The National Basketball Association’s $76 billion broadcast deal with The Walt Disney Co., Comcast Corp. and Amazon.com Inc. relied heavily on the support of in-house legal departments experienced with the complexity of multi-step media transactions.
The league’s lawyers are setting the strategy in negotiations over media rights and other contracts, four sources familiar with the situation said. They played a role in securing an 11-year deal that will see NBA games broadcast on Comcast’s NBC, Disney’s ABC and ESPN, as well as Amazon Prime Video, one of the sources said.
The NBA and its 30 franchises derive most of their value from revenue from media rights deals, and those deals have expanded – both in size and scope – with the advent of streaming and digital broadcast partners.
Unlike publicly traded companies that rely on outside counsel for traditional merger and acquisition transactions, leagues like the NBA rely on armies of lawyers already on their staff to guide them.
“NBA lawyers live and breathe these television contracts every day,” says Tim Browne, a former league corporate lawyer who now heads Polsinelli’s sports and entertainment practice.
The league’s ability to add more partners in a changing media environment and nearly triple the value of its previous $24 billion TV contract should be considered a major success, said Browne. Polsinelli’s partner played a key role as the league’s in-house counsel on the NBA’s last major media deal a decade ago with ESPN and Turner Broadcasting System Inc., now owned by Warner Bros. Discovery Inc.
The in-house legal team reviews media contracts, which are often tied to other key business functions such as ticket sales, merchandising and sponsorships. Money from media transactions also forms the framework for an income split with the NBPA, the league’s players’ union.
Managing player relations and maximizing their licensing potential are the two core parts of the NBA’s legal business, and both require a comparatively large number of dedicated lawyers — on both the legal and business sides — to understand the nuances of collective bargaining agreements and media rights deals, say four sources familiar with the league’s operations.
Outside legal advisers would use the necessary force to update contracts and other documents overnight as discussions progress, the sources said. The NBA hired Covington, who has frequently advised the New York-based league as legal counsel over the years, to work on its latest media deal.
William Koenig, the NBA’s head of worldwide media distribution, took the lead in working out the details of the deal with Disney, Comcast and Amazon, according to two sources familiar with the situation. Koenig worked with Jennifer Chu, the NBA’s head of content partnerships and media, and gaming chief Scott Kaufman-Ross, the sources said.
The NBA, whose commissioner Adam Silver and his predecessor David Stern both began their careers in the legal industry, has been able to hire so many lawyers over the years that those who do business with the organization jokingly refer to the acronym as short for “Nothing But Attorneys.”
Rick Buchanan, a former Covington employee, joined the NBA in 1993 and has been its general counsel since 2006.
The new TV deal was led by Nathaniel Jackson, Associate General Counsel of Amazon Prime Video, and Monica Estrada, Senior Corporate Counsel, who were also advised by Benjamin Mulcahy, Partner at DLA Piper.
New role for Sullivan & Cromwell
Like many big deals, this one was not without complications.
Turner, a company owned by Warner Bros. and soon-to-be former media partner of the NBA, is suing the league for being excluded from the latest contract, which is set to take effect in 2025 and run through 2036.
The dispute broke out after the league rejected Turner’s $1.8 billion offer to award a broadcast package for NBA games to streamer Amazon Prime Video.
According to court documents, Sullivan & Cromwell partners Robert Sacks, Richard “Rick” Pepperman II and Benjamin Walker are representing the NBA and two subsidiaries in the legal dispute with Warner Bros. Sullivan & Cromwell has previously worked in the NBA sector, but the previously known engagements were rather minor.
Walker is involved in a bankruptcy case involving Diamond Sports Group, a bankrupt regional sports network owned by Sinclair Inc. whose fate as a broadcaster of local NBA games has drawn interest from the league. Amazon is providing $115 million to finance Diamond’s restructuring.
The Wall Street law firm advised cable magnate James Dolan, owner of the New York Knicks, on the division of his business interests and was also involved in the $1 billion sale of the Atlanta Hawks to private equity mogul Antony Ressler. Billionaire Joseph Tsai, a former partner at Sullivan & Cromwell, owns the Brooklyn Nets and the WNBA’s New York Liberty.
Buchanan is also involved in the litigation with Warner Bros., along with NBA Deputy General Counsel Daniel Spillane. Warner Bros. is represented by partners David Yohai and Theodore “Ted” Tsekerides of Weil, Gotshal & Manges.
I am looking forward to
The WNBA, the fast-growing 12-team women’s basketball league, is part of the new broadcast package. The WNBA players’ union has criticized the NBA for its $2.2 billion share of the league’s media rights profits.
The gold medals won by the U.S. men’s and women’s national basketball teams – both comprised of NBA and WNBA players – at the Paris Olympics over the weekend also demonstrated the strength of the league’s national and global brand.
Having finalized most of its broadcast and labor agreements, the NBA is now expected to turn its attention to possible expansion in Las Vegas, Seattle or Europe.
