Tuesday, August 23, 2011

Revised TV deal for Nets doubles current rate, worth at least $200 million; yet another factor ignored in the cost-benefit analyses

From NetsDaily:
Sports Business Journal reports that the Nets and YES have quietly settled their local TV rights dispute with the Nets receiving a big bump-up --about double what the team received this seaons-- and YES retaining the Nets' rights through 2031-32, a ten year extension of their original deal.

The Nets will receive $20 million a year immediately with increases through the end of the deal. Previously, the Nets were receiving about half that figure, putting them near the bottom of NBA local rights deals. The Nets have had the lowest local TV ratings the last two seasons, but the move to Brooklyn should improve them.
In other words, a new arena, in Brooklyn, is worth a lot--if $20 million a year immediately nearly doubles the current take, that's $200 million over ten years, and likely more, given that increases continue.

What the analysts missed

As with the value of arena naming rights, worth $200 million-plus to Forest City Ratner and the Nets, the value of TV rights was never evaluated by sports economist Andrew Zimbalist in his work for developer Forest City Ratner, which claimed outlandish estimates of new city and state revenue.

Nor, for that matter, did the New York City Independent Budget Office analyze those huge benefits to the developer and team.

Bottom line: gains to the public are speculative (and, to the IBO, losses to the city are likely), while gains to the developer and team are far more certain.

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