Analysis of Media Rights in Professional Sports Leagues

This report summarizes the role of media rights in the revenue streams of professional sports teams across the National Football League (NFL), National Basketball Association (NBA), Major League Baseball (MLB), and National Hockey League (NHL).

It examines the percentage of revenues driven by media rights, the structure of contracts with media companies, typical annual guarantees and escalators, specific team agreements, and a comparison of media and digital rights growth trends and their impact on team valuations.

Percentage of Revenues Driven by Media Rights

Media rights, encompassing both national and local broadcasting agreements, are a cornerstone of professional sports teams' financial models. The contribution of media rights to total revenue varies significantly by league, reflecting differences in how each league structures its media deals:

NFL: Media rights account for approximately 66% of total revenue, primarily from centralized national TV deals. The NFL’s model, where nearly all TV inventory is controlled at the league level, ensures equitable revenue distribution among its 32 teams. In 2022, the NFL’s total revenue was $18.7 billion, with central revenue (largely media rights) contributing $12.342 billion (Sportico).

NBA: Media rights contribute 54% to total revenue, with 41% from central (national) media rights and 13% from local media rights. The NBA’s total revenue in the 2022-23 season was $10.9 billion, with media rights playing a significant role (Visual Capitalist).

MLB: Media rights make up 49% of total revenue, with 26% from central (national) media rights and 23% from local media rights. MLB’s reliance on local media rights, often through regional sports networks (RSNs), leads to revenue disparities between large and small-market teams. In 2022, MLB’s total revenue was $10.9 billion (Sportico).

NHL: Media rights account for 38% of total revenue, evenly split between central (national) at 19% and local media rights at 19%. The NHL’s total revenue in the 2022-23 season was $6.8 billion, with media rights being a smaller but still significant component (Visual Capitalist).

The following table summarizes the media rights revenue percentages:

Structure of Media Contracts and Revenue Guarantees

Media rights contracts are long-term agreements between sports leagues and media companies, such as broadcasters (e.g., ESPN, Fox) and streaming platforms (e.g., Amazon, Peacock), that provide guaranteed annual payments for the right to broadcast games. These contracts ensure a stable and predictable revenue stream, which is critical for teams’ financial planning. Below are the details for each league:

NFL: The NFL has secured media rights deals worth $9 billion per year through 2033 with Amazon, CBS, ESPN/ABC, Fox, and NBC. These agreements, finalized in 2021, represent a 75% increase over previous deals and provide fixed annual payments, ensuring each of the 32 teams receives approximately $281.25 million annually from media rights alone (The New York Times). The centralized nature of NFL media rights minimizes reliance on local deals, which are limited to radio and preseason games.

NBA: The NBA’s new media rights deals, effective from the 2025-26 season, are valued at $76 billion over 11 years, averaging $6.9 billion per year.

The contracts are with:

• Disney (ESPN/ABC): $2.6 billion per year

• NBCUniversal (NBC/Peacock): $2.5 billion per year

• Amazon Prime Video: $1.8 billion per yeer.

These fixed payments guarantee revenue stability for the league’s 30 teams (ESPN).

MLB: MLB’s national media rights deals with ESPN, Fox, and Turner Sports (TBS) are worth approximately $1.7 billion per year through 2028. The ESPN deal alone is valued at $550 million annually (Forbes).

Local media rights, negotiated by individual teams with RSNs, vary widely, with large-market teams like the New York Yankees securing deals worth over $300 million per year, while smaller-market teams earn significantly less (MLB Trade Rumors). The bankruptcy of Diamond Sports Group, which operates Bally Sports RSNs, has disrupted local media revenue for several teams.

NHL: The NHL’s media rights deals with ESPN and Turner Sports are worth $625 million per year through the 2027-28 season. These contracts provide guaranteed annual payments, though the NHL’s media revenue is smaller compared to other leagues due to its lower viewership (Wikipedia).

These contracts are structured to provide financial certainty, with payments distributed to teams either equally (in centralized models like the NFL) or based on market size and individual negotiations (in leagues like MLB and NHL).

Typical Annual Guarantees and Escalators

Annual Guarantees:

NFL: $9 billion per year, equating to approximately $281.25 million per team.

NBA: $6.9 billion per year (starting 2025-26), roughly $230 million per team.

