The National Hockey League announced a digital media rights partnership with MLBAM (Major League Baseball Advanced Media) on August 4, 2015. NHL Commissioner Gary Bettman and MLB Commissioner Rob Manfred discussed the transformations planned for the NHL’s digital content, both improving the NHL’s current properties as well as creating new properties. Bettman elaborated on why the NHL was so eager to partner with MLBAM: “As the market leader, MLBAM is uniquely qualified to assist us in giving hockey fans a richer, more immersive experience with the game.”
The six year deal is reportedly worth $600 million in total, or $100 million annually. In return for MLBAM’s purchase of the rights to the NHL’s digital platforms and products, the NHL will gain between 7 and 10 percent equity ownership in BAM Tech, while the 30 MLB team owners are the majority equity owners.
But before actually engaging in the partnership, the MLB owners were faced with a vote on whether to allow BAM Tech to become a spin-off company of MLBAM to increase its operational independence. Last week, at the Board of Directors quarterly meeting, the owners voted in favor of spinning off BAM Tech. Manfred discussed the newly independent MLBAM’s potential:
One of the most important things that any sports league or a commissioner of a sports league can do is make sure that you deliver to your fans your content, your games, in the best possible way. We believe MLB Advanced Media has been a leader in this space, that we have developed creative ways to serve our fans in multiple platforms. And we think in partnership with the NHL we will provide that same technology, that same service that will be of benefits to NHL fans over the long haul.
Bettman echoed Manfred, saying “MLBAM is also the right partner because they have the expertise to help us deliver new and exciting products to our fans, who crave compelling digital content. We couldn’t have North America better covered than with the power of NBC, Rogers, TVA and MLBAM – an incredible convergence of technical, creative and production talent that is great news for our fans.”
The history of BAM is critical in understanding why the NHL’s partnership is such a milestone for MLBAM. In 2000, MLB Commissioner Bud Selig created MLBAM in order to consolidate the digital rights of all MLB teams and to create websites for each MLB club. By creating one overarching company to oversee digital work, the MLB did not have to worry that the superior resources of wealthier teams would outrun smaller market teams. All of the MLB clubs contributed a total of $120 million to invest in BAM, and all clubs earned an equal ownership stake in the company.
Initially, BAM contracted an outside consulting firm to create MLB.com, but the budget allocated to the consulting firm was essentially wasted because the website did not work properly. BAM restarted their work on MLB.com from scratch and decided to only use technology that they built. By 2001, BAM expanded its operations to include streaming live audio of games. Between building and marketing, BAM spent millions—and received few subscribers.
After struggling financially, the MLB gave BAM the league’s ticketing rights, which BAM used for leverage against TicketMaster. That resulted in a $10 million advance from Ticketmaster, allowing BAM to explore new ventures. By 2002, BAM experimented with video streaming; unfortunately the streaming speed was only 280 kilobits per second. BAM CEO, Bob Bowman, compared the video feed to watching a “flip book.” Due to the positive fan response to the service, BAM expanded to launching the first paid video streaming service, and in the first year alone, the service gained over 100,000 customers.
Since then, BAM has worked with HBO in launching HBO Now, as well as ESPN, Sony, and the WWE.
Prior to this partnership with BAM, the NHL worked with NeuLion, beginning in 2007, to execute their digital platforms. Along with the NHL, Neulion powered the AHL’s, ECHL’s, and OHL’s streaming services. In 2008, Charles Wang was named Chairman of NeuLion. Wang has been the majority owner of the New York Islanders since 2004, until he sold a portion of his shares to Scott Malkin and Jon Ledecky in the fall of 2014. Although he remains a minority partner of the Islanders, losing the NHL’s streaming rights as well as the majority stake in the Islanders truly minimized his affiliation with the League.
Bettman spoke about the former partnership that contributed much to the NHL’s digital infrastructure: “NeuLion has been a terrific partner. We could not have established the deep foundation we have in digital content without their expertise and talented people.” Neulion will help manage the transition with BAM until their full launch in January 2016. NHL COO John Collins talked about the January launch, stating that “In January, when we turn the switch, you’ll see new products, but even then it won’t be all the way, across every board. Most of our conversations so far have been around getting the deal done. The next several months will be about developing those products.”
Included in the set of rights awarded by the NHL to BAM are the streaming rights for live out-of-market games. Currently, the NHL streams live out-of-market games through their subscription services, NHL GameCenter LIVE and NHL Center Ice. Along with distribution rights to live out-of-market games, BAM received the rights to operate the NHL’s website, as well as all of the clubs’ websites. In addition, BAM will gain control of the NHL’s applications and develop apps for the NHL clubs. BAM will work in conjunction with the NHL in both the design and development of their digital products and platforms.
Unfortunately, NHL fans will likely still have to deal with in-market blackouts, like MLB fans have to, especially since the final settlement in the litigation against both the NHL and MLB over in-market blackouts did not resolve the issue.
With regards to the NHL Network, BAM will revamp the station, first by moving NHL Network’s headquarters to Secaucus, New Jersey where the Emmy winning MLB Network resides. The MLB Network will contribute studio space and other production resources to the NHL Network. Collins discussed the NHL Network’s newly established studio situation in a recent Puck Daddy article, adding clarity to their situation: “We’re going to have three sets: The set in the NHL Store in Manhattan, where we do NHL Live and make the Player Safety videos; and then two sets out in Secaucus. So we’ll have better sets.” Essentially, NHL Live will remain in New York, while NHL Tonight will move to Secaucus. Shows like On the Fly, NHL Live, and NHL Tonight will continue with tweaks from MLBAM, and eventually new original content will be created.
This partnership could also expand the NHL’s digital analytics. The NHL experimented with player tracking at the 2015 All Star Game, but due to high costs, the NHL has not yet established how to track players on a regular basis (and then allow fans to interact with those analytics). Collins explained the NHL’s issue: “We were struggling with costs. The chip added… $200 per puck, which would not allow you to do the things you like to do with them. They are shot into the crowd, people keep them. Players, officials like to give pucks to fans. It’s not something we wanted to take away.” MLBAM President and CEO Bob Bowman expressed confidence in their ability to bring digital analytics to the NHL, similar to the MLB’s successful Statcast. Bowman said on the topic of NHL player tracking and analytics, “We’ve discussed options with [the NHL]. It’s our goal to gain enough knowledge during the 2015-2016 season to figure out what is best. They’ve shown a willingness to consider other solutions, which may pay larger dividends in the long run.”
BAM has put themselves in a unique market position at the cross-section of sports, technology, and media. BAM is so unique in the market because there truly are no competitors (such as Hulu, Netflix, and Amazon) at this time that offer live sports coverage. Furthermore, BAM’s capabilities to power all digital platforms—including television, mobile, and web—while partnering with another major league, as Collins said, is “groundbreaking.”
Commissioners Manfred and Bettman recognize that the potential of the partnership and the product is expected to be remarkable. Manfred’s perspective exemplifies BAM’s enthusiasm to expand MLB’s digital conglomerate and provide the best digital platform for the NHL: “It is an honor for Major League Baseball to stand alongside the National Hockey League on this joint initiative. All of us in sports share a desire to distribute our games and tell our stories as widely and broadly as possible. Because of our own experiences in delivering baseball to its loyal fans, MLB Advanced Media is uniquely suited to excel in a partnership of this magnitude.”