Los Angeles Clippers owner and former Microsoft CEO Steve Ballmer recently rejected a $60 million offer for TV rights to his team's regular-season games and is now considering launching his own over-the-top streaming network, The New York Post reported yesterday.
Earlier this year, Ballmer turned down the $60 million per year offer from Fox Sports' regional network Prime Ticket, marking a substantial increase from its current $25 million per year, according to the report. The Post also claims Prime Ticket's exclusive negotiating period ended in June.
While some anonymous sources quoted in The Post's story claim Ballmer is instead moving toward a streaming model, others reportedly see the claims as a negotiating tactic. Ballmer's extensive experience and relationships in the tech industry make him seem a more legitimate candidate to go online-only, so he could be using that threat to drive up the bidding price for regional broadcast TV rights.
Specifically, The Post's sources pointed to the difficulty Ballmer and the Clippers would have reaching revenue numbers that would justify Ballmer's rejection of the $60 million offer. Broadcast TV currently distributes Clippers games to 5 million viewers in the area as part of cable TV packages, whether the customers watch the games or not. A streaming service would need to convince individual users to sign up. To do so, the company would have to strike a balance in pricing, making it high enough to cover the investment but low enough that it's affordable to large amounts of customers. Then there's the offseason issue – would customers be willing to pay for an NBA streaming service during the summer and fall months when the Clippers aren't playing?
However, this could be where Ballmer's experience in the tech industry could separate him from those with experience only in sports media. Once the technology is in place – which would make the Clippers the first NBA team with such a service – it could open all kinds of opportunities. Earlier this month, The Verge ran an in-depth profile of Baseball Advanced Media (BAM), which began as a small division with Major League Baseball dedicated to building and maintaining team websites. Over time, however, the people working at BAM saw the opportunity for streaming baseball games over the internet. Now BAM has broken out as its own organization and handles streaming for HBO and the WWE. Ballmer has to see the difficulties in making a profit by launching a streaming network just for Clippers games, but he might see the greater value in being the first to market with the technology.
Although it has lagged far behind the rest of the media industry in the transition to internet streaming, the sports world has warmed up to the idea in the past few years. This market is still very young, so, as Baseball Advanced Media showed, those who claim a stake early on might reap some pretty massive benefits down the line.