Plain English with Derek Thompson - Why the New NBA Deal Is So Weird. Plus, How Sports Rights Actually Work.

Episode Date: May 28, 2024

In an age of cults, sports are the last gasp of the monoculture—the last remnant of the 20th century mainstream still standing. Even so, the new NBA media rights deal is astonishing. At a time when basketball ratings are in steady decline, the NBA is on the verge of signing a $70-plus billion sports rights deal that would grow its annual media rights revenue by almost 3x. How does that make any sense? (Try asking your boss for a tripled raise when your performance declines 2 percent a year and tell us how that goes.) And what does this madness tell us about the state of sports and TV economics in the age of cults and cord-cutting? John Ourand, sports correspondent with Puck News, explains. If you have questions, observations, or ideas for future episodes, email us at [e-mail]. Host: Derek Thompson Guest: John Ourand Producer: Devon Baroldi Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hey, football fans, we know that the NFL offseason can seem long and dark, but the Ringer NFL show is here to shine a light on all the big training camp developments and front office news around the league. Join me, Shield Capadia, and a rotating cast of Ringer favorites that includes Noura Princeati, Stephen Ruiz, Austin, Gail, and Lindsay Joan throughout the summer months and stay up to date on what your favorite team is cooking up for the 2024 season. subscribe to the Ringer NFL show on Spotify or wherever you get your podcast

and follow Ringer NFL on Instagram and TikTok and at Ringer NFL on X and YouTube. Today's episode is about the future of sports and the economics of sports. There are some wild things happening in sports media rights right now and I think they reflect on a few trends we've been circling for the last few months.

Recently we did an episode in this show about the death of the mainstream in mass culture, and the case that fragmentation in entertainment and the media is turning culture into a set of cults. The sheer riotous abundance of media options on Instagram and TikTok and beyond have created a scenario where it's genuinely difficult to have a clear understanding of how other people are processing the world, how our neighbors are seeing reality because we are all staring at a different telecast when we gaze into our algorithmic devices. This phenomenon, by the way, very much hits home.

There are some nights where my wife and I are catching up, and she'll say, did you see this trend? Did you see this video? Did you hear about this thing that everybody is talking about? And some nights, I'll have a vague understanding of what she's referring to. And other nights I'm like, no, I actually, I'm paid to follow the news, but I don't know what you're talking about. And then I'll say, you know, Laura, did you see this article?

Did you read this podcast transcript that everyone, that I'm a lot. around is talking about and she'll be like, no, I don't. I think it's easy to underrate just how interesting and strange this is. My wife and I are very similar people. We have very similar interests. But because the modern internet is so frigging huge, and because its hugeness is algorithmically sordid to take advantage of microscopic differences in our tastes, it is all too easy for even two similar people to find themselves submerged in entirely different media. And when you realize that a nation of 250 million American adults are not at all similar to each other in many ways, you realize why we are witnessing the death of any illusion of a shared

reality. So that is all perhaps a very, very strange preamble for the topic of today's podcast, which is sports. But I would argue it's absolutely appropriate. In a world of cults, it sometimes seems as if there is. one institutional category standing that we can at least somewhat call mainstream. It's sports. The NFL in particular is bigger and more popular than just about any other media institution in this country. In 2023, of the top 100 most viewed US TV programs, NFL games made up 93.

Of the top 25 programs, the NFL made up 24. Like, what is shared reality these days? What is the universal telecast that we are all witnessing at the same time? It's pigskins and Taylor Swift. The rest is cults. Well, just behind the NFL, in order of popularity, but way behind them an actual measurable audience, is the NBA. And despite everything that I just told you about how sports is the last monoculture standing, the NBA is on the verge of signing a rights deal that is, I think, utterly astonishing and very storytelling, the NBA is about to sign a deal that will get them $76 billion over the next

