The regional sports network model is declining, but teams still lack a solid alternative. This is exemplified by the NBA’s Utah Jazz, who last season decided to abandon their regional sports network, Root Sports Utah, and instead air games on local over-the-air affiliates. While this move was praised by fans who no longer needed to pay for cable or satellite subscriptions, it has turned out to be a questionable financial decision for the Jazz.
According to a report from CNBC’s Alex Sherman, the Utah Jazz have experienced a nearly 50% drop in average annual media rights revenue since leaving Root Sports. Although teams anticipated a revenue drop in exchange for wider reach, the extent of this decline was unexpected. Despite the struggles, regional sports networks still offer significantly higher rights fees than their over-the-air counterparts because of the revenue generated through carriage fees. While teams knew media rights revenue would decrease by switching to over-the-air broadcasting, they hoped to offset this loss with increased income from ticket and merchandise sales due to broader exposure.
Jazz owner Ryan Smith stated to CNBC, “You couldn’t pay me enough money to go back to the old model.” Previously, Jazz games were accessible to around 760,000 viewers on Root Sports Utah, but now they reach 6.3 million individuals via broadcast affiliates throughout the state. “You have to zoom out a little bit beyond just the RSN revenue stream,” Smith explained. “Our team has about seven different revenue streams, and the other six are enhanced by broader distribution of our games. The more people watch, the more people come to games, the more we sell in concessions, the more money we bring in with sponsorships.”
However, it’s uncertain whether this strategy is effective. A recent report from Sports Business Journal indicated that local Utah Jazz television viewership has dropped by 44% compared to last year, as the initial appeal of watching games on free over-the-air TV diminishes, coupled with the team’s underperformance on the court. The Phoenix Suns, another franchise mentioned by CNBC, were the first NBA team to leave their regional sports network in 2023 and have since seen a 25% loss in media rights revenue.
These developments highlight the challenges teams face in maintaining revenue levels previously generated through the cable bundle, leading many organizations to consider remaining with their RSN until absolutely necessary.
