Why The NBA’s In-Season Tournament Is Really About Media Rights
Huddle Up is a 3x weekly newsletter that breaks down the business and money behind sports. If you are not already a subscriber, sign up and join 100,000+ others who receive it directly in their inbox each week. Today At A Glance:The NBA has seen its regular season viewership decline over the last several decades, and players routinely conduct load management throughout the season. So the NBA recently announced the addition of a new in-season tournament, and today’s newsletter examines why its timing is critical to the league’s new media rights deal. This newsletter is also available via podcast on Apple or Spotify. Enjoy! This Newsletter is Sponsored By ButcherBox!
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The NBA tried to reverse this trend by implementing a new set of rules that essentially said 1) teams are prohibited from resting healthy players for high-profile, nationally televised games, 2) teams should not rest multiple healthy players for the same game, and 3) teams should not rest healthy players when playing on the road. But with no specific punishment listed and teams able to categorize rest days as undiscoverable injuries like calf tightness or back strains, the problem has only worsened. So now the NBA has a new solution: a midseason tournament between all 30 teams.
The NBA In-Season Tournament is a new annual competition that kicks off this coming 2023-24 season. All 30 NBA teams will compete in group play starting on November 3. Eight teams will then move on to the knockout rounds (quarterfinals and semifinals), and the championship will take place on December 9. The group play and quarterfinal games will be played at home NBA arenas, while the semifinals and championship will be held at the T-Mobile Arena in Las Vegas, Nevada. NBA In-Season Tournament Schedule
And while it might sound ironic that the NBA wants to fix load management by adding more games to the schedule, there are a few essential things to remember. First, all of these games (except for the championship game) count toward the regular season. So teams aren’t playing additional games; the games are just…different. And secondly, the NBA has put together a huge prize pool that guarantees every player that makes it out of the group stage a check between $50,000 and $500,000. Prize Pool Breakdown Per Player
Still, I’m not convinced this will work the way the NBA wants it to work. That’s because the 50 best NBA players make over $30 million annually, and a $50,000 to $500,000 check isn’t as enticing when you get paid that every two weeks anyways. And while many people want to compare this to popular in-season soccer tournaments like the FA Cup or the UEFA Champions League, there is one key difference. Those tournaments work so well because they put teams against each other from different leagues around the world, creating the opportunity for David vs. Goliath-type upsets, which won’t happen in the NBA since everyone plays everyone anyways. Instead, the NBA is trying to solve two problems: 1) Make NBA regular season games more meaningful and 2) create an additional media property for broadcast partners. The first is self-explanatory because the tournament doesn’t have to be amazing to be better than a random Tuesday matchup between two bottom-tier NBA teams. And when you add in the additional promotion the NBA will get from its media partners for the inaugural event, the viewership in year one should be pretty solid. But that leads me to my second point: the NBA creating an additional media property. We all know the NBA is currently negotiating its next media rights deal. The rumors are that the league is looking to get $5 billion to $8.33 billion per year, equating to a 9-year, $45 billion to $75 billion deal. That would be 2-3x more than their current deal. But the type of media partner is almost as important as the money at this point. That’s because the NBA’s media deal is pretty standard right now. They get $2.66 billion a year from Disney and Warner Bros. Discovery. But with the NBA’s next media deal expected to run into the mid-2030s and millions of cable customers expected to churn during that time, a streaming partner (or two) is paramount. Take the NFL, for instance. Roger Goodell recently signed media rights deals with six companies worth over $110 billion. Games are split up in packages — Sunday afternoon, Sunday night, Monday night, and Thursday night — and part of the inventory was reserved for Amazon, Peacock, and YouTube TV. Not only did this deal make the NFL a lot more money by splitting up the inventory into different packages, but it reduced the risk associated with the decline of cable TV. And my guess is the NBA wants to do something very similar. So, yes, they’ll probably sell $50M+ in sponsorships for the tournament (naming rights partner, etc.), and the audience/competition should be good enough to demand a sizable broadcasting fee. But the most beneficial outcome for the NBA is that they can include this tournament as part of their next media rights package, which will most likely have a combination of cable and streaming partners like ESPN, ABC, TNT, Fox, NBC, Apple, and/or Amazon. So while many people will inevitably complain about this tournament — the quality of play isn’t good! The players don’t care! It doesn’t matter! — the NBA just created another multi-billion-dollar property out of thin air, and we should all be paying attention to that. If you enjoyed this breakdown, please consider sharing it with your friends! I hope everyone has a great day. We’ll talk on Friday. Listen to the Joe Pomp Show on Apple or Spotify. Interested in advertising with Huddle Up? Email me. Your feedback helps me improve Huddle Up. How did you like today’s post? Loved | Great | Good | Meh | Bad Huddle Up is a 3x weekly newsletter that breaks down the business and money behind sports. If you are not already a subscriber, sign up and join 100,000+ others who receive it directly in their inbox each week. Huddle Up is free today. But if you enjoyed this post, you can tell Huddle Up that their writing is valuable by pledging a future subscription. You won’t be charged unless they enable payments.
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