11 years. Huge number, but that's not the number I'm most interested in. The package would be worth more than 2.5 times the league's current deal. That's the number I'm interested in, because the NBA's regular season TV ratings are declining. That's right, NBA ratings are in structural decline, and for this, in exchange for a product mired in slow structural decline, media companies are giving the NBA a 150% raise. Does that make any sense? And what does the madness of modern sports rights tell us about the state of sports and TV economics in this age of cults and cord cutting? Today's guest is John Orand, a sports correspondent with puck news. We talk about the basic economics of sports rights and TV revenue, why this deal does or doesn't

make any bit of sense, and why experts who predicted that cord-cutting would wallop the sports leagues seem to have gotten something a little bit wrong. I'm Derek Thompson. This is plain English. John Orand, welcome at the show. Hey, thank you for having me, Derek. You are here to explain sports media economics to me, and I will. want to start by confessing my astonishment and confusion. In most businesses and for most individual

workers, if your key success metric goes down, your business suffers. But you look at the NBA, TV audiences for the NBA seem to have declined in recent years. Last season, I read the league average of 1.6 million viewers was down about 2% from the previous years. And yet the NBA, as I just said in my open, is about to sign a deal that will nearly triple its annual rate. revenue from broadcasters. This is just on its face remarkable thing. Like, if you walked into your boss's office and he was like, look, John, your performance is getting worse by about 2% a year. And that's why we're tripling your salary. Like, that'd be a very weird conversation to come home and explain to your family. And I do think it is a reflection of the weirdness that is

sports media economics. And I wanted your help to understand why it is so weird right now. So let's start with some basics. When the NBA Sunday, a new rights deal. What does that actually mean? So what that actually means is that they're going to sign a deal with ESPN, almost certainly with Amazon, and it's looking right now with NBC.

And so the only way for you to watch NBA games moving forward is going to be on ABC or ESPN, because they're both owned by Disney, or ESPN Plus, Amazon Prime, or NBC, and Peacock. Peacock, of course, is a streaming service for NBC. So they are buying the rights so they control all of the NBA games. So you can't watch it anywhere else but those three areas. And let's say I'm Disney.

I rent the right to broadcast NBA games for the next 11 years on ESPN and ABC and ESPN Plus. How does Disney make it worthwhile to them? How does Disney, has a company like Disney, make money from sports rights these days? This has changed. In the past, it used to be they would, would make the money back solely from advertising. So they would buy the rights. They would sell advertising against it.

And it was pretty easy to come up with the rights fee for that. It was basically how much revenue you got in selling advertising and you'd put a little markup on that. When ESPN got it about 15, 20 years ago, the calculus change because ESPN gets paid by the cable operator and they get paid a hefty amount. ESPN is the most expensive channel on your. cable dial and they're getting paid $10 per subscriber per month for not just for the NBA programming, but for the NFL programming. And so there's some portion of that that they allocate to the NBA.

So it goes, so one of the reasons a cable came in and started destroying the broadcast networks in terms of getting the rights come over, it's because they had that dual revenue stream. So they could, they could afford to pay a lot more than broadcasters who didn't want to lose money. You know, they were just selling advertising against it. So that basically takes us up from, you know, the 1990s into maybe 2010, 2011. But now we don't just have the cable bundle. We have a structurally declining cable bundle. We have cord cutting, and we have this explosion of Netflix and Amazon, we're just starting

to get into the sports rights games. How does streaming change the economics of making your money back from all this money that you're putting out to the sports leagues? And let's stick with Disney, just talking about maybe how a company like Disney with ESP N-plus and Disney Plus is thinking about making money from those streamers to pay off what it's putting out to the NBA. So one of the ways that Disney is able to do that, and you also look at NBC with Peacock or you look at CBS with Paramount Plus, is that if they get these games and then they start

to stream some of them exclusively, they get a lot of people, they get a lot more subscribers to their subscription services, which is what you want to do. NBC put a NFL playoff game, a wildcard playoff game exclusively on Peacock. They saw an enormous number. I don't have the numbers in front of me, but they saw an enormous number of signups. And you would think that people would sign up for Peacock,

watch a game, and then try to save what $10 a month or whatever peacock costs and then did your service. What they found is that close to 70% of the people that signed up for that game stuck with the service and started watching other things on the service. And then all of a sudden, you know, they, they, it's almost like being a drug dealer, I guess. It's, you know, they tested it.

