NBA in unique position with TV deal

Thanks to a new TV deal, NBA games will continue to air on ESPN and TNT through the 2024-25 season. David Dow/NBAE/Getty Images

The new NBA television deals with ESPN and Turner are as much about the competitive landscape of cable networks -- and the unique position of sports -- as they are about basketball.

First, let's delve into the price, which, according to a New York Times report, comes in at an average of $2.66 billion a year, up from $930 million annually being shared by the same partners, ESPN/ABC and Turner. That's a 186 percent increase from the current deal, which expires after next season.

And while it's tough to make a pure "apples to apples" comparison, by rough analysis that is the largest increase for a TV deal for any of the four major leagues, besting the recent U.S. and Canadian deals negotiated by the NHL (167 percent increase), Major League Baseball (105 percent) and the NFL (28 percent).

So why did the NBA get the biggest increase?

Even though the deal covers American television only, part of the increase in rights fees is because it is truly the only major American sport with worldwide appeal.

Another key factor is that the NBA's deal was negotiated most recently, as sports rights only continue to get more valuable. While most other forms of television are commonly watched on demand or DVR'd, allowing viewers to fast forward through commercials, sports programming is one of the few sectors remaining in which watching live is crucial for most audiences. Consider this: More than 99 percent of ESPN's content is consumed live. As we are starting to move away from television and on to other ways to watch -- tablet, mobile -- this equation hasn't changed. The rest of the TV world outside of sports is proving harder and harder to monetize.

The NFL negotiated its current deal (which began this year) three years ago -- a long time in TV negotiation terms. The NFL also sells some of its packages separately -- to Verizon and DirecTV. Lastly, the NFL deal didn't have as much room to grow. That league has long pushed the limits of the return on investment equation, as annual rights deals for that league are worth $6.45 billion, $3.8 billion more than what television networks will pay the NBA each year.

The new NBA deal is markedly different from its existing deal, and from what the NFL offers.

Increased hours of coverage and live game broadcasts stand out, but the big deal is the rights that ESPN/ABC gets to create a digital channel in partnership with the league.

Yes, NBA League Pass has existed through Turner, but Washington Wizards owner Ted Leonsis said the digital channel that he envisions being attempted is aiming more at the worldwide mobile audience.

"There are hundreds of millions of people that pay for pay television," Leonsis said. "There are billions of people paying for the mobile experience."

Relevant is Major League Baseball's "At Bat" application, which has emerged as Apple's highest-grossing sports app for years. (For housekeeping sake, that money is made internally and is not in the above rights calculation.)

But the idea, as Leonsis explains it, is for ESPN and the NBA to be able to sell digital packages to mobile customers worldwide with a large choice of payment systems. Imagine a person in Beijing buying a season's worth of a team's games for his phone, or even just particular highlight packages, or maybe even for just a quarter of live action on the spot after following the game on Twitter. That's all possible, and it's not hard to visualize.

Although nothing is for sure, that idea was worth hundreds of millions of dollars to the NBA in this deal.

But also of tremendous value was the business landscape at large. In the past two years, Fox has stepped up its game with Fox Sports 1, and so has NBC Sports with its own network. What does this mean? There is value to the rights holders in keeping the competition out. The value of doing that today is greater than ever before, which is also reason why these deals are being extended so far into the future. This deal is long at nine years, but not as long as some other deals ESPN has negotiated recently: The US Open tennis deal goes to 2025, the College Football Playoff goes to 2026, as does the Rose Bowl, and its SEC deal goes to 2034.

It's a tribute to sports television as a product that today's nine-year deals, at the price that is being paid, is not being questioned. In fact, NBA commissioner Adam Silver acknowledged that some owners wanted to do 20-year deals, but in the end, the shorter deals made sense, he said, because of emerging technologies and tech companies (often taken, in business circles, to mean Google and Apple) who might be ready to bid next time.

Just think about that. How many businesses feel as confident about their future as they do about the present? Very few, which demonstrates the strength of the sports sector, on any screen.