PwC: Sports Media Rights to Overtake Gate Receipts Next Year

Sports media rights deals are expected to top gate receipts for the first time next year, according to researcher PriceWaterhouseCoopers, with regional sports network deals fueling most of the growth in the next four years.

PwC predicts that sports media rights deals will attract about $20.1 billion in 2018, up 5.6%, topping ticket sales for sporting events of $19.6 billion for the year.

While most of the major sports have rights deals with broadcasters and cable networks in place through 2021, PwC said RSN deals will roll off sooner and should help drive growth.

Total sports revenue should grow at a 3.1% rate from $71.9 billion in 2018 to $78.5 billion in 2021, according to PwC.

PwC estimates that rights for 25 RSNs across Major League Baseball, the National Basketball Association and the National Hockey League will expire within the next five years. Coupled with a national rights climate that is expected to remain strong as the cycle restarts after 2021 and increasingly healthy digital rights should fuel future growth.

Overall, PwC predicts that media rights will grow at a 4.3% compound annual rate to about $22.7 billion by 2021, with gate revenue rising at a 2.3% annual clip to $21 billion in 2021. Sponsorship revenue is expected to climb 4% annually from $17.6 billion in 2018 to $19.9 billion in 2021, while merchandising revenue should rise 1.6% per year from $14.6 billion to $15.1 billion.

PwC expects that broadcast rights preservation will be a priority for the industry through at least the next cycle to avoid further potential dilution. And the researcher believes that disruptive practices like cord cutting and cord shaving will have a minimal impact on rights

“This is particularly true for major properties with incumbent rights holder carriage deals in place with major distributors through at least the early stages of the next deal cycle, along with subscriber migration away from or within the pay-TV bundle anticipated to occur over a protracted period,” PwC wrote.

But the researcher warned that lower tier properties could face some push back in the form of lower multiples and even lower fees, widening the gap between premium and other broadcast content.

“In general, next cycle deals across the property spectrum could realize shorter term commitments by rights holders, particularly if existing rights fee levels are preserved, with an increased share of market risk retained by properties, which would lead to increased volatility in future market size beyond the five-year Outlook period,” PwC stated.