They liked it and they stuck with it. And so that's, that's one of the attraction that these media companies, as they try to grow these streaming services, have with sports. It was 2.8 million people who signed up to Peacock in order to watch the Kansas City Chiefs Miami Dolphins game. And if you're right, that 70% of them stayed, that's about 1.9, 2 million people who are still, subscribing to Peacock because of a sports game that happened, you know, whatever, four months ago, which is pretty remarkable when you think about how much they're making every single month. Let's return to my... By the way, there still are...

There still aren't a number of people who are paying for the AOL dial-up service. So inertia is a beautiful thing for these companies. And this is why subscription companies can be so successful. Not only is the underlying company successful, but also you're monetizing some people's forgetfulness. Let's return to my original question. NBA ratings are down 1 to 2% on an annual basis. They've been more or less declining, it seems to me, for much of the last decade.

And the NBA is being rewarded by almost tripling the amount of annual money they're going to be receiving from these broadcasters in exchange for the right to rent these games to put them on NBC, ESPN, ABC. Just explain to me, and feel free to just take the stage here and you pick apart the question. taking any direction you want. How does this make any sense? How does it make any sense for ratings to be down and revenues to triple? Not all decreases are the same. And so if you take a look and you say that, okay, the ratings are down and they have been dropping. But if you compare it to the rest of television, the ratings are really holding relatively steady. And in fact, If you, where else in television are you going to draw 1.6 million people to watch a regular season game? That's regular season.

Where else in television are you going to bring in 10 million viewers to watch an NBA finals game, which is around what they get? The, that's one aspect of it. So these media companies are taking a look at, at the NBA ratings as compared. to the rest of television, and they actually look relatively healthy in those regards. The other thing is, like, if you're talking about regular season ratings, and regular season is, you know, across baseball, across hockey, across basketball, it's just not as important as the playoffs. The playoffs are really where these money, all this money comes into play, because those numbers go up considerably. They're playing just about every single night.

and the playoff ratings have been generally a little bit better than the regular season ratings that you suggest. And that's one of the reasons that the NBA in particular is taking a look at, what can we do to make regular season more fan friendly? And they started up an in-season tournament last year in November where, you know, and the ratings increased for that tournament, in fact. And so they're trying to do a couple of different things to make the regular season a little bit more fan friendly. but across baseball, across hockey,

across basketball, regular season is sort of what it is. People are watching their local NBA team on their regional sports network or however they get it locally. And they're not necessarily

watching the national broadcasts as much as they would during the playoffs. I have to confess that something just doesn't add up for me and I want you to tell me if I just have this wrong. ESPN, and I believe this is

according to your reporting, is paying more for less. The annual fee they're going to pay to the NBA is going to go from about $1.5 billion per year to about $2.6 billion per year, despite the fact that the NBA is going to sell them fewer games. The regular season slate has been cut in half. Now, again, you're the expert here. But if I were like an investment, In ESPN, if I were thinking about investing in Disney, and I heard that ESPN is going to increase by 160 percent the amount that it pays annually to the NBA, despite the fact that it's getting fewer games, and those games are going to have less of an audience than they had last year, which was less of an audience they had the year before, which was less of an audience they had

the year before, I'd say there's no business where you can survive for a decade by paying a 1.5x premium for a core product that is getting less popular year after year. The economics of media simply won't allow you to discharge that premium that you are committing to this product. I mean, am I wrong here, or is this kind of a flashing red light for these traditional broadcasters like ESPN and NBC that are paying so much money for these rights in an era where cable, a court cutting is happening and the cable bundle is in obvious structural decline. So if I was with ESPN and I heard you say that to me, they would say that you have a view that is stuck in 2010. And so ESPN is going to have, they're going to have fewer regular

season games. That means they're not going to have the Friday night games. If you're a Comcast, if you're a charter, because they don't have the NBA on a Friday night, are you going to to not pay ESPN less? No, what matters is, again, the playoffs, what matters is the fact that they do have NBA programming going throughout. And what we're, look, I've been covering sports media for two decades now. And right now, one of the key areas that I'm looking, my biggest story that I'm following is that there's a line.

