The decline in local media rights values to nearly zero for many MLB, NBA and NHL teams —and shrinking spending on entertainment programming— seemingly offers a preview of what a highly consolidated, lower-margin video distribution business is most likely to yield for national sports rights in the years ahead. 

Remember, the subscriber fees that power national rights spending are the same cable bundle-related dollars once used to purchase local rights and U.S. pay TV subscriptions have fallen from ~100 million in 2016 to ~62 million as of Q2 ’26.

Now that “the rigidity of the pay TV bundle and its iron laws have broken down, the laws of supply and demand and economic scarcity are coming for the biggest sports leagues,” Crakes Media founder and JohnWallStreet Advisory advisor Patrick Crakes said. You’re “already starting to see it with Lachlan Murdoch a couple weeks ago saying to the NFL that it’s not going to adjust terms mid-deal.”

And yet, rights owners, operators and investors across sport continue to build models predicting 100% growth in their league’s next media rights agreement.

Those assumptions are “largely predicated on the idea Amazon, Google, and/or Apple is going to roll out of bed one day and decide to spend triple what they're currently spending. Given the hyper scaling investments needed in data centers, I don't know that's true,” Crakes said. That “changes the value equation.”

The value of national media deals has increased dramatically for the biggest U.S. leagues over the last decade. That, along with fast rising franchise valuations, has helped to mask the decline in local rights revenue and RSN game inventory.

For context, teams are now getting “four million dollars, five million dollars for deals that used to be worth $50 million dollars, ten cents on the dollar literally,” former Fox Sports Networks president Bob Thompson said. So, “once you boil it down to a per-game basis, the value of a given league’s national rights deal versus what the teams collectively used to reap with their local rights, the total TV revenue line for many teams has shrunk.” 

The ongoing push into stadium adjacent mixed-use real estate development is largely an effort to offset the lost revenues. 

But winter is coming.

Few of the established sports rights distributors “can afford to pay leagues the large increases they’re going to be seeking the next time around, and those that can are too concerned about what is going on in AI and how much cash they need to hold for that,” Thompson said.

For properties taking national rights to market in recent years, success often meant securing a deal worth twice the expiring one. However, that seems more like a perfect outcome for most moving forward, even if few executives are willing to publicly acknowledge it.

“You can’t look at the engine that powers the economics of this business and the non-replacement from new bidding entities and say that should be your benchmark,” Crakes said. “Instead,  rights owners [save the NFL] should be looking at going up just 80%, which would be considered a failure in the old expectation environment.”

Or at least the three RSN leagues, SEC and Big Ten should. 

Those five properties “over-index on driving value with what's left of pay TV distributors, with new distributors, with subscriber models and sponsors because they bring scale, relevance and demographic mix,” Crakes said.

They also have the ability to slice and dice inventory and create valuable new IP as needed. 

But the rights-receiving properties beneath them on the value chain will find those same rights deal increases harder, if not impossible, to find.

“Their rate of increase is going to go backwards,” Crakes said. “As distribution gets scarcer, from an ability to pay upfront fees [perspective], less sports will benefit from rights…The disparity [in rights revenue] will get larger.”

The best thing a second- or third-tier property can do in preparation for the next round of negotiations is reimagine how its inventory is packaged. 

“Try and figure out if you rearrange the deck chairs,” Thompson said. “Is there some way to create incremental value? Because that's the only way any of those leagues are going to get paid a whole lot more than their current deal.”

Just be certain there are more bidders than packages for sale!

While their media rights growth is likely slow, challenger and emerging leagues will have other ways to derive income from live game inventory.

“You're going to have to be focused on engagement with your segment and your value to more niche distributors, and you're going to have to really lean into monetizing on social,” Crakes said. Then, “hope that all social CPMs and value go up [too].”

The good news is the latter is likely to occur. Social platforms have the ability to surface clips and conversation around ongoing live events and drive users to it.

“Sports have a strategic sledgehammer in the modern viewing ecosystem as they work hand in glove with discovery/social [channels] to create awareness, reach and brand value, not just with sports fans but with the general market at large,” Crakes said. “Each live game serves as a content engine that can toss off an enormous amount of incremental content value far beyond the live game telecast…all additively.”

But, either way, rights owners across the value chain will want to account for changing bundle economics.

“It’s more than likely that most properties are not going to do as well [the next time around] as they think,” Crakes said. “If I'm wrong, who cares? It's fantastic. If I'm right, you're not living in a world where you were expecting all these economics and [overshot] expectations with your stakeholders.”

On the latest episode of JaneWallStreet Presents: At The Table, JaneWallStreet Executive Chair Deirdre Lester sits down with Kraft Analytics Group CEO and Sloan Sports Analytics Conference Co-Founder & Co-Chair Jessica Gelman.

In this hour-long conversation, the two surface and talk through a range of actionable insights, including how women’s sports are attracting new fans, how AI could improve the fan experience and athlete performance, how open access, business outcomes and engaged alumni have fueled the growth of the MIT Sloan Sports Analytics Conference, and more.

📺 Watch the full episode on JohnWallStreet’s YouTube page.
🎧 Listen on Apple Podcasts or Spotify.

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