Pablo Torre Finds Out

Episode: The Sporting Class: What the NBA and WNBA’s Record-Setting TV Deals Mean

Host: Pablo Torre
Guests: John Skipper (Former ESPN President), David Samson (Former Marlins President)
Date: July 19, 2024

Overview

This episode explores the unprecedented NBA and WNBA TV rights deals, totaling $76 billion for the NBA and a remarkable leap for the WNBA. Pablo Torre, John Skipper, and David Samson dissect the financial, strategic, and cultural implications, focusing on what these deals mean for fans, leagues, media companies, and owners. The discussion dives into the structure of media packages, battle for broadcast partners, and the evolving media landscape, especially with the entrance of Amazon and NBC, and Warner Brothers Discovery's potential response. By the end, listeners gain insight into the mechanics of sports rights negotiations, the business logic (and sometimes illogic) behind massive valuation increases, and the tensions between local and national broadcasting models.

Key Discussion Points and Insights

1. The New NBA Rights Deal: Details & Dynamics

• Deal Status and Structure: The NBA's new TV rights deal is all but finalized, featuring ESPN, NBCUniversal, and Amazon over 11 years for $76 billion. Warner Bros. Discovery (WBD, Turner) has a 5-day period to “match,” but this isn’t a simple process—it means mirroring every provision ([03:56]).

  • John Skipper: “You don’t just erase the word Amazon and write Warner Bros. Discovery. …You have to have a proposal that you give back to the NBA that says…we’ve matched this deal and here’s how.” [04:19]
  • David Samson: “It’s not simply writing a memo. ‘Dear Adam, we match. Here’s our $1.8 billion. See you later, Amazon!’” [03:56]

• Packages (A, B, C)

  • A Package: ESPN - NBA Finals, conference finals, most playoff games ($2.6B/year)
  • B Package: NBC - Conference finals every other year, All-Star game, Sunday night basketball, exclusive nights after NFL, etc. ($2.5B/year)
  • C Package: Amazon - Third tier, substantial digital rights ($1.8B/year)
  • Rights are weighted by assets (finals, number of games, exclusivity) ([10:15]).

2. Why Amazon and NBC? What’s at Stake?

• Amazon as a Digital Partner: The NBA specifically wanted a “technologically forward” and international partner ([05:54]), with streaming providing future-proofing.

  • Skipper: “They want…a digital partner. I think that’s good business and a smart choice.” [05:54]

• NBC’s Return: NBC’s motivation is compared to a company paying a premium to win back an old customer.

  • Samson: “NBC is paying a premium to get back in the game…like paying more to get a new customer than to keep an existing one.” [15:54]

• Warner Bros. Discovery’s Dilemma: Is it worth matching?

  • Samson: “I’d rather be the one who lost the NBA than the one who put my company in further dire straits…But I kept Inside the NBA. That’s not a trade I would make.” [08:42]

3. Sports Rights Bubble: Is This a Peak?

• Market growth: Sports rights have ballooned: SEC (+536%), NFL (+79%), MLB (+17%), NHL (+233%), Premier League (+177%), Big Ten (+160%) ([17:18]).

  • Skipper: “It still signals sports rights are the most valuable content in the universe.” [15:24]
  • Samson: “It’s misleading to do percent arguments…percentage is not an indicator of health of an industry or a trend.” [18:14]
  • Skipper emphasizes the U.S. demand is unique due to wealth and obsession with TV/sports ([19:13]).

• Team Valuations & Private Equity: Franchise prices rise alongside the number of billionaires, but the entry bar is now forcing leagues to seek private equity ([21:00], [21:36]).

  • Skipper: “There is one chart…that is an exact correlation between the prices of teams, and that is the number of billionaires in the world.” [21:00]
  • Samson: “There are not enough billionaires to support the increase in asset value, which is why [leagues] are looking for other streams of capital.” [21:36]

4. National vs. Local Economics: The Jim Dolan Angle

• Dolan’s Dissent: Knicks owner Jim Dolan voted against the deal, opposing the NBA’s “NFL model” that deemphasizes local TV for national revenue-sharing ([24:00]).
  • B (David Samson): “Jim Dolan has become [the guy who] votes no on Tuesday following Monday…The impact of his no vote is zero.” [23:49]
  • C (Skipper): “His incentives are to continue to protect MSG…” [25:11]
  • A (Pablo): “Jim Dolan said: ‘The NBA has made the move to an NFL model de-emphasizing and de-powering the local market.’” [35:11]
  • Skipper: “The NBA will be advantage[d] by being the second league to go totally national and forget regional games.” [35:53]
  • Samson: “What Dolan wants to protect against…is having anyone benefit from that which he has achieved.” [36:41]

5. Bundle Economics vs. A La Carte: What Really Matters

• The Value of Bundling: Networks and leagues preferred the cable bundle, which forced many to pay for sports they didn’t watch.
  • Skipper: “At the height of the cable bundle [ESPN] was the greatest business model that existed to date in all of media.” [32:24]
  • Samson quoting MLB Commissioner Manfred: “It was a much better business when people were paying for things they didn’t want.” [30:26]; [From Manfred:] “The RSNs were a great business. Lots of people paid for programming they didn’t necessarily want.” [31:57]
• What Moves the Needle?
  • Skipper: “It’s greenbacks.” [30:16]
  • Samson: “There’s a big gulf between what matters inside a room versus what matters to the media or fans.” [29:53]

6. The WNBA Deal: Ride the NBA’s Coattails?

• Deal Overview: WNBA rights jump from ~$40-60M to $200M+ per year ([41:51]), piggybacking on the NBA’s negotiations.