And what you described is, like, who are the house? The NFL, clearly a half. College football, clearly a half. Up to a point, the PAC 12 when it doesn't exist anymore partly because of this. The NBA, based on what we're seeing, clearly you have. Then you're seeing

Major League Soccer. Clearly, I have not. They could not get a linear television deal and now they're with Apple. My job over the next several years is going to try to be to try to figure out which are the

sports and which are the sports leagues that are part of the halves and which are the ones that are, you know, falling short of that line. And the next big one to come up is going to be baseball, because when you talk about regular season, nobody's watching regular season baseball really. And that's one of the, and ESPN has Sunday night baseball. They have no real baseball playoffs. So they didn't have room for the, but they don't care about baseball playoffs because they have college football and they have the NFL in the fall. And so when that comes up, where is baseball going to fall on either side of this? And that's going to be a fascinating topic to follow. It sounds like one thing you might be saying is that in a world of pure advertising,

you fall to the level of your ratings. But in a world of subscriptions and affiliate fees, you rise to the level of the most popular that the sport can be. So as long as the NBA playoffs are this must-see event, it is really, really valuable for these companies to remain a part of the cable bundle, and so they're going to get big affiliate fees from the cable operators, and it's likely you're going to have more phenomena like the Peacock Kansas City Chiefs game, where people are going to pay for the service in order to see that premier event,

and 70-ish percent of them will stick with the streamer for the next six months, and that will be so valuable to the company. And so in a way, it's like, ratings are a bit of a red herring. That's like day-to-day ratings are not the thing that matters most if you're trying to evaluate media economics in 2024. What matters most is how many people are going to watch or demand the most popular that the sport can be because that's going to determine the number of subscribers that sign up and the likelihood that they just stick with the program, stick with the streamer for the next six months.

Even more than that, it's even more than the number of people. It's the passion of those people. And so something like the Champions League, a European soccer tournament, Paramount Plus gets it. And if you talk to CBS sports executives, they say that the subscribers that they get to watch the soccer tournament, they subscribe. They pay a lot of money. They're A1 subscribers. They stick with the service, and it ends up being profitable for them. So nobody's going to confuse Champions League's ratings with the Super Bowl or within the NFL playoffs,

but it still is a really engaged fan base that all of these media companies won ahead. The NBA having a really popular must-see playoff and a regular season that isn't particularly well attended to is a little bit like the fact that Netflix has this portfolio strategy with their shows, where they can have a lot of shows that don't necessarily succeed very well. But if they are one or two hits per quarter, those hits pay for all of the misses. And in a way, the NBA postseason helps to pay for the fact that the regular season is a little bit ignored by a lot of sports fans. I have to confess, it's certainly ignored by me as a media product. I went on Bill Simmons podcast, and I joked that I'm a Bravo sports fan when it comes to the NBA,

because I like gossip about the NBA for about 90% of the NBA season, and then I tune in for like the middle of the playoffs toward the NBA finals. That's the only time when my appreciation for the NBA as a fan can be like profitably used by these companies. That's the only time that I'm actually tuning in. But I'm paying attention the entire season. You're saying to a certain extent, Derek,

it doesn't really matter that you don't pay attention for 90% of the season if you're still paying for a lot of these streamers who have the NBA. because if you're still going to pay for them, well, they're collecting your money on a monthly basis, and they don't mind so much that you are or aren't watching, you know, every single night. And so, yeah, it is kind of interesting to think that the NBA as a product is a little bit like the entire portfolio of a company like Netflix

because it's the playoffs that are the tallest pole in the tent. One more point to you before I move on to the NFL. You are exactly right. And one of the things that the streamers have figured out that the broadcast network and the cable networks figured out a long time ago, is that even, let's even talk about the NBA regular season, which we've acknowledged has ratings that aren't great

and are dropping. They have research executives that can predict within a couple of thousand viewers exactly what those ratings are going to be. When you talk about Netflix, throwing out what, 20 shows, they have no idea what shows are going to hit, what shows they're not going to hit. So the money might be higher for the NBA, but they know exactly what kind of hit they're going to have with it. And that goes across through MLB,

through NHL, and certainly through the NFL and college sports as well. Right. You're paying for predictability. That absolutely makes sense to me. Moving on to the NFL, in 2021, the NFL, which is much more popular than the NBA. It must be said, signed media rights agreements with CBS NBC, Fox, ESPN, Amazon worth $110 billion over 11 years. So it was a bigger deal than the one the NBA is looking to sign. That number was double the value of its previous contracts. And that double is really interesting because the NBA is about to get a 2.5x raise. And here's another thing I don't quite understand about the NBA media rights deal.

