RSN struggles, the future of streaming, trading cards: Sports Business Mailbag, Part I (2024)

Again, great questions! I love it. I answered those I could and picked the best question from topics that got multiple, similar submissions. We had so many submissions, we broke this mailbag into two parts. Part I here deals with all things streaming and trading cards. Part II is Thursday and deals with Aaron Judge’s historic home run balls, LIV Golf, MLB playoff start times, college football broadcast rights and everything else you asked about.

Questions have been edited for clarity and length. Let’s dive in …

I know in the past you’ve talked about the way streaming doesn’t make money and RSNs do — and certainly, Warner and Netflix seem to be showing some reversion from the streaming optimism of the past decade or so. But equally, Sinclair’s Bally Sports’ troubles must mean there’s some level of instability/stagnation/recession for RSNs, right? And as Bally controls the local rights for the majority of NBA/NHL/MLB teams — well, if streaming is too expensive, and RSNs are potentially too expensive, what is the solution? (I know it’s not broadcast, but every fan wants it to be broadcast.)

— Vasav S.

That’s really the multi-billion dollar question, and if I had an elegant little solution, I’d box it up and sell it to the networks and leagues, and then retire to my private Caribbean island. The RSN model is under strain, for sure. We remain in a transition period for how we consume sports and entertainment and the technology around it. A stop-gap measure may be the reported talks by MLB/NBA/NHL to buy the RSNs to preserve that cash flow, but geez does that feel expensive for an interim fix. We may not have clarity for years. I’m deeply sympathetic to fan frustration on this.

What is the timetable for Bally’s demise? Could Sinclair be out of the RSN game by year-end?

— Brandon F.

No timetable, and I doubt they’re out of in before 2023. Sinclair has options beyond insolvency and a sale, but perhaps not better options.

How credible are the reports that the Sinclair-owned RSNs are close to insolvency?

— Robby W.

They’re credible. Will bankruptcy happen? That’s what we don’t know. The leagues surely don’t want their rights fees jeopardized unless they think they can buy them back at a discount.

The leagues have been rumored to be in negotiation to buy the streaming rights from Diamond Sports because of possible bankruptcy. Do you think the leagues (MLB, NBA, NHL) are going to play nice in order to get a deal done? I see a power dynamic at play here being that the NHL teams derive a large portion of their operating revenue from rights fees. The leagues must have a plan in place for the eventual collapse of Diamond and how they are going to replace a significant portion of revenue? With that in mind, how do franchises sell for billions (Phoenix Suns) when the foundation of revenue is crumbling beneath them? I realize it’s largely a status symbol to own a franchise in one of the big four, but is status really worth billions?

— Chris Z.

The leagues buying the Diamond RSNs is fraught with risk because operating such channels is very expensive, and sports leagues’ expertise is playing games rather than distributing them. Atop that, consumer habits are changing, so taking on a bunch of RSNs now is risky, but you’re right that preserving that RSN revenue is a major concern. The audience is there, but finding them to monetize long-term amid shifting consuming habits isn’t easy. Or cheap. Team values are driven partly by national league-wide broadcast rights deals more than local TV contracts, and lenders understand that live game delivery issues are a temporary problem. People still want to watch games. It’s a question of money and delivery method rather than fan interest.

The model for RSNs appears broken. However, streaming is nowhere profitable yet. Is leagues investing directly into the RSNs the answer?

— Brian S.

I don’t know if it’s the answer, but there may soon be an attempt to find out.

Does Sinclair/Bally Sports hate all sports fans or just Minnesotans?

— Boots

Hi, Boots. Sinclair doesn’t hate all sports fans or even just Minnesotans. It just hates you. (This glib joke was stolen from an episode of “Band of Brothers.”) But for real, any network’s fumbling or perceived ineptitude isn’t personal. It just feels like it because our teams are important to us.

When will HBO Max (and/or Discovery Plus) start live-streaming games that TNT and other channels affiliated with Warner air?

— Luke H.

Great question, and one a lot of people are wondering (or at least sports media nerds like me). I suspect it’ll happen with the next round of national NBA media deals, so we’re talking within a couple of years. All the major broadcasters and streamers are trying to find that magic formula — sort of like looking for a needle in a stack of needles — that gets them into the black with direct-to-consumer and sets them up for stability long-term. HBO/Turner have a deal to air U.S. men’s and women’s national team games, and also will stream NHL games.

