Last year, as the New Orleans Pelicans’ local rights deal with Bally Sports was set to expire, team president Dennis Lauscha said making Pelicans games more accessible was a “gigantic priority.”
“Maximum viewership and maximum distribution, so that our product can be seen and consumed by our fans,” Lauscha said.
How did the Pelicans address this accessibility issue? By sticking with the status quo.
They renewed their partnership with Bally Sports. In September, Bally Sports launched its streaming offering, Bally Sports+, at a price point of $19.99 a month. Six months later, Bally Sports’ parent company filed for bankruptcy.
Contrast that with the way the Phoenix Suns handled this same predicament one year later. On Friday, the Suns announced that they were ditching Bally Sports. Starting next season, their games will be available for free over-the-air and streamed online on a new direct-to-consumer service.
In doing so, the Suns are eschewing a significant source of short-term revenue — local rights fees — in the hopes of recouping that money in other ways by allowing their fan base to watch games for free so it can grow viewership. The Suns said their games will be available in 2.8 million households in Arizona under the new agreement, more than triple the number of households they were in before.
“We’re not focusing on money,” Suns owner Mat Ishbia said. “We’re focusing on winning, success and taking care of fans, taking care of the community. What happens is you always end up making money. It always works out.”
The Bensons bought the Pelicans in 2012 for $338 million. The team is now worth $1.63 billion, according to Sportico’s valuation in December. If that valuation is correct, that means the Pelicans have increased in value by roughly $1.3 billion in 11 years.
The exploding value of pro sports franchises in the last decade has been one of the greatest wealth creation events in human history. Owner Gayle Benson and others with equity in the franchise have benefitted from this.
What have they given Pelicans fans in return?
Under Benson ownership, the Pelicans have posted eight losing seasons. The Pelicans have remained one of two NBA franchises to have never paid the luxury tax. And the arena they play in, the Smoothie King Center, is widely considered one of the NBA’s worst venues. It was built before the start of this millennium using taxpayer dollars.
For fans who want to watch the Pelicans play from home, it is costly. Cable packages that include local sports channels run more than $100 a month. Streaming options are limited, in part because of the years-long impasse between Bally Sports and two of the major streaming players, YouTube TV and Hulu. The introduction of Bally Sports+ added an alternative for streamers, but it is more expensive than premium content providers such as Netflix, HBO Max and Disney Plus.
Ishbia’s decision to break up with Bally Sports will negatively affect his team’s bottom line in the short term. It is a bet that increasing the size of his fan base on the heels of trading for Kevin Durant will juice other revenue streams in the long run.
There is no guarantee this will pay off. But for a franchise like the Pelicans, it would have been a bet worth placing.
The Pelicans’ valuation in the last decade has skyrocketed. Their incredible run-up was the result of external market forces — not the franchise putting a good team around a game-changing talent such as Anthony Davis, nor an investment in infrastructure.
The Pelicans had an opportunity to service their long-suffering fans a year ago by doing what Ishbia did.
They said making games more accessible was a “gigantic priority.” Their actions indicate otherwise.
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