Why is the NBA getting a larger percentage raise than the NFL, even though it's It's a less valuable product that is losing audience over time, and the NFL seems to be consolidating its position as being, like, the dominant mainstream entertainment Goliath of the country. It's incredible, isn't it, $110 billion worth of deals, and it now seems totally undervalued? And one of the reasons that the NBA is doing so well is because it has four companies that are tripping over themselves going after three packages. So right now it looks like, and ESPN has a package for certain. It looks like Amazon Prime has a package for certain. And TNT and NBC are battling for that third package. One of the problems that the NFL ran into is that it had five

packages and it had five bidders. So the bidders were bidding against themselves. All of them, by the way, are terrified at losing the NFL because they've seen what happened to CBS in the 1990s when it didn't have the NFL. It's all what happened to NBC in the early 2000s when it didn't have the NFL. Nobody wants to a risk. None of the broadcasters want to risk not having the NFL. But if you only have five bidders and five packages, you're not going to create a bidding war to where it's going to go too far up from that. And that's one of the reasons why you saw the NFL turn around and they sold a couple of Christmas Day games to Netflix.

And again, it's like the drug dealer. They're trying to get Netflix addicted to NFL programming. So the next time it comes up, maybe you'll have six-bitters for those five packages. Or maybe they'll call those five packages and you'll have six-bitters for the four packages. Then you'll see that the numbers really increase, I think. You mentioned the fact that the three companies that are likely to be in this final NBA deal are Disney, which owns ESPN, Comcast, which owns NBC, and Amazon. Warner Brothers Discovery, which owns TNT, does not appear to be among the final three. Why isn't Warner Brothers Discovery on the verge of renewing their deal?

Okay. Let me also suggest that Warner Brothers Discovery has matching rights in its contract, and nobody quite knows exactly what those. matching rights mean or what those those right what they can match or what they can't match. And so that's going to sort of be what the lawyers. And what Warner Brothers Discovery told Adam Silver in the NBA was like, sign your deals and then we're going to see if we can end up matching them. My reporting suggests that Warner Brothers Discovery, when they went into this, they thought that NBC had sort of a bluff bid. And if you know Brian Roberts and Comcast, they have a history of trying to bid other companies up and then sort of stepping out at the last moment. The NBC bid is not a bluff bid. It's real. And once they realize it was real, then now they're in a bidding more with NBC and are unable to

get it, you know, as a company that has had the NBA since in 1980s, they could have gotten, I'm going to say a sweetheart deal, but I'm using air quotes as I say it. And so they the Warner Brothers Discovery negotiating strategy was

really not the best. Starting from two years ago when David Zazlov made a very public announcement that we don't need the NBA, he said. And you don't say that when you're trying to do sports deals,

relationships matter a lot. And what I can tell you is that when he said that, that resonated within the NBA. And when you talk to people from the NBA, they continue to bring it up even now. So this isn't something that the press is sort of making a mountain out of a molehill. This is something that irritated the NBA at the time, and they haven't forgotten it since.

So why did Warner Brothers Discovery not be part of it? A lot of it is sort of, they were trying to save some money. You know, they have a ton of debt, of course, and they just didn't negotiate very well. It seems, though, that like if they don't renew this deal, it might be a little bit like cutting off your nose despite your face. You mentioned that in the 1990s, CBS did not renew their relationship with the NFL, and it really hurt them. I could absolutely imagine the same thing happening to Warner Brothers Discovery, which has had a hard time in so many different fields. Their movie slate hasn't been particularly successful. And now here you have the NBA, which is the gem, the jewel of their television offerings.

