NFL Media, Sunday Ticket up for grabs in streaming fight

Apple is new to the sports media rights scene, but it’s already making noise.

Last week, Apple announced it landed rights from Major League Baseball to stream games on Friday nights. The company plans to stream live pregame and postgame shows. Games will be free from local broadcast restrictions and won’t require an Apple TV+ subscription, for now.

Terms of the deal were not announced, but Forbes reported Apple would pay nearly $600 million in a seven-year agreement.

Apple’s MLB deal may just be the beginning for the tech giant, especially with a big National Football League rights package up for grabs. But the company faces stiff competition from legacy media companies and tech rivals alike while more games head to streaming outlets.

In addition, MLB is close to reaching a similar deal with Peacock, CNBC parent company NBCUniversal’s streaming service, according to The Wall Street Journal. That deal returns MLB games to the media company for the first time since 1989, when NBC lost MLB rights to CBS Sports.

Longtime media rights advisor Lee Berke called MLB’s deal with Apple the “right amount of games, at the right time.”

The MLB deals are just a taste of what could be coming next in the sports streaming wars. Berke, the CEO of LHB Sports, which advises the U.S. pro sports leagues on media deals, said the biggest asset remaining on the table is the National Football League’s Sunday Ticket property.

DirecTV still has the rights to the NFL’s out-of-market games for one more year. But NFL Commissioner Roger Goodell publicly said the league is seeking a more direct-to-consumer model around Sunday Ticket. Media pundits suggest Sunday Ticket is worth up to $2.5 billion annually. That’s higher than the $1.5 billion DirectTV pays in its current pact.

Dan Cohen, the senior vice president of Octagon’s global media rights consulting division, predicted a $3 billion asking price.

It’s unclear what the NFLs plans are for Sunday Ticket. The DirectTV deal expires in 2023, so a deal isn’t likely to happen soon and could come during the 2022 season.

Berke suggested the NFL could divide Sunday Ticket among outlets. It would be similar to the NFL splitting its alcohol rights. Anheuser-Busch lost complete control of alcohol rights but kept beer and hard seltzer. The NFL then added Diageo as a rights holder for hard alcohol worth $30 million per year.

But in this potential split, DirecTV, now partially owned by private equity firm TPG, could keep satellite rights for its consumer base, especially in rural areas where streaming is still problematic. DirectTV would also keep out-of-home screens in commercial properties such as airports, bars and restaurants to protect its “substantial commercial establishment business,” said Berke.

In this scenario, Apple would snag Sunday Ticket streaming rights. That package could also include the league’s mobile rights, which Verizon abandoned in its renewal last year. CNBC reported in October there were rumblings in league circles that the NFL wanted to lure Apple to buy the rights. Other companies could be in the running, too.

CNBC also previously reported that Amazon is the front-runner to land for Sunday Ticket. Amazon already has exclusive rights to the NFL’s “Thursday Night Football” property, with an exclusive Saturday game. That was part of the over $100 billion media deal the NFL struck with networks and outlets in March 2021.  

“I don’t think they want everything to be with Amazon,” Berke said. “And Apple has a tremendous need for additional content not only to grow their Apple TV+ service but also to grow sales of their own hardware and software worldwide.”

The NFL, Amazon and Apple declined to comment.

Apple, which has a $2.5 trillion market cap, is using its huge cash hoard to expand its business well beyond iPhones, computers, watches and the App Store. The company introduced Apple TV+ in 2019 as a $5-per-month subscription service that would run across all the big streaming platforms and compete with the likes of Netflix and Amazon with original content including series like “Ted Lasso” and movies like “The Tragedy of Macbeth.”

“There’s no [company] out there that has the dry powder (money) that Apple has — even Amazon included in that list,” Cohen said. “If I’m a tier-one sports property in a market in which Apple TV+ matters to Apple, I’m lining up to get ready,” Cohen said.

Also, some on Wall Street expect Apple will eventually capture the NFL’s rights. In a March 9 note to clients, investment firm Evercore called Apple’s MLB package a “fine first step,” but added baseball games are “unlikely to truly move the needle” for the company’s streaming service. “Sunday Ticket would be a different story as it is the only place to watch out of market games of America’s most popular sport,” the note said.

Added Evercore: “Live sports rights are an area where Apple can leverage its significant financial firepower to win rights and also has the technical infrastructure to deliver a great user experience.”

The NFL’s annual meeting is scheduled later this month in Florida. At that time, Goodell could provide an update about Sunday Ticket plans.

NFL’s media arm is also the subject of deal speculation.

