Apple’s Sports Ambitions Should Come into Focus During Ongoing Negotiating Period

Apple’s Sports Ambitions Expected to Come into Focus

ESPN has reportedly told Formula 1 and Top Rank Boxing that it is not planning to renew their respective media rights agreements when the current term expires (end of ’25 season and Aug ’25, respectively). 

Questions remain about the UFC’s future on the cable network too. ESPN’s exclusive negotiating window with the MMA promotion expires April 15.

Apple would presumably be a logical landing spot for all three properties.

“Its philosophy is to acquire global media rights and deliver the same experience to fans, across their devices, in as many countries as possible,” media consultant Patrick Crakes said. “Well, here are three great, [and in the case of Top Rank and F1, relatively affordable], examples fitting that criterion.”

So, the ongoing/upcoming negotiating period should provide some clarity on Apple’s sports ambitions. If none of the rights packages appeal to the tech company, its standards are tighter than originally believed.

Passing on all three properties “would suggest there isn’t a big pond to fish from befitting its strategy,” Crakes said. 

Either that, or Apple is not yet ready to up the ante on its sports media rights experiment. 

Neither would be a positive development for the broader industry.

MLS’ Season Pass pivot suggests it remains premature for a top tier rights owner to be primarily over-the-top. It does not say much, if anything, about Apple’s sports ambitions.

“Overall, the agreement between Apple and MLS appears to have more than met both sides’ expectations,” Crakes said. “However, MLS has [come to the realization] it needs some incremental routes to reach viewers outside the Apple echo system.”

Apple TV+ commands less than .5% of all TV video minutes consumed.

But the company’s pursuit (or lack thereof) of UFC, F1, and Top Rank Boxing rights will be a tell. Should the three properties all land elsewhere, it’ll indicate Apple still isn’t sure it needs more content for its sports experiment; or that just a few properties will work for what it wants to do. 

Perhaps “only something like the Premier League’s global rights could fit the bill,” Crakes said.

At that point, it would be fair to suggest many sports media observers may have misjudged the company’s position as a stalking horse.

“If you think that Apple’s going to bid aggressively, for example, for college football rights in 2030, you might want to rethink that,” Crakes said. It will have become clear “they’re not going to be a major piece of a puzzle that drives media rights [valuations] higher.”

At least, not across the entirety of the ecosystem. 

“It’s not clear that any of the non-traditional digital players want to build a next-gen ESPN or Fox Sports,” Crakes said.

Sports rights are never going to be direct drivers of EBITDA for the tech companies. 

“For them, media remains a marketing expense that could drive economic profitability in other truly strategic areas,” Crakes said. “A consumer buys an expensive [Apple gadget] and with it they get access to all this cool original media, plus a bunch of other whiz-bang stuff.”

The problem is it’s hard to pinpoint exactly how much incremental value having media adds.

That is less of an issue on the entertainment side of things. Even if the company never figures out how to properly monetize the programming, it can always sell the valuable library.

But a portfolio of rented sports rights can’t be sold.

If Apple isn’t going to regularly compete for league rights at scale, a deep pocketed potential bidder comes off the board.

“A lot of the castles in the sky are built on the idea that there's going to be numerous established and new bidders competing for multiple properties, at all price points, and that will drive values upwards in the years ahead,” Crakes said.

And having fewer potential buyers for those rights would make the route to a 100% fee increase during the next round of negotiations more complicated for many properties.

But Apple simply waiting on the sidelines to build a robust rights portfolio isn’t great news for sports leagues, either. It indicates leverage may be shifting in favor of the rights holder.

The tight-lipped company hasn’t given any indication that it plans to bid for one or more of the three rights packages.

While the ongoing negotiation cycle is expected to provide some clarity on Apple ambitions, it is hard to suggest it’s now or never for the company. The publicly traded tech giant is going to be around in a decade; some of the other bidders currently in the marketplace will not.

“Rights could suddenly become available at a really good price and Apple could choose to up its sports experiment then because packages are cheap and leagues have no other place to go,” Crakes said. 

But how patient can anyone realistically expect Apple to be?

The company doesn’t appear to have a particularly robust sports org chart. And it’s not as if cable TV, although in steady secular decline, is dying anytime soon (though, consolidation is inevitable). 

Nielsen reported there were approximately 40 million average minute viewers tuned in across broadcast and cable between the hours of 8-11p last Saturday evening.

“That’s a lot,” Crakes said. “This [established] system still produces more viewing than anything else at any given minute.”

One must imagine ESPN wants to remain involved with the UFC.

“But they’re probably not going to give [the MMA promotion] the kind of increase it wants, either,” Crakes said.

That’s because the world has changed, and rights holders can no longer monetize PPV events like they once could.

“People are used to paying a lot of money for content [and their expectations as to what should be included in a given service has changed],” Crakes said.

It’s likely a streamer will value the UFC’s highest quality events (i.e. the ones that drive new subs).

And the promotion “can get paid to take all [its programming] behind a streaming paywall,” Crakes said. 

But that doesn’t mean ESPN is necessarily going to be on the outside looking in.

Said “streamer could include ESPN [in the deal] and incorporate [the UFC] into its streaming content, along with [the cable network’s] flagship [channel],” Crakes said.

Remember, while Apple has the money, rights owners must still account for the lack of viewership on the platform. Sublicensing some rights to ESPN or another linear partner could help solve that concern.

Formula 1 and Top Rank could end up back on the cable network too. It’ll just happen under the broadcaster’s terms. 

“There’s a deal to made with both of them that makes sense for ESPN,” Crakes said.

If they can’t come to terms, ESPN will allocate the money saved toward established properties that over-deliver on value with distributors, subscribers, and advertisers (NFL, CFB) or newer ones that have growth potential and a more attractive price point (think: TGL); or they’ll save the funds and simply increase profitability.

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