The NBL + WNBL have the highest potential for broadcaster and sponsor value creation of any sport in Australia

Key points

• Sport is a key programming pillar for Australian video services looking to continue scaling
• At present, everyone is competing for the rights of 4 sports - AFL, NRL, tennis and cricket. All of whom have established incumbent relationships
• As more video services emerge, sporting code focus from these services has become more concentrated
• Basketball represents the best opportunity to become the fifth mass sporting code
• Basketball has high volume participant engagement across varied demographics and regions, a high quality globally renowned local competition, and Australia is a top 3 nation globally in the game
• The key lever to boost the game is increasing the awareness and engagement of non participants, and allowing it to take the leap as a mainstream spectator sport. Awareness of non participants is the largest issue the league faces due to media support far less than other sports receive.
• For a media platform looking to build a long term programming asset, basketball represents the best opportunity. It has a five month season, coverage in all markets, an existing base of 1.3m engaged participants that skew under 40, a global standard competition across mens and womens, and 20 years of consistent participation growth that will continue to increase.
• Basketball has parallels with the BBL 10 years ago - engaging format, family friendly, high potential and high commercialisation potential

The current sporting rights climate - a seemingly infinite amount of services competing for a very finite amount of content

We are in a market where there have never been as many services competing for the attention of local consumers. Nine, Seven and Ten in commercial FTA across on demand and linear. Foxtel in cable, plus Kayo and Binge. Disney has Disney+ and ESPN. We have Amazon, Meta, YouTube, Google TV, TikTok, Paramount (also owner of Ten), DAZN, Apple TV+, Stan, Optus Sport (owned by Nine). Plus there’s? free ad supported ‘channel’ services launching from media companies as well as electronics OEM’s such as Samsung, TCL and Roku.?

What this means is significantly more competition for basically the same levels of attention. The proliferation of these services may seem infinite (right now), but attention remains finite. And what is also finite is good quality, engaging content.

At the same time as platforms emerge, sporting code power has become more consolidated.?

There are four leagues/associations in Australia who between them have existing deals which will pay them north of $7 billion in the coming years - the AFL, NRL, Cricket Australia and Tennis Australia. All of these bodies have leaned towards incumbents in the most recent deals, and the current market suggests this dynamic is unlikely to change unless there is an extraordinary event (i.e. quality of coverage drops, or a network is required to walk away etc). Australia has also proven itself with sports to be an ‘all or nothing’ market. Networks and broadcasters are happy to split rights across a free and paid option, but unlike the United States, there is not an appetite to ‘spread’ rights across multiple networks in both free and paid. (such as the ESPN, CBS, Fox, Amazon, YouTube NFL deal)

The four tier-one sport rights deals favor incumbents in Australia. This makes these sporting rights unlikely to change hands anytime soon. At the same time we know there’s more services than ever recognising the need to secure and develop exclusive, high engagement sports content.

Sports content is appealing for a few reasons. One is due to its sustained activity across many months. This, combined with multiple matches per week, provides the rights holder with many hours of content and audiences that are loyal to leagues and teams and will watch regularly. Secondly, sport is highly coveted by advertisers and can command price premiums above comparable rating non-sport programming. Thirdly, sports brings an existing core audience.?

This means that incumbent networks are unlikely to exit any deals they currently have, and as current rights fees are already at a premium it’s unlikely these major codes are likely to risk moving from these partners who are doing a solid job.

Basketball represents the best opportunity to build a sporting asset that can match the commercial and audience appeal of AFL, NRL, cricket and tennis.

The National Basketball League and WNBL represent the highest potential for broadcaster and sponsor value creation in Australia.

It has a highly engaged core participant audience, national footprint, high attendance in games, appealing demographic profile and legitimately balanced national footprint. And the NBL’s commercial rights are undervalued in comparison to other sports - its broadcast rights have a significantly lower price tag than rugby union, swimming and soccer. For example, the deal A-League signed with Paramount in 2021 was worth $200m over 5 years (it has been revealed since that the contract had performance based triggers to reach this level). Reports on the NBL’s most recent deal pegs the revenue figure at around 25% of what the A-League obtained, despite the NBL crowds being comparable to A-League.

Importantly, basketball in Australia has healthy and robust foundations to grow sustainably in the future.

Foundation 1: Highly engaged core participation across all of Australia, with Australia being a top 3 global basketball nation in both women and men’s competition

National: Basketball is a truly national code with a supportive core engaged across all major markets and balanced participation across all states and metro/ regional

High volume: High participation rates of ~1.3m Australians - with high adult participation (900k+). Of participants, ~65% identify basketball as their most important sport

World beating: Australian national team is top 3 in world for women and men, there are 10 Australian men in NBA, 10+ Australian women in WNBA

Foundation 2: A younger, gender balanced audience profile driving consistent high growth over the past two decades

All gender appeal: Basketball is a top 7 sports/exercise activity for both men and women over 15 (above AFL, cricket, rugby)

High participation engagement in children all the way to middle age: Basketball is the number 3 organised participation sport in Australia for <15’s,and a? top 10 sport for every demographic bracket under 44

Supercharged growth: Between 2000 and 2022 basketball participation has grown faster than any other organised sport outside soccer

Foundation 3: The NBL is a Top 3 global basketball competition with strong attendance increases, a national footprint and relatively clear fixture air

1m attendees forecast for this NBL season: The NBL23 season is on track to surpass 1 million attendees for the season; with strong ticket sales in all markets. The league also has highly capable and stable leadership, with a history of innovation and sustained investment in the clubs and league at a level beyond what basketball has seen prior..

