How Couch Potatoes Could Change the NBA
ESPN has been laying off staff in significant numbers as cable television faces a broader crisis of declining viewer interest. Will this shift influence the content of the professional sports that fill ESPN’s airwaves? I thought I’d consider professional basketball, the sport I know best.
By one estimate, ESPN and another NBA broadcaster, TNT, are transferring $2.66 billion a year to the National Basketball Association, as part of a nine-year deal for broadcast rights. That may not be sustainable. 1 Local networks also show games, and those sources too are likely to be hurt by a decline in cable viewership.
The eventual falling off of the TV revenue stream will have two effects on the NBA, namely television falling in relative terms as a source of its revenue, and the league’s total revenue sinking.
The decline of TV revenue is not the same as a decline of interest in the sport. NBA basketball is alive and well; it’s just that more people are cutting the cord on cable. They still might follow the NBA through its website, or watch highlights on YouTube, or share gifs on Twitter.
That shift is likely to favor the stars and the most athletic players, because they are more likely to be featured in very short clips. As for the incentives, player salary will matter less, and the desire to become famous on the internet -- and thus win lucrative endorsement contracts -- will discourage team play. Expect more attempts to produce spectacular sequences, even if that doesn’t always translate into wins. “Boring” but fundamentally sound teams -- which are better to watch for a 2.5 hour game -- will be disfavored by this trend. Sorry, San Antonio!
For similar reasons, teams will compete harder for stars, who will have ever greater power to drive ticket sales and, indirectly, concessions revenue. Franchises will invest less in coaching and training lower-tier players, and again team ball will suffer.
Professional basketball may become a more corporate sport. As TV revenue goes down, the league will tailor the product to corporate tastes, to sell more expensive boxes and suites in the arena for client entertaining. That too will favor the star players, because those boxes and suites are filed with casual fans and not basketball diehards. They will have heard of LeBron James, but they are not interested in the fine points of whether Kelly Oubre Jr. has become an effective long-armed defensive stopper.
Another possibility is that the NBA will consolidate with fantasy basketball and video gaming to augment their revenue. The NBA already has plans to introduce an e-sports product. More speculatively, if more states legalize sports gambling, the league could enter into a revenue-sharing agreement with casinos or bookmakers. Imagine redesigning the playoffs to maximize the number of decisive games and thus boost betting interest -- that could mean more but shorter playoff series. At least the fantasy component of such a basketball conglomerate might redistribute some of the attention back to players who are not superstars. Gamblers also tend to be well-informed about the teams they bet on, so this direction could encourage a smarter NBA, better designed for the nerds and fanboys.
As for the eventual hit to total NBA revenue, the owners and the players will have to cut back. The owners will spend less on stadium upkeep and trainers and coaches. Might the franchises in Sacramento and Memphis close up shop? In the meantime, everyone will work hard to try to monetize video streaming.
A poorer NBA will probably have a weaker player’s union, just as autoworkers unions lost out in Detroit decades ago. Unions do best when they can grab a share of stable or growing revenue in an industry with a small number of sellers. The player’s union is hardly a pure, ideal democracy, but there is still voting, and union stances redistribute some income away from the superstars and toward the middling players. Look for that to go in reverse.
Strikes might become more likely too. It’s easiest to buy off the players with salary cap increases, and thus higher pay, but more difficult for the owners to cut wages without inducing a work stoppage.
That all said, if the current deal holds, the NBA will be receiving lots of TV revenue through the 2024-2025 season, with the cliff coming only after that date. Before the current ESPN contract expires, the cable network might have to ask for a renegotiation, sure to be contentious. Along the way, ESPN might invest less in promoting the NBA.
I still expect a recognizable version of the sport to result, just as there was professional basketball long before the advent of cable. It won’t be your grandfather’s NBA, but it won’t be your son’s NBA either.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the author of this story:
Tyler Cowen at email@example.com
To contact the editor responsible for this story:
Stacey Shick at firstname.lastname@example.org