  • Samson (sarcastic): “The WNBA made an announcement that all of a sudden they are getting $200 million a year from the exact same partners who are spending $76 billion on the NBA...The NBA picked a number out of the blue sky that happens to be the number John said.” [37:59]
  • Skipper (on deal logic): “They were going to certainly give the WNBA the same or something approaching the same proportional increase that the NBA overall deal got.” [38:33]

• Is It Earned, or an Add-On?

  • Samson: “To say [the WNBA] merits the same type of attention that the NBA gets is not proper.” [46:10]
  • Skipper: “Nobody’s saying it has the thus far merited. …It’s getting somewhere between 2 and 3% of the money. …Would I, sitting at ESPN, think that package is worth two and a half percent? Yeah.” [46:47]
  • Samson: “Would you have paid $200 million as a standalone company in the open market…?” [47:14]

• Future Growth Clause

  • The contract allows for “good faith talks after three years to reflect the league’s growth.”
  • Samson: “There is no greater legal eyewash than the two words ‘good faith.’” [49:03]
  • Skipper: “It makes people feel good to get it in a deal. But your lawyer will always tell you … it actually means nothing.” [49:03]

Memorable Quotes & Moments

• On Matching Rights Clauses:
  “You don’t just erase the word Amazon and write Warner Bros. Discovery. …You have to have a proposal that you give back to the NBA that says…we’ve matched this deal and here’s how.”
  – John Skipper [04:19]

• On the Value of Sports Rights:
  “It still signals sports rights are the most valuable content in the universe… for the traditional broadcaster, NBC, for the pay television behemoth ESPN…and for the technology company that wants to get into the sports business.”
  – John Skipper [15:24]

• On Bubble Economics:
  “Everything’s great until it’s not.”
  – David Samson [19:57]

• On Ownership & Team Valuations:
  “There is one chart…that is an exact correlation between the prices of teams, and that is the number of billionaires in the world.”
  – John Skipper [21:00]

• On the End of Local TV Power:
  “Jim Dolan said: ‘The NBA has made the move to an NFL model de-emphasizing and de-powering the local market.’ This feels like a thing the NBA should want, but obviously Jim Dolan doesn’t feel that way.”
  – Pablo Torre [35:11]

• On the Era of the Cable Bundle:
  “At the height of the cable bundle [ESPN] was the greatest business model that existed to date in all of media because it took advantage of the most valuable content at a moment when it was put into bundles.”
  – John Skipper [32:24]

Timestamps for Key Segments

• NBA Rights Deal Mechanics & Matching Provision – [03:56]–[06:48]
• Packaging ‘A, B, C’ and What’s Included – [10:02]–[13:19]
• All-National, Seven-Day NBA Broadcasts – [14:00]–[15:04]
• Macro Industry Takeaways – [15:24]–[17:18]
• Sports Rights Inflation: Percent Bumps Across Leagues – [17:18]–[18:41]
• Debate: Peak or Plateau for Sports Rights? – [18:41]–[21:36]
• Billionaires & Private Equity in Team Ownership – [21:36]–[23:05]
• Jim Dolan vs. National Revenue-Sharing – [23:24]–[26:07]; [35:11]–[36:41]
• What Actually Drives Media Deals? – [29:23]–[33:20]
• Bundling, Subscriptions, and Greenbacks – [30:16]–[32:24]
• WNBA’s “Piggyback” TV Rights Surge – [37:04]–[41:51]
• The “Good Faith” Clause in WNBA Negotiations – [48:08]–[49:32]

Tone and Dynamics

The episode is quick-witted, playful, and occasionally self-mocking—insider-y but always aiming to amuse and inform:

• Skipper’s folksy drawl and deadpan humor repeatedly referenced.
• Samson provides the sharp skeptic/contrarian role.
• Pablo orchestrates, clarifies, and keeps the conversation snappy and accessible.

Conclusion

This episode breaks down the epochal NBA/ WNBA media rights landscape. The hosts and guests reveal the high-stakes, sometimes irrational logic behind TV rights negotiations, with big questions looming: Is this the sports rights peak? Who really wins—leagues, fans, or just the billionaires? And in the case of the WNBA, is success best measured in dollar multiples or actual, sustainable market growth?

For listeners who missed the episode:
You’ll walk away understanding why the NBA gambled on streaming, why Jim Dolan is the league’s perennial outlier, and why “good faith” doesn’t mean much in billion-dollar contracts—but greenbacks always do.