Competitive games, minimal blowouts: The NBL is a highly even competition with percentage difference (a good indicator of the equality of teams in terms of performance)? between the top and bottom team only 24 percentage points (for comparison, the AFL in 2022 had an 89 percentage point gap between Geelong and North Melbourne)

Clear scheduling air: Summer basketball has a low core audience overlap with other summer based sports (of basketball participants who played other sports in addition - the rates were cricket <10%, soccer <20%, tennis <10%)

The foundations are strong within basketball when it comes to the sports core audience. It is a mainstream sport in terms of participation, with strong local teams in every part of Australia and an engaged core when it comes to support of the NBL. The opportunity for supercharged growth doesn’t come from growing this participant core (although this wouldn’t be a bad thing), it’s growing engagement and consumption of the game amongst people not actively engaged in playing, or supporting someone who plays basketball. This audience is needed for it to truly break through.

The NBL is different to tennis/AFL/NRL/cricket as it requires a growth investment mindset rather than being viewed as an asset to be rented at high cost that will provide high levels of immediate revenue recouping demand. These larger codes such as AFL allow any potential acquirer to analyse an investment based on historical, actual data. Viewership, minutes of content, ad yield, sell through, production costs, subscriber acquisition etc. A multi billion dollar figure for the NRL or AFL is a carefully considered, highly quantified commitment which is ultimately a low risk investment as there is so much relevant existing real data and precedent to validate the investment

A sport like the NBL requires a shift in mindset for potential partners on how they evaluate the potential. Partners need to move beyond an approach of ‘what is currently true’ (i.e., we can deliver x revenue in year 1 based on these 3 historical revenue figures) to ‘what would need to be true’.

What would need to be true for the NBL and basketball in Australia to become an entertainment product that can rival the AFL/Cricket/NRL/tennis in scale and commercial success?

1. Increases in awareness can be translated? into increases in engagement and consumption

Awareness on its own isn’t sufficient, this awareness must be converted to engagement and trial. There is a job to do here around distilling key purchase/consumption criteria around sports in Australia and finding ways to make basketball salient across these.

2. Engagement results in increased viewership across all outlets - live, condensed, social

Providing the league increases engagement and consumption of professional basketball, the second component is balancing consumption across live attendance and via broadcast/platforms. The key is converting the in-game live experience onto the screen and creating engaging storylines and narratives week in week out around players, clubs, rivalries and events.

3. Sponsorship and commercial engagement follows with more categories across clubs and the league

Higher consumption will increase the appeal of the league to sponsors, especially those seeking to influence the behaviour of those under 40 and young families. Increased sponsorship will require increased commercial opportunities and more creative ways to access fans of the league and the clubs across the men and women's game.

4. Advertising and/or subscriber revenues increase for game coverage.

This is crucial. If you analyse the revenue composition of tier 1 sporting leagues the most material area is from broadcast revenues. These provide the bedrock for game development and club financial allocations that boost game quality and club sustainability. Higher revenues also create the opportunity for the networks to improve their product and promote even more to their viewers and subscribers, which has a downstream positive impact. Ad and subscriber revenue is ultimately dependent on three things - volume of viewers, context of broadcast, and competitive tension. The big 4 leagues have this.

5. Increased revenues across all areas allows further investment into production and talent, creating better quality and content that can continue to increase engagement across audiences and convert new audiences

Higher advertising revenues will translate into higher rights competition, which should lead to sustainable and fair increases over time. These increases flow to the league and clubs, which boosts talent and game quality; and higher revenues will allow any broadcast partner to continue evolving production. A good example of this are the improvements in AFL, NRL, Cricket and Tennis over the past 5-10 years. More cameras, more viewing options, deeper coverage, better technology.?

These ultimately become the flywheel for league and partner success, that once this flywheel is spinning it can provide the basis for long term sustainable growth.

A good example of a sport that has managed to get their version of this flywheel moving in the last few years is Formula 1. F1 has always had a rusted on core, but it struggled to resonate outside of this core and outside of Europe. Drive to Survive helped build awareness outside of the core, and this has managed to convert into higher viewing, attendance, revenue and improved product. As the product evolves, more and more people are being added as fans. It shows it can be done, but it requires a creative approach.

My view is basketball as a sport has the fundamentals for the above 5 areas to be true. Basketball is a highly valuable asset hiding in plain sight. For the 1.3 million people involved in the sport, it’s a highly compelling, valuable part of their life. For everyone else it’s relatively obscured. Somewhat visible, but not top of mind.?

The NBL is ready for prime time. And in a market where there are a heap of streaming platforms and networks looking for a long term hit, basketball has the potential to be a breakout. It's not a matter of if, but when.