This is the first in a series from TheWrap exploring how sports is transforming the entertainment business.
“God knows, you’ll hear the word ‘sports’ 10,000 times this week,” Mark Marshall, chairman of NBCUniversal global advertising and partnerships, said at the studio’s upfront in May, kicking off a week in which that figure might have been exaggerated, but not by much.
As linear TV clings to relevance and media and tech-run streaming services seek to cement their bond with subscribers, sports is having “a moment” in the industry, as Marshall noted, fueling explosive growth for sports rights, gobbling up primetime real estate and raising questions about whether this is a pricey bubble that at some point has to burst.
What the upfronts underscored was that sports represents a rare vital connection to audiences for a host of reasons, beginning with the fact that it remains the one genre that people generally prefer to watch live, which commands a huge premium from advertisers. That’s not a new phenomenon, of course. But sports is defying ratings gravity, exerting even more influence with each passing season as the dominant genre by far that people prefer to watch live, which has significant implications for sponsors pushing products on a schedule.
Sports accounted for 86 of the top 100 telecasts in 2024 in terms of live-plus-same-day viewing, according to Nielsen, with the balance made up of presidential debates, award shows, a few live events and the first episode of “Tracker,” which premiered after the 2024 Super Bowl.
Correspondingly, spending on sports has steadily increased, with research and analytics firm S&P Global putting the overall cost of U.S. sports media rights this year at $29.3 billion. Those rights represent roughly 23% of the industry’s total spending, based on a MoffettNathanson estimate of how much each player would commit to content this year.
At the same time, spending on scripted entertainment has decreased in the U.S. since its high in 2023.
In the second half of 2024, scripted accounted for 37% of all titles ordered by major streamers by region, a 9 percentage point drop compared to North America’s high of 46%, according to Ampere Analytics. That 37% also marks a notable uptick from what scripted spending was in the the first half of 2024. The WGA and SAG-AFTRA strikes as well as changes in commissioning strategies were to blame for the decline.
But while this drop has happened, global content spend by the six biggest content providers increased 3% from 2023 to 2024 owing in part to the increased investment in sports rights.
In short, sports has become a crucial lifeline for both legacy entertainment, and the disruptors looking to add new audiences.
S&P projects that sports spending figure will rise to $37 billion by 2030, up a staggering 153% from 2015. That projection includes several moving parts, with by far the biggest sport, NFL football, which is set to kick off its season on Thursday, mulling whether to exercise on opt-out clause on its TV rights deals after the 2029 season.
Sports have always been a cornerstone of programming but, as Marshall noted, there’s something particular about what’s going on now. Just last month, Walt Disney Co. gave the NFL a 10% stake in ESPN in exchange for stewardship of its media holdings and access to more games. Less than a week later, Paramount signed a seven-year contract with the UFC worth $7.7 billion.
Tech giants like Apple and Amazon, flush with cash, also keep upping the ante, in a way that has heightened the pressure on traditional networks to maintain their piece of the pie.
These agreements are accounting for some of the biggest deals in television across both traditional networks and streamers, who are linking up with established sports and up-and-coming leagues alike. While Comcast is set to pay a reported $2.45 billion annually for National Basketball Association rights, YouTube and Amazon are paying roughly $2 billion and $1 billion a year, respectively, for NFL rights, and Apple is set to pay $150 million a year for Formula 1 streaming rights.
Part of sports power comes from its ability to unite people in a time of fragmentation and division. As election statistician-turned-pundit Nate Silver noted in a July post, “Outside of sports and perhaps Taylor Swift, there’s really no mass culture anymore.”
Because TV still serves as a key way to market products – such as movies targeted to a specific opening date – advertising in sports will continue to reign supreme.
“If we think about the major sports, the value is only going in one direction which is exponentially higher,” Sean Cunningham, president and CEO for Video Advertising Bureau, told TheWrap.
Billion-dollar bets
Since that ostentatious display of power at the upfronts, the importance of sports has only been magnified by a number of announcements coming out over the summer.
NBC, for example, announced plans to relaunch a sports network – even as it sheds other cable assets. Parent NBC Universal is also in advanced talks for a three-year package to carry Major League Baseball games in a deal worth nearly $600 million.
That ESPN-NFL deal, meanwhile, was the linchpin for Disney’s launch of the network as a standalone streaming service.
Notably, that wasn’t the only marriage of network and sports property, with Fox Corp. taking a one-third stake in racing enterprise Penske Entertainment, securing its IndyCar rights, in a late July deal the Wall Street Journal reported to be worth $125 million.
The enormous demand for sports as a perceived lifeline for broadcasters, cable and streaming has vast implications throughout the TV ecosystem, beginning with those upfronts, where NBC made NBA the marquee component of its lineup.
“It’s the last bastion of must-see TV when it’s happening,” Lauren Anderson, director of the University of Oregon’s Warsaw Sports Business Center, told TheWrap. “Are you the person who watches ‘Squid Game’ the day it comes out? Or do you watch it later? You don’t miss the cultural moment if you don’t consume it right then. But there’s this time-bound necessity with sports of when it’s relevant and being part of the conversation, and I think that’s really what’s driving it.”
But if you want to see how transformative a strong sports strategy can be, look no further than The CW.
A sports makeover
When Nexstar acquired the controlling share of The CW in 2022 and started axing its young-adult programming, the decision was met with mass outrage from fans and members of the media. Now the company is on track to become profitable in 2026 — a first for a network that was largely seen as a loss leader for the studio divisions of its former owners Warner Bros. and CBS.
A huge reason for that turnaround? The network’s investment is sports. Out of the 1,100 programming hours expected to premiere in 2025, roughly 40% of them are sports.