MLB: National media rights: $1.7 billion per year, approximately $56.67 million per team; local media rights range from tens of millions to over $300 million for large-market teams.

NHL: $625 million per year, approximately $19.53 million per team from national deals, with local deals adding variable amounts.

Escalators:

Media rights contracts typically feature fixed annual payments, with limited public information on escalators (automatic increases based on performance metrics like viewership). However, some contracts may include clauses allowing for renegotiation or adjustments based on market conditions, such as changes in subscriber numbers or advertising revenue. For example, the NBA’s new deals emphasize increased exposure on streaming platforms, which could lead to higher valuations in future negotiations (AP News). MLB’s exploration of nationalizing local media rights could also introduce new revenue-sharing models, potentially acting as an escalator for smaller-market teams (The Athletic).

Specific Team Agreements

Specific team agreements highlight the diversity in media rights revenue across leagues and markets:

MLB:

New York Yankees: The Yankees have historically secured one of the most lucrative local media deals through their YES Network, previously valued at over $300 million per year. This deal significantly boosts their revenue and valuation, making them one of the most valuable sports franchises globally (Statista).

San Diego Padres and Arizona Diamondbacks: These teams have faced revenue reductions due to the bankruptcy of Diamond Sports Group. They have transitioned to direct deals with cable and satellite providers, but their local media revenue has decreased compared to previous RSN contracts (MLB Trade Rumors).

Small-Market Teams: Teams like the Pittsburgh Pirates or Tampa Bay Rays earn less from local media rights due to smaller market sizes, relying heavily on the $56.67 million per team from national deals.

NBA: Los Angeles Lakers and New York Knicks: These large-market teams benefit from significant local media deals, but the NBA’s new national media contracts will distribute revenue more evenly, providing all teams with a substantial share of the $6.9 billion annual pool (Forbes).

Small-Market Teams: Teams like the Memphis Grizzlies or Oklahoma City Thunder rely more on national media revenue, which ensures financial stability despite smaller local markets.

NFL: Dallas Cowboys and Cincinnati Bengals: The NFL’s centralized media rights model ensures that all teams receive an equal share of the $9 billion annual media revenue, approximately $281.25 million per team. This equitable distribution supports high valuations even for teams in smaller markets like the Bengals (Visual Capitalist).

NHL: New York Rangers and Toronto Maple Leafs: These large-market teams secure higher local media rights revenue due to their strong fan bases and media markets, supplementing the $19.53 million per team from national deals.

Small-Market Teams: Teams like the Arizona Coyotes (now Utah Hockey Club) rely more on national media revenue, as their local deals are less lucrative.

These examples illustrate how media rights contracts vary by league structure and market size, with centralized models providing stability and local deals offering potential for higher revenue in large markets.

Comparison of Major League Sports: Media and Digital Rights Growth Trends and Valuations

Growth Trends

The value of media rights across all major sports leagues has grown significantly, driven by increased competition among traditional broadcasters and emerging streaming platforms:

NFL: The NFL’s current media rights deals, worth $9 billion per year through 2033, represent a 75% increase over previous contracts. The inclusion of Amazon for Thursday Night Football highlights the growing role of digital platforms (The New York Times).

NBA: The NBA’s new media deals, valued at $76 billion over 11 years ($6.9 billion per year), more than double the previous $2.66 billion annual deal. Partnerships with Amazon and NBC/Peacock reflect the shift toward digital distribution (ESPN).

MLB: MLB’s national media rights are worth $1.7 billion per year through 2028, but local media rights face challenges due to the RSN model’s instability. MLB is exploring nationalizing local rights, which could lead to higher growth by 2028 (The Athletic).

NHL: The NHL’s current deals, worth $625 million per year, are expected to grow in future negotiations as streaming platforms compete for live sports content (Wikipedia).

Digital rights are a key driver of growth, with streaming services like Amazon, Peacock, and ESPN+ acquiring significant sports content.

For example, Amazon’s $1 billion annual deal for NFL Thursday Night Football and its $1.8 billion NBA deal underscore the increasing value of digital platforms (Sporting News). This trend is expected to continue as cord-cutting reduces traditional TV viewership, pushing leagues to prioritize streaming.

