—The efforts of owner Steve Ballmer to monetize the Los Angeles Clippers’ product across media platforms may change the way NBA teams shape their localized media deals.
The billionaire former Microsoft CEO has informed TV networks that he plans on holding back the majority of the Clippers’ traditional digital rights in his upcoming deal so that the team has the ability to launch a “second-screen over-the-top” service to supplement its games. Those digital rights may not include live game action, but will offer in-game programming such as player-specific cameras, in-game highlights and real-time statistics – though no specific content has been firmly decided upon by Balmer and his people.
Ballmer’s strategy would be historic in terms of media deals, as it would mark the first time that an NBA team has withheld a substantial portion of digital rights from a regional network to launch a team-run OTT or over the top service. The former Microsoft CEO vowed to bring a new approach to team ownership when he purchased the Los Angeles Clippers for $2 billion in August of 2014, and this would be a monumental step toward that initiative.
Balmer’s net worth is estimated to be 22.7 billion USD (Forbes, 2015), so it’s apparent that this comes down to control more than money. He originally had the intention of keeping all of his media rights within the organization, including streaming games on his newly introduced OTT platform – yet ultimately decided from a business perspective it was a better decision to sell the Clippers’ live TV rights and keep a significant portion of digital rights for his OTT service. The service has been designed to supplement television, not to replace it and the Clippers would more than likely create the content in-house and charge for it, although no pricing model has been determined.
The Clippers’ current rights deal with Fox Sports owned Prime Ticket ends after this NBA season and pays the team an average of $25 million per year, a sum that is considered below market for an NBA team in the country’s second-largest media market. The team has been negotiating with Fox officials for several months, but the sides have continued to disagree about how much the teams’ digital rights are worth.
“Irrespective of whether we go back to Fox or to the Dodgers network or what we do independently, the Clippers will absolutely pursue a digital product that is separate and apart from the traditional rights,” said Steve Greenberg, managing director of Allen & Co. which is representing the Clippers in their ongoing negotiations. “It is a cutting-edge concept, and Steve Ballmer is a cutting-edge guy, and we are absolutely going down that road. We have a lot of interest from nontraditional media companies. The timing is, come next October, we need to have a TV home and we think we will. We are in the backstretch.”
Time will tell if the Clippers decide to renew their local contract with Prime Ticket, or if they take their business elsewhere. It will also be interesting to see how Ballmer’s OTT service pans out once October comes around. Regardless, this outside-the-box thinking that’s pouring out from the west coast is a monumental step surrounding digital rights in the NBA – something that may ultimately affect the entire professional sport industry in the near future.