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SBJ: Brooklyn Nets, YES Network close to agreement that would nearly double local TV rights

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Jeff Hanisch-USA TODAY Sports

Despite having the worst local TV ratings in the NBA, the Nets are likely to get a big increase in local TV rights money starting in the 2017-18 season, Sports Business Journal reports Monday.  The deal, along with the national TV rights agreement and internal cost-cutting, is likely to make the franchise highly profitable after years of enormous losses.

According to John Ourand and John Lombardo of SBJ...

The Nets used a contractual "reset" that occurs every five years to get YES Network’s majority owner Fox Sports to increase its rights fee to an annual average of around $40 million, starting with 2017-18 season, according to sources.

Under terms of the proposed agreement, the agreement between the two would let YES retain all broadcast TV and digital rights to the Nets programming and shorten the deal. The current agreement goes through the 2031-32 season, with options beyond that.  The new deal is shorter but still runs well into the next decade, says SBJ.

Although no date has been set for closing the deal, there is a deadline both sides would like to avoid. If there's no deal by December, the two would go to arbitration.

A little more than one-half of one percent of the New York market's TVs are tuned to YES for Nets games, according to earlier SBJ reporting. That doesn't mean the Nets have the smallest audience in the NBA. Because the New York market is so large, even a tiny percentage of it yields an audience larger than some of the smaller NBA markets.

Despite the low ratings, Nets games are important for YES Network, because they provide winter programming to supplement the RSN’s highly rated New York Yankees schedule, noted Ourand and Lombardo.

The local TV rights have long been an issue for the Nets ownership.  Of the four big market teams in New York and Los Angeles, the Nets received the least money.  According to one league source, the Nets local rights take wasn't much more than what the Timberwolves receive. Despite consistent low ratings, ownership had argued that it had spent an enormous amount of money on the franchise that would over the course of the agreement  yield results.

Even with a $40 million a year deal, the Nets are still likely to remain last among the four big market teams. The Knicks and Lakers have huge cable deals with MSG and Time Warner, and the Clippers have reportedly turned down $60 million from Fox Sports. However, the Clippers are in a better bargaining position. Their deal is up, while the Nets deal is a "reset."

The increase in local TV rights would come a year after the Nets, as well as the rest of the NBA, will start to receive the big  increase in national TV rights from TNT and ESPN. While all 30 teams share equally in the national rights, the local TV rights money is the team's to keep.

The combination will ensure the Nets profitability and make the sale of a majority or minority stake in the franchise easier to negotiate. The Nets will also not have to pay the NBA luxury tax this year, for the first time since moving to Brooklyn.

Fox Sports Regional Networks President Jeff Krolik and Nets CEO Brett Yormark led the negotiations for each side.