Valuations

Team valuations are closely tied to media rights revenue, with leagues and teams benefiting from strong media deals commanding higher valuations:

NFL: The NFL’s centralized media rights model ensures stable and high revenue, supporting an average team valuation of $5.14 billion. The Dallas Cowboys, with a valuation of nearly $7 billion, benefit from both media revenue and strong sponsorships (Sportico).

NBA: The NBA’s high media rights revenue and global appeal drive strong valuations, with teams like the Los Angeles Lakers and New York Knicks benefiting from large markets. The new $76 billion media deal is expected to further boost valuations (Forbes).

MLB: MLB team valuations vary widely due to reliance on local media rights. Large-market teams like the New York Yankees, valued at over $7 billion, benefit from lucrative local deals, while smaller-market teams face volatility due to RSN challenges (Statista).

NHL: NHL team valuations are lower, with an average around $1 billion, but large-market teams like the Toronto Maple Leafs and New York Rangers command higher values due to strong local media revenue. The NHL’s national deals provide a baseline for smaller-market teams.

The shift toward digital rights and potential nationalization of local rights (e.g., MLB’s plans for 2028) could reduce valuation disparities by ensuring more equitable revenue distribution. However, leagues like MLB and NHL, with significant local media dependence, may face short-term volatility as the RSN model evolves.

Conclusion

Media rights are a critical revenue driver for professional sports teams. The share of media rights as a percentage of league revenue are a follows:

• NFL - 66%

• NBA - 54%)

• MLB - 49%

• NHL - 38%

Long-term media contracts with fixed annual payments provide financial stability, with the NFL securing $9 billion per year, the NBA $6.9 billion (starting 2025-26), MLB $1.7 billion (national), and the NHL $625 million.

The growth of digital rights and increasing media deal values are boosting team valuations, particularly in the NFL and NBA, while MLB and NHL navigate challenges in local media markets.

References

Sportico. (2022). How Sports Teams and Leagues Make Money. Retrieved from https://www.sportico.com/feature/how-sports-teams-leagues-make-money-1234766931/

Visual Capitalist. (2023). U.S. Sports Leagues by Revenue. Retrieved from https://www.visualcapitalist.com/u-s-sports-leagues-by-revenue/

Visual Capitalist. (2023). Compared: Revenue of Top Sports Teams in North America. Retrieved from https://www.visualcapitalist.com/compared-revenue-of-top-sports-teams-in-north-america/

The New York Times. (2021). N.F.L. Signs Media Deals Worth Over $100 Billion. Retrieved from https://www.nytimes.com/2021/03/18/sports/football/nfl-tv-contracts.html

ESPN. (2023). Reports: NBA Agrees to Terms on $76 Billion Media Rights Deal. Retrieved from https://www.espn.com/nba/story/_/id/40535771/reports-nba-agrees-terms-76-billion-media-rights-deal

Forbes. (2021). ESPN’s $4 Billion, 7-Year Renewal With MLB Starts in 2022. Retrieved from https://www.forbes.com/sites/maurybrown/2021/05/14/espns-7-year-392-billion-renewal-with-mlb-starts-in-2022/

MLB Trade Rumors. (2024). Each Team’s Local Broadcasting Arrangement. Retrieved from https://www.mlbtraderumors.com/2024/01/each-teams-local-broadcasting-arrangement.html

Wikipedia. (2023). Sports Broadcasting Contracts in the United States. Retrieved from https://en.wikipedia.org/wiki/Sports_broadcasting_contracts_in_the_United_States

Statista. (2023). MLB Revenue by Team 2023. Retrieved from https://www.statista.com/statistics/193645/revenue-of-major-league-baseball-teams-in-2010/

The Athletic. (2024). MLB Plans New National TV Packages for 2028, Changes to Revenue Sharing, CBA Crucial. Retrieved from https://www.nytimes.com/athletic/5933299/2024/11/19/mlb-plans-new-national-tv-packages-for-2028-changes-to-revenue-sharing-cba-crucial/

AP News. (2023). NBA’s $76 Billion Media Rights Deal. Retrieved from https://apnews.com/article/nba-media-deal-tv-70e4ac5db5ba0a733fdc9ff4cf15950b

Sporting News. (2023). NFL’s New TV Rights Deals Explained. Retrieved from https://www.sportingnews.com/us/nfl/news/nfl-tv-rights-deals-explained/z4rlycwog3jz1f6pqdqoegbxf