How many years do you think we are from a MLB (or NBA or NHL if the answer is different) DTC streaming offer? How big of a problem are the local RSNs and current deals to making this happen?

— Michael F.

If you mean a league-owned-and-operated streaming service for all games (both home and out-of-market), I think that’s the dream of many fans, but I don’t see it happening any time soon. As you note, the leagues would have to own all of the digital rights. RSNs want those rights to help offset the cord-cutting trend — and it’s RSNs that pay large sums not just for the rights but also the enormous production costs of broadcasting games.

Any update on NFL Sunday Ticket streaming rights? Who is the leader? ESPN, Amazon, Apple, etc? When do you expect a decision to be made by?

— Blake T.

The NFL is sticking to its timetable of making a decision by the end of the year. So, within three months. No word on a front-runner, but Amazon isn’t hurting its case now that its “Thursday Night Football” experiment is doing well with viewership. That said, my sense is Apple and Google’s YouTube are real possibilities, too.

Amazon’s TNF is looking pretty solid from a numbers perspective. Does this start to push the Big 12 and/or Pac-12 toward considering streamers more than the legacy broadcasters? OSU vs. Baylor managed around 2.4 million viewers — can they get those same results on Apple or Amazon?

— Mike S.

Everyone is keeping a close eye on what Amazon and the NFL are doing (along with other streaming exclusives like Apple TV with its MLB Friday night doubleheaders and MLS going entirely to Apple TV in 2023). That said, the NFL is such a powerful property that it can withstand some audience decline from a move to paywalled games. Other sports, probably not so much. At least not yet. The college conferences will study the recent Big Ten deal closely, too, as a model. We’re still early in the Age of Streaming. Some stuff will work. Some will fail. Consolidation is coming.

I’ve noticed that Amazon Prime really doesn’t have the usual suspects for commercials for their NFL Thursday night package. No beer commercials, only Mercedes for cars, and a lot of ads for Amazon products and delivery services. Do you think sponsors are waiting for numbers on viewership?

— Joel B.

I tracked ads during the first Amazon TNF broadcast, and it was a mix of new and familiar ads. Lots of in-house promotion — which networks love to do — but also lots of tech, insurance, gambling, F&B, etc. Yes, some are waiting but a lot bought in.

Are all RSNs hurting as they say, or is it from smaller markets? I feel MSG, SNY and YES are doing well in New York.

— Matthew F.

Many, but not all, are feeling the cord-cutting pressures on their bottom line and their ability to cover rights fees — particularly the Sinclair/Diamond RSNs operating under the Bally name. Others, such as YES Network, are doing OK. But will that hold true in a few years? We don’t know.

For sports on a streaming platform, have there been fewer older viewers when compared to non-streaming outlets (RSNs, Big 4 network broadcasters, etc.)? My dad passed away 4 years ago at 86 and he was a huge sports fan — and vehemently anti-online anything. Has there been a drop in the most senior of age demographics out with Nielsen or other audience measurement data for streaming-only games?

— Andrew M.

Americans age 50-plus are a major factor in streaming growth, per Nielsen data reported by the Wall Street Journal this summer. The share of viewers ages 50 to 64, and 65+, has grown year over year for Hulu, Netflix, Amazon, Disney+, YouTube and other services. Time watching by younger age groups declined over the time measured (May 2021-May 2022).

What does the streaming success for Amazon’s TNF tell us about the potential for other tech giants — Facebook, Apple, Google, etc. — and their potential bid into the NFL/sports media landscape? More people have/are probably willing to get Amazon Prime than Apple+, for instance, but will that prevent others’ involvement? How much scrutiny will Apple’s deal with MLS get, and how much will it impact other tech/streamers likewise?

— Jesse K.