If they don't renew that, it does seem potentially devastating for the company. Do you disagree? Do you think there's a path forward for Warner Brothers, T&T, for all those companies to continue to cut costs and yet eke it through in terms of getting through the debt? I think the glass half full of view of that is that David Zazlov will have $2.5 billion a year burning a hole in his pocket that he can reinvest in other rights as they come up with the UFC coming up or potentially baseball coming up. And he can continue to be aggressive and continue to bring in rights that may not be as draw as passionate fans as the NBA or as big in audiences as the NBA. but there are still plenty of rights that are going to come out on the open market over the next couple of years. Ten years ago, I would have said that court cutting would be terrible for sports.

I would have said the cable bundle is this magical cross-subsidy. People who don't watch sports at all are still paying this affiliate fee to ESPN every month. That makes ESPN rich. ESPN uses the free cash, much of which it gets from people who aren't watching sports to pay for live sports rights. And if you undo this system, sports rights deals will come crashing back down to earth.

That's the story I believed. Honestly, it's a story that I was told by a lot of media experts. But you here have the NBA and the NFL doubling, or more, there's sports rights deals in the middle of this cord-cutting crisis for the cable bundle.

Why was that conventional wisdom wrong? Why does it seem like the age of the... Well, yeah, but why does it seem maybe like the age of cord-cutting has actually coincided with very positive deals for sports. Well, two things. One is, I don't think that was wrong. I think that if you look at the PAC 12,

I brought this up before, but the PAC 12 is one of the five biggest college conferences. It had the nickname of the Conference of Champions, because it boasted the most national championships of any conference out there. it couldn't find a suitable media deal and it collapsed. Could you imagine that? I mean, that is what we're seeing moving forward.

Major League Soccer in its ascendancy, the World Cup is coming to American soil in a couple of years and they could not get a traditional media company to bite. And so they had to go and do a deal with Apple. And so they're behind the Apple TV plus paywall. So in some respects, I think that what, you described is actually 100% correct. The other corollary to that is that if NBC does a deal and Warner Brothers doesn't match, there's Peacock, their streaming service is going to be a big part of

that deal. ESPN streaming service is going to be a big part of that deal. So what you're seeing from these traditional media companies are not the same kind of deals that they used to do, but they're deals that have a pretty big streaming component to it that is allowing them to try to build another part of their business. If you agree that court cutting and the demise of the Caleb bundle has clearly threatened the ability of sports leagues to demand higher and higher rights fees from broadcasters, is it time to sort of crown Adam Silver, like the king of media rights deals?

I mean, is this a little bit of a magic act here? Because even taking it everything that you said about why the NBA is more important than its declining regular season ratings suggest, and that point is very well taken. I'm persuaded on that point. But even so, it's not as if the NBA postseason ratings or some enormous gangbuss thing relative to the NFL, and yet they're going to make a larger percentage raise on their rights than the NFL made just three years ago. I mean, how much of that is a result of basic cold economics, and how much of it do you think is the fact that Adam Silver is just a really

savvy operator and understood how to play these companies off each other? I feel Adam Silver is a really savvy operator. I think he certainly knows how to play these companies off of each other. Despite the cord cutting that's going on, he was able to get a bidding war going with multiple, again, multiple traditional media companies. So it wasn't a bidding more with, like, you know, YouTube out there. This is, you know, Warner Brothers Discovery and NBC.

And the biggest winner in all of this, Adam Silver and Bill Koenig is a senior NBA executive. I should shout out too, because he's the guy that rolls up his sleeve and is getting this done as well. But the biggest winner of this is certainly Adam Silver and the NBA, because I will tell you that despite some of some early reports out there, I thought the NBA was going to be lucky to double their revenue, and they've blown past that.

And regardless of how this comes out, whether it goes to NBC, whether it goes to Warner Brothers Discovery, they're going to get a windfall. And to your question that I dodged a little bit unintentionally earlier, if I'm the NFL, I'm looking at what happened at the NBA, and I'm scratching my head, like, wow, how did we just double when we're seeing the importance of sports to traditional media companies? I want you to tell me one more surprising winner.

