The National Basketball Association on Monday announced it signed a deal with ESPN and TNT, owned by The Walt Disney Company (NYSE: DIS) and Time Warner Inc (NYSE: TWX), respectively, to extend its television deal through the 2024-2025 season.
The $24-billion deal breaks down, on average, to $2.66 billion per year, up from $930 million of the current deal, which expires next season. That represents growth of 186 percent, besting the percentage growth of new deals for every other major sports league.
Though the deal is only for American television, one of the reasons for the 186-percent spike in rights prices has to do with global appeal: Professional basketball is arguably the only American sport that has a true worldwide following.
The rights for sports broadcasts are growing across the board, and one of the primary reasons is that people still watch basketball, football, baseball and other sports live. In an era of DVR and streaming, 99 percent of ESPN’s content is consumed live. Sports rights fees on these deals are actually growing faster than ticket sales to games; within the next few years, The Wall Street Journal said television viewers could become more valuable to leagues and channels than the actual fans in the stands.
ESPN didn’t forget about streaming. The company has gained new over-the-top (OTT) rights (television delivered directly over the Internet) that will allow it to build a new online subscription service for selling access to out-of-market NBA games. Something like this already exists in the form of NBA League Pass, which was part of the NBA’s previous deal with Time Warner.
People like Washington Wizards owner Ted Leonsis, however, said that the new digital channel will be more able to tap into the NBA’s aforementioned worldwide following. “There are hundreds of millions of people that pay for pay television. There are billions of people paying for the mobile experience,” Leonsis said.
Brad Adgate, research director at Horizon Media, agreed with Leonsis, saying that the new OTT rights will give ESPN a new tool for staying ahead of the rest of the pack. As he told Mashable on Monday, "ESPN is now facing competition. They're still the leader in sports, but FOX Sports 1, NBC Sports Net, CBS has a sports net ... there's regional sports nets out there. I think this was an opportunity for ESPN to kind of retain its dominant position in terms of sports content and moving that to the other screen."
Here is a look at other major TV deals.
Major League Baseball
In August 2012, the MLB signed a new deal with ESPN worth .6 billion from 2014 through 2021. Only a month later, the league signed another deal with Fox Sports (NASDAQ: FOX) and TBS, which is also owned by Time Warner. The total value of the three contracts was .4 billion, representing a 105-percent increase in its annual rights fees.
National Football League
The NFL in 2011 signed a nine-year extension with Fox, NBC and CBS Corporation (NYSE: CBS) for $27 billion. The deal went into effect this year and has the networks paying roughly 60 percent than they did under the last contract, with the three expected to collectively pay about $3 billion annually for the rights, up from $1.93 billion.
The NFL's television draw is so hot, earlier this year it offered a contract for rights to air eight "Thursday Night Football" games. Although the league retained the rights to show the games on the NFL's own cable channel, NFL Network, cable companies still lined up for the opportunity. Ultimately, CBS won the rights with its 0 million bid.
Related Link: The FCC's Archaic Blackout Rule Is Lifted; Will NFL Fans Notice?
Major League Soccer
Earlier this year, the MLS signed an eight-year deal with ESPN and Fox Sports for 0 million; Univision Deportes signed a Spanish-speaking deal for $120 million, bringing the value of MLS rights until 2022 to $720 million.
Soccer’s popularity is growing in the states -- the previous deals with those three networks came out to about $30 million per year, while the new one comes to $90 million.
World Wrestling Entertainment, Inc. (NYSE: WWE)
WWE signed a new deal in May with NBCUniversal, valuing all of its TV deals, both domestic and international, at $200 million. Domestically, the number came to $160 million, representing about a 50 percent increase. Up until the deal was signed, however, the WWE was claiming it could double or even triple its fees.
CEO Vince McMahon said that PAA Research analyst Brad Safalow could put him in a hammerlock if the WWE didn’t at least double its fees. The company’ stock is down 42 percent over the last six months, due in part to the lower-than-anticipated TV deal.
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