Let’s see how Amazon and TNF finish the year before making any final pronouncements, but so far, it’s positive. That said, a chunk of Amazon’s NFL streaming audience is still linear TV in the local markets of the participating teams. It’s a good streaming story, but not quite a grand slam. Still, this is the NFL. No other league comes close in eyeballs, so Amazon-NFL is of only limited value in determining if fans of other leagues and sports will as readily shift to watching behind a paywall. I’m keen to see what numbers MLS gets next year with Apple — and I’m not alone. Every league will watch closely, but each also has different viewership success expectations and needs.

With the high ratings for Amazon Prime’s NFL coverage so far, how likely are we going to see college football and other sports jump into the streaming side? Besides Apple, Paramount+, and Amazon, who else among streaming platforms would want to get involved in new sports content?

— Gabriel M.

Everyone is looking at the current streaming deals to see viewership, demos, tech, and profit/losses. Amazon TNF may not be a great template for others because of the distance between NFL popularity and everything else. Google’s YouTube TV wants the Sunday Ticket. HBO Max has sports with more coming. I bet Netflix gets into live sports eventually.

Why does Amazon have the same amount of traditional ad breaks (beyond the more obviou$ reason$) as on-air broadcasts? I was disappointed that for such an “innovative” broadcast, the overall viewing experience is pretty similar to a typical broadcast, and I’m wondering if they have to follow certain rules about how they broadcast (similar experience to AppleTV’s MLB coverage.) For example, they could run a quick-hitter analysis segment showcasing (Amazon Web Services) rather than air a commercial for AWS that you are seeing in action, followed by your latest digest on what’s hot and new in big pharma land.

— Harry K.

Football games require a certain number of breaks in the action. They’re always going to be around three hours. So networks and streamers have airtime to sell. And Amazon Web Services promo spots are good for Amazon’s overall business, but in-house promos don’t pay the bills, and the NFL bill is $1.2 billion a season. They need traditional advertisers (hence, Nielsen being hired to measure viewership and provide demographic information).

In Canada, the Friday night Apple TV baseball games had no commercials. For a brief moment, you’d see a commercial begin but then it would be replaced with a blank screen and super annoying repetitive music. It was like this all season. Why wouldn’t/couldn’t Apple show advertising during the commercial breaks? The music was so annoying it became a common talking point amongst Canadian MLB fans and was one more reason why there wasn’t a lot of enthusiasm for the Apple TV games.

— Patrick H.

Apple has advertising agreements with brands, and those advertisers generally are trying to target U.S. consumers. There are Canadian laws around U.S. and Canadian ads during broadcasts, and the topic occasionally pops up around the Super Bowl. Basically, the advertisers also have to buy airtime to reach Canadian viewers, too. My working assumption on this is it applies to live streaming in addition to linear TV because the U.S. commercial airtime isn’t being replaced with Canadian ads, as is done with other sports.

Given that they spent a significant amount of money to buy the rights to the UEFA Champions League, why isn’t CBS showing the matches on live TV (i.e. CBSSN)? Why are they pushing all the matches onto their streaming service, Paramount+?

— Matthew W.

Because of where the TV industry is right now, and where networks think it’s going. There’s a push to populate streaming services with must-see programming for which consumers will pay. We’re in a transitional era with linear TV and streaming. And streaming isn’t profitable for any of the networks, so the thinking is they can grow revenue by forcing fans to spend to get through the paywall. It’s conditioning.

Why does MLB all of a sudden cut international viewers off the live-streaming postseason coverage? It is like the NFL blacking out the Super Bowl.

— N T.

It’s because of “exclusivity agreements with international broadcast partners reached ahead of the season, and that as part of those agreements more games had been added, including postseason games,” per Maury Brown at Forbes. MLB did admit that it should have make the overseas playoff streaming blackout situation clearer sooner, so it allowed limited Wild Card Series coverage to air internationally through Sunday and offered some refunds. But the international blackout remains in place for the rest of the postseason.

If Apple lands Sunday Ticket and parts of the NBA rights deals is there a possibility that Apple makes a sports app to incorporate all of their sports rights into one place? While also leaving the option to buy each league’s rights a la carte style? (MLS rights, part of MLB rights, part of NBA rights, and Sunday Ticket)

— Marc L.

Intriguing idea. But do people want more apps, or do they prefer access via a single app that has a subset of menu choices? I think Apple would need more sports than it has to launch a sports-only app. We’re approaching the point of needing a universal remote to find and watch sports.

