Sports Properties May Need Production Capabilities to Maximize Rights Revenues

Sports Properties May Need Production Capabilities to Maximize Rights Revenues

NASCAR announced a collective of new seven-year rights deals worth $7.7 billion back in late ’23 (+40% over expiring deals with FOX and NBC). FOX Sports, NBC Sports, Amazon’s Prime Video and Warner Bros. Discovery’s TNT Sports will split 38 Cup Series races beginning in 2025. 

The new pacts are in addition to the seven-year $800 million deal NASCAR signed with The CW Network last summer. Xfinity Series races will air on the broadcast network. 

NASCAR’s latest round of negotiations is yet another indication that sport’s future is going to be more fragmented than its past. It also suggests sports properties may need to be prepared to deliver an advantageous production solution to maximize their media rights values moving forward.

“There's still room to grow [revenue wise inside the established Pay TV system. However,] the bar is getting higher for these must-have properties to deliver value to the media partners and the distributors,” Brian Herbst (SVP, media & productions, NASCAR) said. “If you’d like to be best positioned, not just with traditional media companies but some of the emerging companies that are taking an interest in sports, particularly the digital streaming companies, having production expertise is certainly an advantage going into those discussions.”

The stock car racing circuit will produce the entirety of the Xfinity Series season and expects to have increased production responsibilities across Cup Series events too.

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While the Pay TV universe is shrinking, it continues to have the greatest reach and remains the most lucrative distribution channel for sports rights owners; at least for tier one properties.

“Which means that you can [still] allocate some of your [live programming] to [it],” Herbst said. 

But NASCAR was hesitant to tie all of its race inventory to a legacy media model that is evolving. 

“You need to [also] set yourself up for the future, which [means] finding some sort of digital or streaming solution,” Herbst said.

Because that is where younger audiences, and more potentially some more casual fans, reside.

In addition to the practice and qualifying coverage on Prime Video, all of TNT Sports’ Cup Series races will be simulcast on MAX (see: B/R sports add-on). NASCAR also expects to receive increased exposure across Bleach Report and House of Highlights properties.

“We want as many platforms promoting our sport as possible,” Herbst said. 

That’s a logical sentiment for a sports property dealing with increasingly fragmented audiences. The problem is that most of the digital players lack in-house production capabilities and/or broadcasting expertise.

For context, NASCAR will have ~150 people working on-site at a race (think: camera operators to caterers). 

Most of the new entrants could probably pull off the technical aspects of a sports production. 

“It’s all the below the line personnel, the get your hands dirty part of the operation, that is a little scary [for them],” Herbst said. “That is something the FOX and NBC’s of the world are very accustomed to [dealing with], but not the digital platforms.”

As a result, Herbst expects to see production responsibilities gradually shift to from the broadcaster to the leagues in the years ahead; particularly as local rights increasingly find themselves under league control and/or responsibility.

“The bar [is getting] a little higher in terms of what [sports properties] have to deliver if [they’re] going to be playing at this level,” Herbst said. “You’re seeing that with MLB. You’re [now] seeing that with us too, where we’re building out our own production infrastructure.”

NASCAR recently cut the ribbon on a new production facility in Concord, North Carolina. The sport has also made investments in technology and personnel.

But NASCAR was able to divvy up its rights across five broadcasters, and maximize revenues during this rights cycle, in part, because it has been aiding partners on the production end for much of the last 15 years. 

NASCAR Productions produced “Truck [series] events for FS1,” Herbst said. “We [have] also [been] handling production for all ‘non-companion’ events for the Xfinity series” (i.e., when the Cup series and Xfinity series race at two different locations on the same weekend). 

The sport’s in-house production co. has been producing IMSA races and supports a host of lower-tier properties too (think: ARCA, grassroots racing). 

Of course, live event production isn’t a cheap endeavor. NASCAR will spend tens of millions annually on its efforts. 

Naturally, the sport believes it is money well spent. Rights revenues aside, having in-house production capabilities can aid fan engagement and development efforts. 

“When we laid out the business plan for the new production facility, in 2021 and 2022, one of the things that was a big part of that was alternate telecasts,” Herbst said. 

NASCAR is considering producing a host of different broadcasts alongside its main feed, including ones targeting casual fans and sports bettors. An AWS-powered alt-cast, akin to what Amazon does for the NFL, is also under consideration.

Sports properties with the ability to negotiate media rights fees and then deliver turnkey production services to potential broadcast partners should be best positioned to monetize their rights moving forward.

At least, for a while. 

“It’s all a matter of scale,” Herbst said.

If/when the digital platforms have enough premium sports content in their portfolios, where it might make financial sense to employ their own production teams, they might take the responsibility on. A reduction in costs and increased control would be among the catalysts for change.

If more of the money in the shrinking legacy media business is funneling up to the top properties, and those with production resources are most likely to appeal to media’s new entrants, it’s fair to wonder where that leaves sports properties further down the value chain. 

Finding a rights partner “gets a little harder for sure,” Herbst said. 

Tier two and three properties may need to get more creative in their deal making to find distribution.

That could result in a shift towards remote production. While not ideal for fans, it would save the rights owner on costs like airfare, hotels, and meals.

“The other thing that [a rights owner] can do is ask the media platforms and the networks for a little bit more ad inventory for [their] own in-house purposes so [they] can pass that [cost] through to sponsors,” Herbst said.

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