I'd love to know who you think this is quote unquote secretly good for. So it's obviously good for the NBA. It seems like it's obviously good for a company like Amazon, which has really been interesting in terms of building up its sports rights packages. What's a company this is sort of secretly good for? Maybe you can name a sports league that is set up well to get a huge raise on their rights deals when they come up in a few months or a few years. Maybe it's a company like Netflix,

like has Disney NBC become desperate to raise cash to pay for all of these rights? Netflix is like, we're sitting pretty. We've got all the money in the world. We didn't blow this money on the NBA. We've got a ton to discharge on UFC or whatever else comes down the pike. Who is it secretly good for?

Okay, who it's not secretly good for is ESPN. ESPN got a great deal in the window. Jimmy Patero, they had an exclusive negotiating window. They did the deal. And so the bidding war that happened isn't affecting ESPN in its package. So ESPN clearly comes out as a winner on this. The secret winner to me is UFC, Ultimate Fighting Championship. They have a deal with ESPN that is up at the end of this year.

They're going to start the renewal talks in the fall. And if Warner Brothers Discovery doesn't get the deal, like I said before, they have $2.5 billion a year burning a hole in their pocket. So all of a sudden you're going to see a bidding award to try to get the UFC. If they match and NBC doesn't get the deal, same situation. They prioritize live sports. UFC brings in a predictable number of viewers for its events. It has pay-per-view events and bring in added revenue.

I can see whoever loses in this scenario to go pretty heavy, after the UFC, and if I'm TKO, the company that owns UFC, I'm licking my jobs right now. Last question, Caitlin Clark. I really enjoyed watching the women's college basketball finals. I'm very excited to follow her career in the WNBA. Caitlin Sanity is clearly a phenomenon. You look at jersey sales.

You look at average ticket prices for arenas that she plays in. I wonder if we're going to look back at 2024, for the WNBA, the way that NBA historians look back at Magic and Bird coming into the league, 1980s, transforming its popularity. Where does the WNBA fit into this picture? You know, it's funny. There's, it was about a year and a half ago. I need to do this trip again soon. I went up to New York and I went to a bunch of, you know, just met with a bunch of private equity people that were involved with private equity.

and he's like, what's the next big thing? What are you investing in that we're not watching? And the first person I met what said women's sports, and it sounded like he was pandering a little bit. The second person I met, what said women's sport, everybody said that the big money is going into women's sports. And if you look at the advertising around it, you're seeing the big brands that are increasingly spending their money

around women's sports. And it happens to coincide right now with Caitlin Sanity, with Angel Reese going through, you have like a bird and magic situation happening there. I think certainly you can look back at this and it's like a chicken and egg for me.

They're undoubtedly popular. You could see the number of people that were watching the NCAA finals when they were playing. Part of that, of course, was because the NBA, excuse me, ESPN and Fox, they were giving them more and best. better windows to show their games.

So more people were coming in and watching it. But I can tell you behind the scenes, there's just a lot of money that's really propping up and pushing for this to happen. So as far as all women's sports being a trend, Fox is putting women's volleyball, college women's volleyball on its broadcast network. The NCAA is going to, on ESPN,

is going to have more and better windows, this coming year as well. So the idea of the trend of women's sports growing, it's something that it's definitely, we're at the very beginning of, and unless the big money ends up pulling its money out of investing in it, which I don't see happening, I think that is a certain bet to make going forward.

And how would the WNBA take advantage of this newfound popularity? When is their new window to negotiate sports rights? What opportunities do they have to raise the amount of revenue that they are negotiating for? Because right, am I right, that they're still operating under a rights deal that was signed years ago when the league wasn't nearly as popular as many people expected to be in the next 10 years? You know, that's one of the head scratchers that I have right now is that the NBA, as they're negotiating their immediate rights deal, the W rights are within that as well. And so they have not yet separated out the W's media rights, other than a few sort of smaller deals that they've made with some broadcast groups.

