew that I had to split it up. Which is fine, because I still have a lot more thoughts. In particular, today, I want to…
- …make the case that this is a great deal for the NBA because the NBA’s ratings have declined significantly, and I compiled a ton of data to make this case.
- …explore the biggest threat to the NBA’s revenue that no one is talking about: the decline of the Regional Sports Networks, or RSNs. Sure, national media rights went up, but what if local media rights decline? (They’re 30-40% of media rights revenue right now.)
And since interesting thoughts keep popping up, well,I might have a fourth article—I wrote about this for The Ankler too—next week.
Two reminders: On the NBA deal, I’m “aggressively moderate”, which means I think it’s fine (especially in the context of the ratings slide), but it’s not the home run, er, touchdown, er, slam dunk most of the media coverage portrayed it as (as the second part of today’s article makes clear). Thinking it’s just “fine” puts me as about the most negative person in town, outside of Sir Charles Barkley, long may he reign.
Finally, I’m an NBA fan. This all comes from both a place of love and genuine concern for my favorite sports league.
Part III: The NBA Rating’s Slide
In defense of Adam Silver, the NBA, and the people touting this deal, they have a point:
NBA ratings are way down over the last decade or so.
If you can negotiate a better deal for your league while your ratings flatline, that’s great negotiating. If the ratings keep going down, even better! And that’s what I want to show today. I couldn’t find one great place for all of the NBA’s ratings (which should be on Wikipedia, if you ask me, for free, for everyone to look at) so I’m going to provide that public service for everyone today.
The NBA’s Regular Season Ratings
Since the 1989 season, the NBA’s broadcast TV ratings are down 73%, but this drop probably seems bigger than it actually is. I don’t love looking at “ratings” and prefer actual viewership numbers, but this was the longest timeframe that I could find. (In general, over the last few decades, ratings as a whole are down because there are so many more channels—and now streamers—than ever before, so more choices equals lower ratings.)
For a less dramatic drop, here’s the NBA’s broadcast and cable viewership (averaged out, in millions) going back to 1995. This is a bit more “apples-to-apples” since fewer games air on broadcast TV nowadays (until the 2025-26 season, when that number will go back up).
In this case, ratings are only down 48% in the last thirty years. They’re down just 20% in the last ten years, but 38% from their 2011 to 2012 peak. They’re down just 25% from the year 2000 too. I’d have made this chart going back in time further, but I couldn’t find the data, and since we’re talking about the recent viewership slide, any data from before the year 2000 doesn’t really impact the discussion.
Next, let’s look at the NBA’s peak during the regular season, the NBA’s marquee Christmas Day games in viewers in millions:
Overall, NBA ratings are down, but this is a much noisier dataset. If you cherry-picked the data, you could make the case that ratings are down 68% (2004 to 2023) or mostly flat (2018 and 2019 had higher ratings than 2002 or 2003).
But I would argue that things are worse than they might seem, for two reasons.
- First, America has gotten larger over this time frame. Just due to population growth alone, these numbers should be going up.
- Second, as I’ve covered before, the Nielsen ratings now measure out-of-home viewership. If anything, the NBA’s ratings should have seen a bump post-2020, but they didn’t.
I’m sure the skeptical reader is like, “But aren’t sports ratings down overall?” That’s a great question. If all sports ratings are declining—say due to the collapse of the linear TV bundle—then yeah, the NBA’s problems don’t matter as much.
Unfortunately, I couldn’t find a great NHL or MLB dataset for the regular season viewership, but I did find data for the NFL going back to 2009. So here’s what that comparison looks like:
Over the same time frame, the NFL’s ratings are up. If you work for a major sports league and you’re telling yourself that ratings are just down overall, so there’s nothing to worry about, I don’t think that excuse plays. Even worse: the Prime Video’s TNF games probably lowered last season’s NFL viewership average, since streaming ratings were mostly lower compared to broadcast. Here’s an example from the first week of the season:
One other little wrinkle I found fascinating. Searching for MLB regular season ratings, I found this tidbit: the MLB averages between 2.3 and 2.6 million viewers each night, adding up all the viewership across local channels. And MLB shared this graph:
And this one:
Looking at just national ratings, baseball doesn’t hold a candle to the NBA; looking at this, it’s probably closer than you’d think.