In June 2021, Dallas Cowboys owner Jerry Jones and New England Patriot owner Robert Kraft told The Wall Street Journal the NFL would seek “investment partners” for NFL Media. The entity operates NFL Network, NFL RedZone, NFL.com and NFL’s international property.

“As the whole world of communications and digital media changes, we want to find a partner who can further help us maximize the reach and potential the NFL assets represent,” Kraft told the outlet.

Apple and Amazon have the consumer reach, data and tech infrastructure to align with NFL’s vision for growth and help the league achieve its international ambitions. It’s unclear how much the property is worth on the marketplace.

Berke referenced MLB’s agreement to sell its MLB Advanced Media property to Disney for more than $2 billion in 2017 as an example of what could happen. That deal included licensing rights to stream MLB games. The company converted BAMTech into Disney Streaming Services.

In August 2021, Disney purchased the National Hockey League’s 10% stake in the streaming tech for a reported $300 million. It gave Disney an 85% stake, and MLB has a 15% stake — worth at least $750 million.  

MLB’s decision to sell the majority of the tech netted team owners roughly $50 million each, according to the Sports Business Journal. Should Goldman Sachs, which the NFL selected to help find partners, lure investors for NFL Media, club owners will profit and team values could increase.

On the Major League Soccer front, Commissioner Don Garber said there’s “a lot of interest” in the marketplace for MLS rights. Garber said a deal could be reached by the end of the first quarter, which is about two weeks away.

In December, CNBC reported the league is seeking $300 million per year, up from roughly $90 million per season. But media executives suggest that figure would likely to fall to within the $150 million to $200 million range, especially since MLS lost control of the U.S. national team rights, which it bundled. The national team entered an exclusive deal with Turner Sports for a reported $25 million per season.

Viewership is the most critical metric in rights deals.

In the first three weeks of the 2022 season, MLS is averaging 298,000 viewers for national games. In the 2021 MLS regular season, the league averaged 276,000 viewers for 31 regular-season games across ESPN channels, including ABC. That’s up from the average 233,000 viewers who consumed 39 MLS games in 2020 on ESPN platforms. Fox said viewership increased 4% across its platforms.

“The challenge for them is to develop growth as far as their television ratings are concerned,” said Berke. “To date, it hasn’t grown to a huge extent. That’s where the upside is for (MLS), so they’ve got to come up with the right media mix to make that happen.”

MLS’ package will include streaming to local games and a new monthlong championship tournament that starts in 2023. Called the “Leagues Cup,” the tournament will feature MLS teams playing against Mexico’s Liga MX league clubs.

Garber called the rights an “unprecedented, unique package with every single game, whether it’s a traditionally national linear game or it’s a local game — or it’s a global game.”

He added, “We’re talking to anybody that is in this business. Whether it’s a streamer, or a traditional media company. I’m encouraged by the interest and hope to be able to finalize something soon.”

NASCAR’s deals with NBC and Fox are set to expire in 2024. NASCAR brings in more than $800 million combined in the deals and could see an increase that reaches $1 billion annually.

NASCAR recovered from the Covid pandemic with its 2022 Daytona 500. The event averaged roughly 8.8 million viewers for Fox, up from the rain-delayed 2021 Daytona 500, which averaged 4.83 million viewers. It marked the lowest-viewed Daytona 500 in the history of the race. Roughly 7 million viewers watched the 2020 event.

Advertisers increased spending around NASCAR events. The national ad spend for the 2021 Cup Series was $93.7 million, according to measurement company iSpot. That’s up from $80.2 million for the 2020 Cup Series.

“I’m bullish on NASCAR,” said Cohen. He praised NASCAR President Steve Phelps for “reimagining” the sport. NASCAR added dirt tracks, remodeled its cars and introduced celebrity owners such as Michael Jordan, and Phelps said NASCAR’s diversity push will help the sport grow.

“If we think about where this sport is going, diversity is playing a huge part in it,” Phelps told CNBC’s “Tech Check” last month. “We’re doing it with both our fan base, our ownership base, and frankly with our employee base. It’s intentional, and it’s very important for the overall success of the sport.”

The NCAA’s Big Ten also could be in line for a media rights raise.

The powerhouse conference will lure its first media rights deal under Commissioner Kevin Warren. The Big Ten is entering the last year of a reported $2.6 billion deal with ESPN, Fox and CBS that former Commissioner Jim Delany negotiated in 2017.

The Big Ten features elite football programs such as Ohio State and the University of Michigan, which drew an average of 15.8 million viewers for their matchup in December. Some sports media observers have suggested the Big Ten could seek $1 billion annually.

“I think the Big Ten is poised for some serious gains,” Cohen said. “And you’ve got big brands in the Big Ten that go beyond just Ohio State and Michigan.”