The Athletic’s Sean Shapiro discusses the imminent deal between Bally Sports Detroit and the Red Wings and Tigers in his sports business column this morning:
The exact term and valuation of the deal aren’t yet known, but inevitably other team executives are scrambling to find out how much the Red Wings got from Sinclair for the rights. In the past, Detroit was reportedly taking home $25 million per season from Sinclair, which was one of the most lucrative local TV deals in the United States for NHL teams.
Because of the ownership situation, the Red Wings’ deal isn’t exactly comparable for other NHL teams. When negotiating with Olympia Sports, Sinclair is also negotiating about the rights to the Tigers, which are roughly double the value because of the expanded inventory an MLB schedule offers.
But the fact Olympia stuck with Bally is a pretty clear indication that any rumbling that a team is trying to build its own regional sports network (RSN) is nothing more than public posturing or a negotiating tactic. Olympia has floated the idea of building its own RSN and even looked into finding a partnership with the NBA’s Detroit Pistons, but in the end, circled back to a more traditional model with the RSN.
Other NHL teams have tried to hint at building their own individual distribution models, but each time networks have called their bluff. It comes down to the financial situation; for an NHL team to go around the RSNs or build a straight-to-consumer model, it would have to find a way to make up $15 million, on average, in profit.
That cost, even with great advertising, would inevitably be put to the consumer. One source said it would likely cost at least $20 per month for a team, and even that price point is probably generous considering what teams would need to make for it to be worthwhile to try to distribute games themselves.