All-Star Games
For another point of comparison, I took a look at the All-Star games for the NFL (which famously has the worst all-star game of any league, and that might seem like my subjective opinion, but it’s not), the MLB’s All-Star game (America’s oldest and most-beloved) and the NBA’s All-Star game, which used to be cool but becomes a bigger and bigger joke each year.
Anyway, let’s check out the ratings.
Oh man, now I know why. The NBA’s ratings are less than half of what they used to be! (At least the NBA and MLB posted similar declines.) Unlike the average national ratings, this data point seems to indicate all All-Star games are declining in value.
NFL, MLB and NBA Championship Ratings
For all sports, viewership peaks when it comes to the big prize, championship games or series, so let’s look at those ratings over time. (I couldn’t find great NHL ratings.)
There are three different stories here. Major League Baseball just shows steady decline (especially if you look at the ratings from the 1990s and 1980s). For the NFL, growth.
For the NBA, viewership was down, then it was up, and now it’s back down, like way down.
And the explanation is pretty simple: stars. Mega-stars like MJ (1991-1993, 1996-1998), Steph Curry (2015-2018), and Kobe Bryant (2010) can pop the NBA ratings over 18 million per game (Okay, yeah, this probably feels like I’m trolling at least one NBA superstar from the last few decades, but that’s just what the data shows.)
NBA TV Shows
Long-time readers know that I’ve been banging the drum that scripted and unscripted basketball TV shows, documentaries and docu-series aren’t all that popular. Most of them don’t ever make the charts, as I wrote for the Ankler: “Chang Can Dunk, Rise, Big Shot, The Crossover, Shooting Stars, Swagger, and White Men Can’t Dunk all missed the Nielsen Top 10 lists.” Since then, HBO cancelled Winning Time. Just last month, Clipped flopped. It came and went on Hulu last month without anyone noticing.
As much as pundits, analysts, reporters and other people in-and-around the league want to tell themselves that the NBA is crazy popular and has tons of cultural relevance, that probably speaks to a lot of people being on Twitter too much, not the NBA and basketball’s actual cultural cache in this country. Using objective measures, the general American public just isn’t that into non-game basketball content.
Also, remember this fact the next time you read an article about an NBA superstar starting his own production company.
Why Are Ratings Down?
Well, the first answer is just going to be unsatisfying: it’s hard to say. Frankly, you’ve got a small sample size (average viewership per year) and a whole ton of factors affecting that number. Any pundit or analyst can confidently say, “This is why NBA ratings are down!” and it’s hard to prove them wrong. But it’s also hard to say they’re right.
Still, something has to be happening. I would highlight two structural/technological issues:
- Piracy: I know tons of people who search online for live streams of sports games, and a lot of research about the prevalence of online piracy, especially with sports, but there’s been precious little done to fight it legislatively. And I don’t think that the NBA is nearly focused enough on this issue. (I wrote more about this for The Ankler last week.)
- Cord-cutting: Some of the NBA’s viewership numbers might be boosted by streaming numbers, but TNT games only just came to Max last year. If ESPN+’s NBA ratings were stellar, why hasn’t Disney ever shared them publicly? They love leaking good news to the press. Likely, a lot of younger viewers cut the cord, and then pirate games. This is why some potentially older-skewing sports (the MLB in particular) aren’t as hurt.
Of course, both of these issues apply to the NFL and their ratings are up in the same timeframe.
Now here’s one set of issues that I don’t think explain the decline: aesthetics.
