Everything you need to know about the Suns’ new media deal and the NBA’s RSN problem
The Phoenix Suns and Phoenix Mercury made a potentially revolutionary announcement last week when they said their games moving forward — beginning with the Mercury’s this summer — will be broadcast for free on over-the-air channels and streamed online on a new direct-to-consumer service.
Suns games had been on cable television in some form since 1981. Now, they’ll be available to a far wider local audience — but with far less certainty in what the franchise will make off the deal.
“We’re not focusing on money,” new team owner Mat Ishbia said. “We’re focusing on winning, success and taking care of fans, taking care of the community. What happens is you always end up making money. It always works out.”
What does this new deal mean, and how will it impact the way games are shown around the NBA moving forward? Here’s where things stand and where they might be headed.
Wait, so … what are the Suns doing?
The Suns had one of the smallest local television deals in the NBA at less than $40 million per year, according to sources. After their current deal expired when Phoenix’s Western Conference first-round playoff series against the LA Clippers concluded, the Suns were in line for a larger fee, even if still less than some of the big markets in their own Pacific Division. (The Los Angeles Lakers are in the middle of a 20-year, $3 billion deal.) But there were two problems:
1. Their partner, Bally Sports Arizona, is in bankruptcy along with its parent, Diamond Sports Group. Diamond has already missed a payment due in March to the Suns’ neighbors, the Arizona Diamondbacks. Needless to say, the Suns felt unsure about making a long-term deal to tie up valued television rights in such an uncertain situation.
2. Because of cord-cutting and the reluctance of top streaming companies like YouTube TV to include regional sports networks (RSNs) like Bally Sports Arizona, the number of local homes able to watch Suns games was shrinking — down to around 800,000 households, according to the Suns.
Ishbia is deep-pocketed, and after studying the matter for months, he said, and consulting with the NBA, he decided to forgo the larger guaranteed money and enter into a partnership with local over-the-air stations. He said he sees it as a long-term investment. Suns and Mercury games could be available to more than 2.8 million households throughout Arizona. His bet is that more eyeballs, over time, will lead to more revenue.
Partly. In this case, there was a confluence of a Suns team with a struggling RSN that is already missing payments, an expiring rights contract and an owner with the liquidity to forgo the guaranteed revenue from a local TV deal.
Diamond has missed payments to four MLB teams besides the Diamondbacks in the Minnesota Twins, Cleveland Guardians, Cincinnati Reds and Texas Rangers. MLB could take over Reds broadcasts as soon as this week if Diamond doesn’t make its rights payment before the end of a contractual grace period. The fates of the other four teams won’t be determined, at the earliest, until the end of May, when a bankruptcy judge rules on Diamond’s claims that it should pay lesser fees due to the deterioration of the current cable model.
In the NBA as in baseball, some teams will be more directly impacted by this than others. This season, 16 of the 30 NBA teams had their games shown on a Diamond network. But there’s less urgency in the NBA than in MLB, whose regular season is a month old and which has five months of games ahead that need to be televised. In the NBA, there is some time to see where the dust settles: Only the first round of the playoffs air on RSNs. From the conference semifinals through the NBA Finals, every game is nationally televised.
But the 2023-24 preseason will start in five months, and by the time NBA teams begin training camp in September, it’s hard to know where the Diamond Sports bankruptcy situation will be and how that will impact individual broadcasts.
One potential issue is off the court. The RSN deals for individual teams are paid out on different timelines, depending on cash flow needs for each individual franchise. If RSNs start missing payments, as they’ve done in their MLB contracts, that could begin causing financial pain for at least a few teams as soon as this summer.
Do other teams see what the Suns are doing as a blueprint?
It’s too early to tell. It’s been decades since games were regularly being shown over the air. Teams have been showing their games on cable because it provides a guaranteed income stream that has become a not-insignificant portion of each team’s finances. The fact Phoenix is moving away from that is a sign of uncertainty in that business model moving forward.
There’s also the fact that Phoenix’s deal expired — though even that point is contested. Diamond Sports Group released a statement in the hours after the announcement saying the move by the Suns and Mercury constituted a breach of contract and violated bankruptcy law — a position Suns CEO Josh Bartelstein then disputed.
Other teams don’t necessarily have the ability, as of now, to get out of their deals if they want to, especially given the opaque nature of Diamond’s situation now that it has entered bankruptcy.
The other complicating factor: the ubiquitous nature of direct-to-consumer (DTC) offerings. Executives from other teams cautioned that every team trying to sell directly to fans is not realistic, especially when combined with all of the other DTC offerings that exist.
What other options are there for changing or replacing the RSN model?
This is a multibillion dollar question being hashed out in real time. The NFL has taken an effective strategy of having most games available on national networks over the air, with a small sliver on cable and a small offering on streaming platforms. All of the revenue is shared equally among teams.
The NFL negotiated its TV and revenue-sharing deals decades ago, though. In the NBA, television contracts are vastly different because they are divided between local and national deals (whereas the NFL has solely national deals). Teams like the Lakers and the New York Knicks share some of the revenue with their partners, but it’s a massive profit center, and there is no appetite among the big teams for equal sharing.
But when the NBA negotiates a new national television deal starting in 2025, it could move to a more NFL-style strategy, with more games on broadcast television or streaming platforms. That could open up alternatives for teams to move their local television rights when deals expire.
Could this mean the end of blackouts?
Not anytime soon. There are too many teams in long-term rights deals and others in standoffs. Fans in Denver have been caught in the middle of a yearslong dispute between local cable providers and sports team owner Stan Kroenke’s Altitude network, which broadcasts the Nuggets and the NHL’s Colorado Avalanche, meaning residents have struggled to watch two of the best teams in their respective leagues for years.
What does the new collective bargaining agreement mean for RSN coverage — or anything else?
Not a lot. The two sides have agreed to keep an eye on the issue, as RSN fees going away would have a material impact on basketball-related income — which is what determines the salary cap. They also agreed certain expenses related to RSNs and creating DTC platforms will be shared equally by the NBA and the National Basketball Players Association.