The Financial Impact of the Atlanta Hawks’ New Local TV Deal
Starting next year, Atlanta Hawks fans will be able to watch all 82 of their regular-season games without having to subscribe to NBA League Pass.
The Hawks announced Thursday a new local television rights agreement with SportSouth—a FOX Sports regional network—that goes into effect come the 2015-16 season. The network will televise all 82 regular-season games that aren’t covered by a national network (ESPN, ABC or TNT), along with three preseason games, “select Hawks playoff games” and 10 hours of “Hawks-themed original programming each season,” according to a statement on the official team site.
“We are excited to extend our partnership with SportSouth and build off the record-setting ratings that we established during our thrilling playoff series last season,” Hawks CEO Steve Koonin said in the statement. “The broadcast of live sports is crucial to our business and we are fortunate to have a great partner with such a large footprint to grow our fan base.”
Financial terms of the deal were not disclosed; however, SportSouth will be airing an increased number of games starting next year. This season, the network is televising 77 of the Hawks’ 82 regular-season games—two additional contests will be shown on national television—and SportSouth did not show any preseason games, per Chris Vivlamore of The Atlanta Journal-Constitution.
According to Forbes.com’s Mike Ozanian, the Hawks’ current deal with SportSouth “pays in the neighborhood of $12 million a year on average.” The new agreement could “average more than $30 million a season,” sports media experts told Ozanian back in September, before the new deal was announced.
Assuming those figures are accurate, what does that mean for both the Hawks and the rest of the league? The timing of the new TV deal couldn’t be better for Hawks owner Bruce Levenson, who is in the midst of selling his controlling interest in the team after racially offensive comments he made surfaced back in September. According to Ozanian, the new local cable deal “will add around $100 million in value because team appraisals are typically based on multiples of revenue.” In January, before the sale of the Milwaukee Bucks for $550 million and Los Angeles Clippers for $2 billion, Forbes valued the Hawks at $425 million, 27th in the NBA. (The Bucks ranked dead last on that list, for what it’s worth.)
So, Levenson appears to be in for a hefty payday once he settles upon a buyer. He’s not the only one who benefits from the presumptive increase of value in the local media rights deal, however.
As Mark Evans noted back in July, local television deals factor into Basketball Related Income. With the NBA already set for a major salary-cap spike in the coming years due to the new national TV deal—see Artie Novikov’s report for more on that—the Hawks’ media rights agreement will factor into that increase, too. According to a 2011 report from SB Nation’s Tom Ziller, a $20 million increase in the Boston Celtics’ local media rights fee would boost the salary cap by roughly $380,000. Though that report came before the new national TV deal, the Hawks’ new agreement with SportSouth will cause a slight rise in the salary cap for all teams by virtue of being factored into BRI.
In other words, everyone comes out a winner here. Atlanta fans get to see more regular-season games, Levensen and the future Hawks’ owner(s) rake in more money, and players will benefit from a higher salary cap in future years.