- Is the “three ball” the problem? (For non-NBA fans, there are way more three-point shots today than ever before. Kirk Goldsberry wrote a great book on the topic.) Almost every pundit confidently asserts that yes, threes are the problem. Actually, if you look at the timeline of increased NBA 3 point shots attempted, it sort of lines up with the decline in ratings, but my gut is this is correlation, not causation.
- What about “entitled” players? Who knows. You really can’t prove it either way. When did players become “entitled” and how would you even measure that?
- Everyone said that the mid-to-late-2010s free agency boom was terrific for the NBA (people are talking about the NBA all year!)…but it didn’t show up in the ratings.
- Same goes for the NBA’s crazy Twitter buzz. NBA Twitter is a “thing”…but that “thing” has never really made a difference when it comes to ratings.
One point in the NBA’s favor is that ticket sales hit an all-time high last year, a sign that demand is there for the sport, so perhaps the structural issues are the real explanation. Then again, literally every major US sports league claimed attendance records last year, speaking more to the economy (good!) than any one sport’s popularity. Plus the NHL and NBA had roughly the same attendance at 22.5 million.
Again, those final numbers look grim compared to the NFL. At the very least, it doesn’t look like the NBA is gaining popularity in America.
Let’s return to the great analogy we started this piece with. When it comes to the hypothetical worker’s performance, it really is trending down. Regardless, if you’re that hypothetical worker, you need to figure out what’s going wrong and get it fixed.
Part IV: My Biggest Worry? The Decline of RSNs Will Offset the National Revenue Growth
To continue the worker analogy, we’ve been talking about salary, but we’ve been leaving out the annual bonus. Right now, the NBA is Clark Griswold in National Lampoon’s Christmas Vacation and they’re about to get a one-year membership in the Jelly of the Month club.
I’m talking about local TV rights. So far in this conversation, I’ve focused on national media rights, as opposed to local media rights. To oversimplify, the NBA sells three sets of media rights:
- Nationally televised games
- Locally televised games
- Internationally televised games
The current deal we’re hyping is all about the first category. The third category, foreign media rights, is a tenth of both of the other revenue sources.
That leaves the second category, local rights. The individual teams control local rights and sell them on different calendars, unlike the national rights. Now, I’m not prone to hyperbole, but…
A rough beast slouches towards the NBA.
I speak of RSNs, where it’s an utter slaughter. A blood-soaked field of misery, pain and horror. Abandon all hope ye who enter into local regional sports networks.
The tale of RSNs has been covered in the press, though not as well as, say, the struggles of the theatrical business. But weirdly, so much media coverage of the new NBA national media rights deal didn’t mention it at all. Unlike the rest of the national media, I’m going to.
Local Rights Are a HUGE Part of the NBA Media Pie
Lest you think, “But maybe local rights don’t matter?”, I’ll do the math.
First, here’s the NBA’s total revenue over time:
In 2022, the NBA made a little over $10 billion in revenue. Where did that money come from? Here’s Forbes’ analysis:
As a share of all the leagues’s revenue, in 2022, media was nearly a precise 50% of revenue, or $5 billion. In my last article, I estimated that national rights earned the NBA roughly $2.8 billion in 2022. (That’s right between the average reported value of the last deal and the Dolan letter leak of $3 billion in 2024.) Forbes has reported that the NBA earns $500 million per year in international rights too, bringing the national/international total to about $3.3 billion, or roughly 66% of the NBA’s annual media rights. (CNBC reports that international makes up about 10% of all revenue, but that includes sponsorships.) Assuming some margin of error, we can easily say local rights are worth 30-40% for the NBA as a whole.
That’s a lot of revenue to potentially lose!
Local Media Rights Are Falling
As the cable bundle shrinks in total subscribers each year, quarter and even month, there’s pressure on cable providers to save costs by eliminating underperforming or expensive channels. RSNs—aka regional sports networks, the local channels built, in some cases, around the local media rights for individual or multiple NBA, MLB and NHL teams—are some of the first channels to face either cancellation or severe cutbacks in cable fees.
