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Apple Is Coming For Major League Baseball
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Hey Friends,
It looks like Apple might finally be getting into the sports broadcasting game.
One of the core pillars of my thesis that sports teams will continue to see an increase in valuations over the next decade is that new streaming services will start to compete with legacy networks for broadcasting rights, causing an increase in demand that ultimately drives the prices higher.
It’s simple math — increasing demand + fixed supply = higher prices — and given those annual broadcasting agreements filter down to each team through revenue-sharing agreements, they end up drawing a straight line to higher valuations.
We are already seeing this with Amazon, to a degree. The e-commerce giant wet its feet by agreeing to pay more than $11 billion over the next 11-years for exclusive rights to Thursday Night Football in the NFL.
But now it looks like Apple might be ready to play also.
Here’s what Andrew Marchand at the New York Post wrote yesterday:
Apple has had substantial talks about carrying Major League Baseball games next season, The Post has learned.
If a deal is finalized, it would represent a significant milestone in sports broadcasting since Apple has long been looked upon as a potential stop for major sports TV rights. One of Apple’s rival companies, Amazon, has already carved out an important piece of real estate in this space, as it will become the exclusive home of NFL “Thursday Night Football” in the fall.
A potential MLB-Apple deal would not be anywhere close to the magnitude of the NFL and Amazon — which is for more than a billion dollars per year — but MLB and Apple would be the entree for the technology behemoth into the coverage of top live sports.
This genre has long been dominated by ESPN, Fox Sports, NBC and CBS. The digital companies are new players in this field.
The package MLB has been attempting to sell is weekday national games that ESPN recently relinquished. ESPN will no longer have regular Monday and Wednesday games. The ESPN games were not exclusive in local markets. It is unclear at this point if Apple would be allowed to wall off these select games from regional sports network coverage or not.
MLB and Apple declined comment.
The contrarian take here is that these are weekday MLB games that are not currently exclusive—regional sports networks can air them also—they average just 500,000 to 600,000 viewers per game, and ESPN had the rights before relinquishing them.
But as an optimist by nature, I think about this in a much more nuanced way.
These streaming services have to start somewhere, and if I wanted to test out my thesis before sinking hundreds of billions of dollars into a live sports media rights strategy, this Major League Baseball package probably isn’t a bad place to start.
Amazon and Apple have a combined market capitalization of $4.5 trillion. They have more than $100 billion of cash on their balance sheets combined, and if they wanted to write a $50 billion check to acquire ESPN tomorrow, they could comfortably do so.
I think it’s probably fair to say that ESPN, Fox Sports, NBC, and CBS aren’t worried much about Apple taking a few non-exclusive midweek MLB games. The concern would be if this crept into more premium rights.
What about the NBA deal that comes up after the 2024-25 season? How about the MLB playoffs? Could Amazon or Apple secure the lion’s share of exclusive NFL games?
Those are things that would start to shake up the power structure and make the incumbents uncomfortable. For example, live sports represented 94 out of the top 100 most-watched U.S. TV broadcasts of 2021 — the NFL held 75 of those spots alone.
What happens if the rights to those games disappear from cable altogether?
The reality is that live sports continue to be the only thing keeping cable TV alive, and legacy networks like ESPN are cautiously attempting to the high-wire the transition from traditional pay-TV to streaming.
But if Amazon & Apple start throwing around cash, it may change the entire dynamic.
I hope everyone has a great day, and we’ll talk tomorrow.
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