“The only thing right now that’s keeping certain bundles together is live sports,” Mike Perman, senior vice president of sports for The CW, told TheWrap.
Perman noted that the network is benefiting “rabid fan bases,” and is averaging 1.1 million viewers for NASCAR Xfinity, which is up 17% year over year, while WWE NXT is having its best ratings run in five years.
The CW’s NASCAR Xfinity series has even beaten Fox’s IndyCar on at least one occasion, a big deal for a network that used to always rank dead last against its peers. And it’s not just racing and professional wrestling. The CW has also invested in college football with PAC-12 and ACC games, college basketball with the ACC and the HBCU All-Star Basketball Game, professional bull riding and professional bowling, to name a few of its sports offerings. Last week, it extended its Pac-12 deal through the 2030-31 season.
For a company with as many stations as Nexstar, investing in something with the regional appeal of sports also boosts its local affiliates. Perman and his team try to schedule games and events they know will serve as a good lead-in for the local news, and in turn The CW’s sales team can target those local markets.
“We want to have more games to help our sales group, which obviously helps other things on the network,” Perman explained.
Though The CW’s ancillary sports coverage may only exist in its local markets, sports fans are also more likely to be highly invested in the so-called game around the game than other fandoms. That means everything from live-streamed drafts to on-the-ground commentary is a source of interest.
Cunningham pointed to the fact that, on average, there’s only about 18 minutes of actual gameplay during an NFL game. Yet the week leading up to those 18 minutes is full hours of commentary shows and deep dives into training – content that can be monetized, costs relatively little to produce and that fans actively consume.
“Sports fandom is perhaps more powerful than any other type of fandom in terms of the level of commitment,” Cunningham said. “It’s an irrational attachment.”
Overvaluation or the new price tag for sports?
That irrational attachment has led to seemingly irrationally high deals, all of which makes the economics of sports challenging. It’s a situation that’s exacerbated by networks recognizing how vital that content is to their future, and franchise owners eager to capitalize on that demand.
“It’s a little bit more complicated than in the past where it was like, ‘Look, we’re making this investment and how much ultimately will that generate in free marketing and advertising for our other programming that’s taking place?’” Bob Lynch, founder and CEO of SponsorUnited, told TheWrap. “In some cases, networks may already be overpaying for [sports rights], but it’s a loss leader that they need to buy in order to pull audiences into their specific platforms.”
The ripple effects of these dynamics can be seen in everything from the valuation of major sports franchises to players’ salaries. In the last few months, that included the sale of NBA’s Los Angeles Lakers and Boston Celtics at the astronomical sums of $10 billion and $6.1 billion, respectively, with the record price for the latter getting eclipsed by its historic rival in a matter of months.
By way of comparison, the L.A. Clippers – admittedly a much less-decorated franchise – sold in 2014 for a then-record $2 billion.
Those latest franchise sales followed the NBA securing $76 billion from TV partners in an 11-year agreement with Disney/ESPN, NBC/Comcast and Amazon, even though, as one network source noted, the media parties are almost sure to lose money on their deals.
“The sale prices tell you what the smart people think about which way local media is going to go,” Mike Ozanian, CNBC’s senior sports reporter, told TheWrap, noting that sports remains “the best game in town” in terms of content. “So I think the prices themselves are an indication, to a certain degree, that there’s not a bubble in media rights.”
University of Oregon’s Anderson is more skeptical about the prospect of a correction, wondering about saturation even as newer sports cram into the picture seeking to capitalize on networks wanting their piece of the live-sports pie.
“I don’t think you can keep going up at the exponential rates that it has,” she said of TV rights fees, while adding that the real odd ones out in the equation might be the fans as new deals scatter the platforms for sports properties far and wide.
“I wonder if anybody’s really thinking long term about the value of the fan and what it’s doing to fandom,” Anderson said, noting that when it comes to accessing games, “It’s so incredibly hard to figure out, unless you have every streaming platform that exists.”
With streaming becoming an increased part of the TV sports picture, veteran sports journalist Joon Lee wrote in a New York Times oped, “Games jump from one service to another with so little notice or apparent logic that even some of the biggest superfans struggle to track what’s available where,” testing the bounds of fan loyalty, and a devotion that “runs too deep to quit. Fandom isn’t being nurtured anymore. It’s being mined.”
Let’s say that you’re a WWE diehard (and for the purposes of this argument, WWE is absolutely a sport). If you want to watch WWE RAW, you’re going to need Netflix. But if you want to watch Smackdown or NXT, those air on USA and The CW, respectively, requiring you to have a cable subscription and access to broadcast TV. And God forbid you want to watch one of WWE’s premium live events. Those were Peacock exclusives, but just this month have moved over to ESPN’s streaming service.
That fragmentation will continue, as even as broadcasters have hung onto sports with a clear realization that they’re vital to their continued survival, the deep pockets of streaming services – whose budgets are a rounding error for companies like Amazon, Google and Apple – will continue to place pressure on linear networks in the near term.
Indeed, most traditional TV outlets now rely on streaming in concert with their networks, such as throwing the Olympics onto Peacock in a way that makes far more hours of content available to smaller subsets of fans.
“Because the number of people cutting the cord keeps growing, the ability for the networks to be able to cover their expenses, their fee for the programming, based simply on broadcast TV is impossible,” Ozanian said.
“Each one of these entities knows where their salinization point is as to what is too high. But a lot of them, it’s their own internal formulas,” Cunningham said. “So if there’s, say, five different suitors for a major multi-year sports league, they probably have five different ways of looking at where that point is.”
What the market for sports rights can bear, in other words, is in the eye of the most-eager buyer. And right now, with sports viewed as a “must have” item, there’s no clear prescription to cool that fever.
Coming up on Thursday: TheWrap untangles the complex knot of who owns which sports rights.
