Have you ever wonder why your favorite brands are paying so much for media rights?
If you haven’t noticed, the sports industry is big business and the recent sports media rights deals have only highlighted the growing interest.
What’s more, if you add in the fact that scripted tv show ratings have been declining and the rise of streaming platforms have crippled cable television, live-sports, however, have been able to hold steady.
Over the summer, the Big Ten conference negotiated a huge deal between three different networks to lock in their media rights. The agreement is worth $7 billion over seven years. Fox, CBS, and NBC are all in with one of the premier college athletic conferences.
The agreement was only made sweeter when USC and UCLA agreed to join the Big Ten before the deal was signed. Ultimately, the addition of the two most notiable west coast schools made the Big Ten a coast-to-coast conference.
However, college athletics aren’t the only ones seeing big bucks for their media rights.
The premier international racing league recently extended their partnership with Disney. The original deal was made in 2019 for just about $5 million. The new extension extends out to 2025 at about $75 to $90 million. – Sports Business Journal
Most races can be seen on either ESPN, ABC, or ESPN+. The sizable raise to the original deal has a lot to do with the recent popularity Formula 1 has had in the U.S. The Netflix series “Formula 1: Drive to Survive” has had a huge impact on the sports popularity and growth.
Additionally, Formula 1 will have six races in the western hemisphere by 2023. More importantly, the viewership number have increased by over 49%.
The NBA will be the next sports league to negotiate their media rights. It is reported that the deal could potentially be worth close to $75 billion. The current agreement with ESPN and Turner sports Is worth $24 billion. It ends in 2024-2025.
The global sports brand’s new deal is expected to be split between multiple media partners. Initially, when the previous deal was signed, competitors like Amazon and Apple weren’t serious players for live sports rights.
However, in 2022 these two companies have very deep pockets and are ready to put big money down to secure a piece of the NBA media rights pie. Amazon secured the rights to the NFL’s Thursday Night Football that began this year.
The Amazon’s NFL Thursday Night Football debut went very well. Delivering “the most watched primetime in U.S. history of Prime Video” per Jay Marine the Vice President of Prime Video.
As I’ve mentioned before, college football media rights deals have been more publicized than the other sports leagues. The reason is because each conference can broker their own media rights agreements.
Moreover, the news recently broke about the College Football Playoff expanding from 4-teams to 12-teams. With the expansion, new media rights’ deals will be set to cover the entire tournament.
Again, Amazon is in play to bid for a piece of the pie. ESPN’s current exclusive deal with the CFB Playoff runs through 2026. With the value of the CFB Playoff reaching as high as $2.2 billion, the expectation is that the CFB Playoff will seek to split the deal between multiple media partners like the NFL has done.
Furthermore, the bidding war to come is expected to be the biggest in college sports history. Fox, NBC, and CBS could also be included in the bidding war.
Why secure media deals?
The reason a company like Amazon or Apple would want to secure the media rights for various sports leagues is because it helps all the other products sell and brings brand awareness.
Millions of people bought Amazon Prime Video just to watch the Thursday night football game. The new influx of customers will also watch other shows on Amazon Prime or even buy a product or two from Amazon.
The benefit for Apple is the growing strategy to add more content to Apple TV. If millions of people are looking to watch their favorite team and they’re only on Apple TV, Apple will ultimately gain new customers.
Apple’s monumental 10-year agreement with Major League Soccer will be considered a bargain as time goes on. Soccer (Football) is the #1 sport in the world, with over 250 million people playing every year in over 200 countries.
Consequently, sports media rights help drive brand visibility to a massive amounts of people at one time every single week. Big brands are bidding for the attention of millions in the industry that knows how to do it best.