There is power in stability. As expected, the NBA announced massive nine-year extensions with longtime partners ESPN and Turner Sports that will keep the Association on the networks through the 2024-25 season.
David Levy, President of Turner Broadcasting Systems, released a statement on the extension:
This is a significant deal for our company and we are pleased to continue our long-standing partnership with the NBA, its fans, owners and players. The agreement locks in some of the most valuable, original, premium live sports programming that we'll continue to monetize across TNT and all other platforms within our extensive portfolio and will help further grow our businesses into the next decade.
Terms of the agreement were not publicly made available. Richard Sandomir of The New York Times reported Sunday that the total value of the respective contracts is $24 billion—nearly three times the annual value of the previous contract:
Under the previous agreement, which runs through the 2015-16 season, ESPN paid the NBA $485 million, while Turner has paid $445 million. There is no word whether it will be a 50-50 split or ESPN will continue to pay a higher fee going forward.
The NBA Finals will continue to be broadcast on ABC. Turner maintains its management of the NBA Digital umbrella. In addition to keeping their previous rights, Turner and ESPN have also expanded their freedoms in the live streaming realm.
Ben Cohen and Shalini Ramachandran of The Wall Street Journal (subscription required) reported the NBA and ESPN struck a separate agreement for a streaming service for live games. The current plan is for fans to not require a cable service provider to watch the games:
The league also laid plans in partnership with ESPN for a new online video service that would show live regular season games, the people said. In a significant move for ESPN, which derives its huge profits from the pay-TV ecosystem, that service will be open to people who aren't cable or satellite TV customers.
It's unclear whether the new service will have any effect on NBA League Pass or require a nominal fee. Currently the NBA offers all out-of-market games on League Pass through cable and satellite service providers.
While expansive, the new deal largely allows for a status quo—a boost in stability for both the networks and the NBA. ESPN and TNT have been the primary homes for nationally televised NBA games for more than a decade. TNT's coverage of the league began in 1988 and includes the Emmy-winning Inside the NBA program. ESPN took over as a rights holder before the 2002-03 season and will debut a Grantland-themed NBA show this fall to go along with its NBA Countdown pregame show.
ESPN president John Skipper released a statement on the extension:
The NBA has never been more popular and it continues to grow under Adam [Silver]'s leadership. By acquiring significantly more NBA content for both existing and yet-to-be created platforms, we will establish a vibrant, year-round NBA presence for fans. For ESPN, this agreement continues our fruitful, longstanding relationship with the NBA and bolsters what is already the sports industry's most impressive and impactful collection of media rights.
Stability is important for the networks, as it also allows them to block out the competition. John Lombardo and John Ourand of SportsBusiness Journal reported in September that ESPN in particular wanted to get an extension in place to prevent competition like Fox Sports and NBC Sports from gaining NBA rights. The NBA cannot talk to other networks until next year, but it is expected that this new deal will prevent a third rights package from being shopped.
The revenue uptick will also have a noticeable on-court impact, as the salary cap and player salaries may skyrocket in the coming years. The NBA's salary structure is dependent on league-wide revenue—a pie that will exponentially grow under these new deals.
A rough estimate from Adam Reisinger of ESPN indicated the NBA's salary cap may rise to $88 million in 2016-17 due to the TV deals alone. The salary cap for the 2014-15 season is $63.065 million. That potential leap would affect things ranging from maximum player salary to the league's luxury tax and more. The new television deal, for instance, is part of the reason LeBron James signed a two-year deal in Cleveland rather than a full max.
Knowing the influx of cash was on the horizon, the NBA has already begun considering alternative moves to avoid one massive summer of freewheeling spending. Grantland's Zach Lowe indicated the league is considering "smoothing" the cap process, though it would require the approval of the players association. As Lowe notes, players receive 50 percent of basketball-related income regardless of how the salary cap is structured.
Follow Tyler Conway (@tylerconway22) on Twitter