What is your current take on the sports trading card market? Since Panini got exclusive rights to the NFL, I have been very disappointed with their products. The Panini Rewards points is garbage. I hope in the not-too-distant future, the right to create these (card) products will be split between two or three companies like in the past. That way the companies will have to try and put out respectable products or they lose their rights.

— Mike H.

The boom is a bubble, but probably not like the 1990s Junk Wax Era collapse. Market forces are driving some prices down. I cannot speak to the details of Panini’s programs or operations. League and union licenses have always been a major driver of the card business, from Topps having them all to rivals picking them up as leagues gave them out willy-nilly in the 1980s and ‘90s. Ending that practice helped revive the card industry, but maybe at the expense of the consumer product. Now it feels like everything is chasing lottery tickets and artificial scarcity is the new over-production.

Fanatics is about to have a 90 percent market share in sports cards when they get the NBA and NFL licenses. They bought Topps and are rumored to be buying Panini. Why is a monopoly in the trading card market accepted when it is not in virtually every other industry?

— Eric W.

This is complex because of the nuances of the law, and the appetite for federal enforcement, and whether competition chooses to sue. It could be that the antitrust regulators simply don’t care or have the capacity to take on another industry amid far more problematic industries that harm consumers. But in 1964, a Federal Trade Commission examiner said Topps was, in fact, a monopoly — a decision soon reversed. The MLBPA worked against the Topps monopoly to improve payments to players in the 1960s. Court rulings in 1980-81 followed. It may come down again to litigation.

Any word on the Fanatics-afication of most of the major sports cards? They bought Topps. Still a few years away, but I have not heard much if anything in the past year or so.

— David L.

All the deals are still in place. Fanatics appears to be taking its time and not trying to upset collectors. They’re not saying much about future plans. That’s a solid strategy amid the current lucrative boom. The money train is rolling. It’ll be interesting to see what they do with the NFL and NBA cards in a few years.

Reading about the recent news of a Jasson Dominguez baseball card selling for $474,000 (despite being years away from starring in the MLB), I see a lot of discussion now of “sports card prospecting” as a viable — and perhaps soon-to-be institutionalized — alternative asset class. Is there data out there about the kind of financial returns the major prospectors are accruing? Do you foresee prospectors developing their own hedge funds (or other pooled capital vehicles) to make more competitive bids? Or is the market just not big enough?

— Kevin S.

I’m not sure if market size matters as much as the dollars in question. I haven’t seen data about returns outside of the PWCC 500 Index that’s for pre-2000 cards that the PWCC auction company often contrasts to the S&P 500. But that’s not really prospecting. Personally, I think buying prospect or young star cards at eye-popping prices is dangerously risky unless you are wealthy enough to see the card lose almost all value. Otherwise, it’s like trying to make a living playing blackjack in Vegas. But people love risk, so I can see cards at the heart of boutique funds.

Has there ever been a hot trading card, where the player went from stud to dud in less than two seasons? I’m thinking of Joe Charb… from the Indianrs and Tom Cost… from the Browns. Sorry, can’t spell their last names.

— Craig W.

“Super Joe” Charboneau was a fav of mine as a little kid in Cleveland, and I’m not sure which Browns player you mean. There have been a ton of examples of a hot rookie that quickly flames out, from performance or injuries or something else. Zion Williamson is the current risk — fantastic hype coming out of college, lived up to it, got hurt. He’s back and hopefully returning to form, but that’s the risk of putting money into expensive modern cards — one injury and they could be done.

I have a Nolan Ryan rookie card in near-mint condition. It was produced by O-Pee-Chee in Canada. Does that reduce the value compared to a U.S.-produced card?

— Geoff K.

While the 1968 Topps split rookie card of Ryan and fellow Mets pitcher Jerry Koosman sells for hefty sums, the nearly identical O-Pee-Chee version is much rarer. And in today’s card boom, it can be anything goes in an auction. Beckett editor Ryan Cracknell wrote a piece about the Ryan rookie cards in 2021 that explains what’s up.

Thanks again for the great questions. Check back Thursday for Part II.

(Photo: Jerome Miron / USA Today)