With the NBA starting the 2023-24 regular season this week, there have been reports the league has been intensifying internal discussions on their upcoming media rights negotiations. The current contract, negotiated in 2014, started in 2016-17 and expires at the end of the 2024-25 season. These upcoming negotiations come at a time when the sports media landscape is a lot different; there is the emergence of streaming video, the ratings dominance of premium sports on linear television, big media companies looking to shed costs, the acceleration of cord cutting and the precarious financial position of the Diamond Sports Group, owner of the nation’s largest regional sports network. As a result, the new media rights agreements will not only be very lucrative for the NBA, but will be very different from the current contracts.

Under the current agreement, Disney’s ESPN/ABC and Warner Bros Discovery’s TNT pay $2.6 billion each year to televise about 165 nationally distributed games. Last season, regular season games averaged 1.6 million viewers, with post season games averaging about 5 million viewers. Last week, The Wall Street Journal reported for the upcoming negotiations, both Disney and WBD will be looking to scale back on the number of games televised. Both media companies have an exclusive negotiating window expiring next April with expectations they will pass on it. This would enable the NBA to negotiate with other media outlets including streaming providers.

There are numerous reports the NBA will more than double and possibly triple the total fees for its next media agreement. With annual rights fees possibly approaching $8 billion. Although the rights fees would still lag behind the top-rated NFL, as the most lucrative sports media rights agreement, in some areas the NBA is a more popular sport.

Compared to the NFL, basketball has a younger and diverse fan base (last season the NBA had a record 32 billion views on social media, with 50% of the audience under 25), a target for many marketers. Furthermore, basketball is more popular globally (last season there were 120 international players from 40 nations and the last five MVP’s winners were players born outside North America). Also, women’s basketball is among the fastest growing sports (the ratings growth of the WNBA and the Women’s NCAA championship game set a record 9.9 million viewers).

With a younger, more tech savvy fan base, it has been widely speculated both Amazon
AMZN
and Apple
AAPL
are interested in streaming NBA games. Both digital companies have already begun streaming live sports. Under a ten-year, $2.5 billion agreement, Apple live streams MLS games. Apple also streams a package of Friday Night MLB games. Amazon streamed 20 WNBA games this season. Also, Amazon is in its second year of live streaming NFL Thursday Night Football games. Amazon pays the NFL $1 billion per annum for the rights.

There are other media/digital companies that could look to televise/stream NBA games. These include NBC/Peacock, NBC had televised NBA games from 1990 until 2002 before ESPN/ABC and TNT took over. There is also Google’s
GOOG
YouTube which is its first season of streaming NFL out-of-market games with Season Ticket. Also, there is Netflix
NFLX
which will be live streaming its first sporting event (The Netflix Cup) next month.

In addition, both incumbents Disney and WBD could also offer to stream games on ESPN+ and Max/Bleacher Report, respectively. Another potential scenario is, with Disney looking to potentially sell an equity stake in ESPN, the NBA could offer games from NBA League Pass, their subscription based streaming service, in exchange for partial ownership of the cable network. As a result, with a myriad of potential negotiations, the NBA could wind up with having four or more media partners.

Streaming video has proven live sports can generate an audience. This season, over the first six weeks, Thursday Night Football, Amazon is averaging 12.9 million viewers, a year-over-year increase of 25% and an audience higher than any scripted primetime entertainment program on either broadcast or cable television last season. Michael McCarthy, of Front Office Sports, reports Amazon is looking to create exclusive rights of streaming NBA games on either Tuesday or Thursday night. It’s been reported NBA Commissioner Adam Silver has been “fascinated” by the job Amazon has been doing with Thursday Night Football.

The NBA could also create a separate package for its new in-season tournament. This season the month-long tournament ends with the quarterfinals on December 4-5, the semifinals on December 7 and the championship game two days later. For now, ESPN and TNT will be televising the tournament games.

The financial health of the Sinclair owned Diamond Sports Group is another potential issue. This season the RSN owns the local media rights for 15 of the 30 NBA franchises. At its bankruptcy hearing, last March, Diamond announced they were in debt by $8 billion. Sports Business Journal reports on average each NBA team is owed $40 million due this month. In the event Diamond Sports falters in payments, the media rights would revert to the NBA, which would broadcast and stream games. There are reports the NBA has offered Diamond Sports financial incentives to keep televising the games this season, including lowering the fee.

This season with no RSN partner, the Phoenix Suns and Utah Jazz will be distributing games via local broadcast stations and streaming. As part of the negotiation, it’s been reported Amazon is interested in acquiring the regional rights to games. The NBA may be willing to negotiate a regional package with Amazon.

The next NBA will be the most complicated sports rights fees negotiations to date. It will also be a negotiation template for other leagues.