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    Does Amazon’s Latest Move Affect Our Local Sports Teams?

    Does Amazon’s Latest Move Affect Our Local Sports Teams

    The sports broadcasting landscape continues its amorphic ways as rights, money, and access change hands on a seemingly daily basis. This month we’ll take a look at Amazon’s recent ‘lean in’ to Diamond Sports Group to get the national digital video provider real estate in the local sports business.

     

    There’s a lot to unpack here and, candidly, the waters remain legally murky. So I can write a blog and not a book, we’ll talk specifically about this deal’s impact on the rights that Diamond Sports Group (Bally’s) formally held with the Coyotes, Diamondbacks, and Suns.

    What did Amazon do?

    Amazon has allotted a portion of its billions and billions of capital to buy a minority stake in Diamond Sports Group. This is a good thing for Diamond Sports Group as this breathes life (and money) into what has been an epic sports business failure. This also gives Amazon streaming rights to fifteen (15) NBA teams, eleven (11) NHL teams, and five (5) MLB teams.

     

    None of them are in Arizona, where most of us stopped paying attention to the RSN saga once it ended in inglorious fashion last year.

     

    To understand why that is you only have to look as far as our beloved Diamondbacks who started getting shorted on their rights payments. To frame this as succinctly as possible, the bill for rights outpaced the revenue that subscriber’s fees and advertising sales generated. The subscriber fee was the primary culprit as technology has negatively impacted the linear TV world.

     

    If you’re really into this or you’re enrolled in Todd Merkow’s Sports Business class at ASU, you can revisit this blog here to read my real-time thoughts and get a better understanding of what happened.

    Does this deal change things for Arizona sports teams?

    The quick answer here is no. Bally’s Arizona has laid off its staff and shuddered the doors of its offices downtown. That being said, MLB, who along with the Dbacks, owns the linear and non-linear rights to the games, was looking for a streaming partner as this all went down. This deal doesn’t change anything for local Dback’s coverage unless the team and the league make a deal with Amazon which they were working on when this all went down.

     

    As you read this, the NBA is negotiating its streaming future with the likes of Amazon and others. Everyone is in a ‘wait and see’ mode with what that will mean for your Phoenix Suns who, like the Diamondbacks, have no legal obligation with DSG. Same with the Arizona Coyotes who might be better served to worry about finding a suitable home to play in before they worry about much else.

     

    Hence the aforementioned murky nature of all of this.

    Why is Amazon doing this?

    Amazon, who has never been accused of being shortsighted in their business executions, sees an opportunity in the RSN game. Some pundits believe they see it as a portal to local advertisers. I don’t see it that way. Advertisers and sponsorship have always been the icing on the revenue cupcake. The real money was in subscriber fees.

     

    Therefore, I don’t think Amazon is seeking a way to get revenue from Sanderson Ford. What I do think is that Amazon is seeking a way to get revenue from EVERYBODY.

     

    Here’s what I mean. I anticipate a slight increase in the monthly Prime video subscription fee in markets that would carry games. Also, online retail product purchases are a thing and will continue to be a thing for the foreseeable future. As television continues its journey to a non-linear product, platforms like Amazon want to generate valuable programming opportunities. To me, nothing is more valuable than the fanbase of a local sports team. So access to them to buy your product is also a thing.

     

    Something else to consider is that Amazon’s investment with Diamond Sports Group creates an interesting wrinkle in all the other streaming negotiations that are happening at the league level. Whereas it remains to be seen, some say this improves their position. Something to note is that any league-wide streaming deal would almost certainly restrict games to local markets to keep the league’s current digital distribution platforms viable.
    To make this point a little more clear, a deal with Amazon could result in an RSN-style broadcast in your local market but you’d still need MLB TV to see that Tigers game you watch cause you were born and raised in Detroit. Furthermore and to reiterate, this deal will have little to no short-term effect on the three teams that used to be affiliated with Bally’s.

     

    Let’s continue to be honest with each other here. The demise of FOX Sports, Bally’s, or whatever you remember it as hasn’t exactly been super fan-friendly to the consumer. Yes, you have broadcast options now but finding a game has become more difficult. In a world of almost endless channels finding the offshoot 15-1 for the Coyotes’ game isn’t as cool as it originally sounded. I would say that MLB TV, NBA League Pass and ESPN + aren’t exactly killing it for the perspective leagues they represent either.

     

    So, having Amazon make a move will most likely be a good thing for the consumer and it bodes well for teams or leagues who are looking for financial security as well as long-term stability. In a world that now perceives their TV as a screen that interfaces with the internet, offset local broadcast stations and one-off league-centric digital networks requiring subscription fees don’t afford them a financially sound long-term solution.

     

    A paid streaming service that reinvents the RSN model does, especially one that is making revenue in a multitude of ways.

    What should sponsors do?

    For now? Short term I’d pop some popcorn and keep an eye on the trades. These things tend to move quickly depending on how many lawyers are involved, which, at this point, is a lot. I think it’s always a good idea for brands engaging in sports sponsorships to have a close relationship with the team and the current rights holder, regardless of what you’re currently executing.

     

    There’s a reason that sports sponsorships tend to be pricey investments but seeing opportunities from every angle can help you to maximize that investment’s ROI. For the three Arizona teams, this development has no immediate impact but as the leagues and teams get a better understanding of what Diamond / Amazon has to offer, you may see changes soon.

     

    As always, if you’re confused or curious to learn more, please reach out. I always love a good discussion on the future of sports, sports broadcasts, and how brands can maximize their sports marketing investment. You can contact me at ed.olsen@linedrivesportsmarketing.com or call my cell at 602-284-6722.

    About the author: Ed Olsen is the CEO of Line Drive Sports Marketing. He is an adjunct professor at Arizona State University and has lots of opinions on all things sports.

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