All the evidence about RSNs themselves show a rapidly contracting industry. Back in 2017, when Disney bought Fox, it valued Fox’s RSNs—which became the Bally Sports network, owned by Diamond Sports Group—at $20 billion. By the time it sold those RSNs in 2019, it was down to $10 to $13 billion. Now? Bally Sports Network is in bankruptcy.
The current state of the case evolves by the day, but as of this point, DSG has a plan to exit bankruptcy, but still needs agreements from a third cable partner and the three major sports leagues. And this is two months before the NBA and NHL seasons start. According to Sports Business Journal just six days ago, five NBA teams might lose their RSNs before the next season. One of those teams might be the Dallas Mavericks! The Mavericks! They just went to the NBA Finals, have one of the three best players in the league, and they play in the fifth biggest media market in the country.
Even if Diamond emerges from bankruptcy, they expect significant “rights fees modifications” to the leagues. Does that mean 25% cuts? 50%? More? We don’t know.
In the last few years, we’ve seen some teams lose their RSN entirely. For example, the NBA’s Utah Jazz. Or in baseball, the San Diego Padres.
All the evidence suggests that the local rights will shrink in the post-RSN world. The Ankler’s Sean McNulty ran the numbers on the Utah Jazz’s effort to move to a broadcast and direct-to-consumer streaming world, and the numbers underwhelm. The Jazz only got 20K fans to sign up for their streamer, and who knows what deals and enticements they included to get even that. The MLB’s Padres only got 40K.
All in all, McNulty estimates the Jazz went from earning $25 million minimum on their RSN (with extra advertising revenue) to $18 million at best. That’s a $7 million drop, or 25%. And the bulk of the revenue still is from their deal with a local broadcast channel, not their streamer. The Padres example is even worse: they used to make $40 million a year and that might be at $4.2 million now.
Imagine that Bally Sports comes back and says, “Hey, all 15 teams in our RSNs have to take a 50% cut in rights fees, and that declines with subscriber losses.” Back of the envelope, that’s an 8.5% percent decline in revenue. (Local rights are 33% of the value, those half of teams are say 50% of that, so 17%, and 50% of 17 is 8.5%.)
That national rights deal could exacerbate that. Here’s Knicks owner James Dolan again, explaining and illustrating how much the Knick’s MSG Network has already lost:
“Dolan cited the 42 million homes that have abandoned traditional paid television over an eight-year period and how those losses — which include a 45% decline for the Knicks’ MSG Network — have been compounded by the league’s new streaming and television deals. Dolan wrote that the league’s new national deal renders the regional sports networks, or RSNs, “unviable.“
Again, the NBA will see a one-time, nearly 50% increase in their national media rights deal (which as mentioned above includes some global rights for Amazon, Disney and Comcast), meaning a potential 25% increase in league revenue this year.
But as the RSNs come under pressure, how much revenue will they lose? It’s an open question.
This Is Why This Deal is “Fine” At Best
To bring it back to my very initial point, the NBA did a smart job of selling more games to lock in a similar growth rate to their current media rights deal. They’re hedging their bets here.
But to be clear: they are hedging. The NBA sold a third package, which means more games, and that’s what kept the growth rate high.
In past years, NBA owners wouldn’t have agreed to sell more national games. The local rights were too valuable to too many teams. That’s the entire point of the James Dolan letter: for the Knicks (and likely the Celtics, Bulls and Lakers), local rights still matter. They can make a ton of money (and by extension the players with revenue sharing.) By adding more of their games to the national TV schedule, they hurt that value proposition and probably hasten the decline of local media rights, for both the big market teams (who have way more nationally televised games) and the small market teams.
Thus, the national rights deal is an admission that RSN and local media rights sales are trending well downward.
To return to the analogy of this article, if you get paid a little less to do a third more work, but your annual bonus of 20-30% may disappear in the next ten years, you’re still doing fine, especially if the quality of your work keeps dropping.
But it isn’t a “slam dunk” everyone thinks it is.
