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NBA teams are valued on subscriptions
Ratings versus subscribers
TV ratings used to be the measure, and people said the NBA underperformed against every other sport. Ratings still sell ads, but the number of subscribers that Peacock and ESPN get matters more.
Values detached from games
Team values have become disconnected from reality, because the demand that counts is demand for the streaming services carrying the games. Fans are signing up for one or two more services just to follow their team, and the open question is whether they keep them.
The churn question
That puts churn at the center. If people cancel, nobody knows what happens to valuations. If they hold on, valuations keep going up.
Why do streaming rights lift team values?
Teams once earned most of their media money from regional sports networks, whose subscriber base shrank as viewers cut cable. National streaming deals replaced part of that income with large, long contracts. In July 2024, the NBA agreed to new media deals with ESPN and ABC, NBC and Peacock, and Amazon, reported to total about 76 billion dollars over 11 years starting with the 2025-26 season.
Why does churn matter to streaming services?
Churn is the share of subscribers who cancel in a given month, and the average subscriber's lifetime equals one divided by that rate. At 5 percent monthly churn a subscriber stays about 20 months, and at 2.5 percent about 40. Streamers use live sports to hold viewers through the year. Peacock's exclusive NFL playoff game in January 2024 drew a reported 23 million viewers.
Why do games end up on so many services?
Leagues split their games into packages and sell each to a different partner, which raises the total price. The NFL spreads its schedule across broadcast networks, cable channels, and streamers. Amazon became the exclusive home of Thursday Night Football in the 2022 season.