Latest Sports Rights Deals Will Come at Viewers’ Expense
The recent announced increases for TV and streaming rights for the Big Ten Conference and UEFA Champions League are just the latest in a long line of eyewatering upticks in the cost for networks and streaming services to air live sports.
College Football’s Big Ten Conference saw annual rights increase from an estimated $440M to $1.07B, a ratcheting of 143.5%. The Champions League’s English-language U.S. rights are now worth $250M a year, up by 150% from their prior level of $100M.
As VIP+ noted in our “Fading Ratings” special report, sports remains a key draw for live audiences. Yet viewer loyalty is being punished by both the networks and streaming services airing games, and the leagues that seek ever-increasing fees for their rights.
A number of large increases have recently been negotiated, most notably for the NFL, with many of these deals beginning in 2023. This will see the annual value of TV and streaming sports rights hit $26.6 billion, with this estimated to grow to $29.3B by 2026. For comparison, the total was $15.2 billion in 2015.
TV networks are not charities. They will pass along the increased costs of sports rights to consumers, whether directly via subscription increases or indirectly through either bumped-up marketing costs (which in turn will be passed on by firms to the consumer) or by having to cut back on content spend for other genres.
This punishment of loyalty will continue. Leagues don’t care so much about the viewers pushing them to become more valuable in a landscape where fewer watch live content; instead, they are focused solely on cashing in on the rights bubble.
By nature, it is a bubble. The number of pay TV customers continues to trend downward, yet sports leagues and networks are married to the idea of charging the remaining subscribers more for the same content. There will be a breaking point.
Don't expect the leagues themselves to show some semblance of awareness. Those who haven’t been able to feast on rights inflation, like NBA and NASCAR, will demand a slice of the inflated pie when their rights renewals are up.
The likely end game is that this will hasten more TV subscribers to the exit. Putting sports onto streaming services may see some pay extra for content that used to be included with their TV subs, but it's also a recipe for flattening growth.
The lack of long-term planning and focus on short-term gains shouldn’t come as a surprise — it's how TV networks let streaming services overtake them — but it is worth noting that live sports is one of the only industries in the world that rewards loyal consumers with price hikes just for existing. Eventually the bubble will pop, but only after sports league engorge themselves to the maximum.