So I think that you'll be able to see it in terms of, I think you are seeing it a little bit. I was going to say in terms of franchise values, which for the NWSL have gone through the roof. I think that you'll see that happen in the WNBA as well. and they're already talking about they're going to have a team in San Francisco for the first time. I think they're going to go up to Toronto as well, so they're going to expand,

they're going to end up bringing in more money there. And until the next media deal, when the W can stand on its own, where can you see it? You're going to be able to see it in terms of the franchise value and also from the sponsorships that they end up selling around there. If the WMBA's deal is nested,

within the NBA's deal. But the WNBA is getting popular, much faster than the NBA is getting popular. How is that going to be reflected in the amount of money that these broadcasters send to the WNBA versus the regular NBA? What I'm trying to think in my head is,

how is Caitlin Sanity actually going to cash out literally for the WNBA? And if those negotiations are being held at the level of the NBA, which has always been the moneymaker between the two, that it's not clear to me how they're going to be rewarded for the fact that they're a much faster-going sport than the NBA. How is that going to work? The networks pay the NBA a fee,

and the NBA decides what gets allocated to what league. And so this happened, and the broadcasters will say, like we value the NBA at X amount and the W at a Y amount. But the way it's been described to me in the past is when the W got a certain number, media executives would sort of laugh to me and be like, yeah, we're not paying. We're just paying this number and whatever the NBA wants to say. If the NBA wants to say they're getting a billion dollars, then they're getting a billion dollars. But we're paying for all of that programming.

So it's impossible to really come. We're going to get a number. The number is coming from the NBA, but that isn't necessarily the number that the broadcasters value WNBA games at. I'm seeing here in the Times it says the WNBA's profitability hinges on media rights. The league's $60 million annual deal

is up for renewal in 2025. But that renewal process is negotiated with in the NBA rights package. That's correct. Correct, yes. I did not realize that. That's very interesting. And also that that 60 million number that you said is that that's what the NBA says.

That's sort of what they've allocated to the W. But it isn't necessarily, it isn't at all what Turner and what ESPN have said like, okay, we're going to pay you 60 for the WNBA. It just doesn't take an enormous amount of creativity to think, well, If the NBA and the WNBA continue on something like this trajectory, in five years, there's going to be a really interesting debate to be held between exactly how much money needs to, ought to go to the W, rather than the NBA, if the big league is in structural decline and the smaller league is super ascendant. That seems like it's going to be a really, really interesting internal tug of war at the association level. Yeah, and the internal tug of war is going to come into where when does the WNBA stand on its own and just go out of the market with its own set of rights that's not tied to the NBA? So get networks to pay for the NBA and then other networks that want to pay for the WNBA.

It was the same sort of question that you saw in the college ranks where it was a big question about whether or not the NCAA should go and strip out the women's college tournament and the women's softball world series from the whole bucket of NCAA rights. And the NCAA ultimately decided, like, well, let's just keep everything together and sell it as one so that, you know, we can allocate something for, you know, swimming and diving. Outside of basketball, what is the women's sport that these private equity people were most excited about investing in? So there already was a lot of investment in tennis. They think golf, a lot of individual sports have a lot of rooms to grow. What I found to be interesting, though, is what they brought up, you know, women's basketball. I mentioned earlier, women's volleyball on Fox. It's something that they see a lot of growth in.

If you ever go to a, if you've ever gone to a women's volleyball match, I mean, there's intense crowds. You know, it's a, you can feel the passion in the arena that never has come and really translate it out to TV as much. Women's softball, especially the, the World Series, college softball world series is something that, you know, that people are big on. Right now with women, it's, with women's sports, it's mainly on the college level. And then we're going to see how they just started this hockey league, PWHL as well. So it might take a little longer for some of these to grow on a professional level. But in terms of where they see room for growth, they see it in college as well. John Arrand, thank you very much.

That was really fun. Oh, I had a ball. I could do it for two more hours. Thanks for having you, then. Thank you for listening. Plain English is produced by Devin Biroldi. We've got new episodes every Tuesday and Friday. If you like what you're hearing, give us five stars and a nice review on Apple Podcasts or Spotify or wherever you get your podcast.

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