In leaving RSN model behind, Kraken are confident in new economic model after deal with Amazon
A look at how one team is leaving the RSN model behind.
The Seattle Kraken are about to have one of the NHL’s most enviable local broadcasting setups.
Starting next season, non-national TV Kraken games will be available on over-the-air broadcast partners and streaming on Amazon Prime Video in Washington, Oregon, and Alaska (the three states Seattle owns exclusive local NHL broadcast rights).
So for any Prime member in those states, Kraken names are now effectively free to stream.
In the current NHL era, one of the most difficult things, particularly in American markets, has been how to actually watch your local team as regional sports networks have been in a downward spiral.
RSNs used to be key to the local economics in the NHL. The deals, which used to average around $20 to $25 million across the league, were a big part of the individual teams being in the black each season.
But RSNs, and this impacts all North American major pro sports beyond the NFL, have become a losing proposition. There have been carriage disputes, most notably with Bally Sports-branded networks, and multiple NHL executives have called this one of the most difficult challenges, business-wise, teams have ever faced.
Some teams have been held hostage by the situation, others have been able to use an early escape hatch to find alternative solutions.
In Seattle, the Kraken were coming to an end of the current term of their deal with Root Sports, an RSN primarily owned by the Seattle Mariners, and decided it was time to look into a solution with Amazon.
Amazon CEO Andy Jassy has a minority stake in the Kraken ownership group, and Amazon had been pushing into live sports programing. Most notably, Thursday Night Football games are now streamed on Amazon, and in Canada Monday night national games next season will be steamed on the service.
“You know at the end of the day our priority here was to get the game to as many fans as possible through as many channels possible to hit the demographics for every possible consumer,” Kraken COO Victor de Bonis told me Thursday. “We want to be able to tell our fans, ‘hey actually watch our games, they are easy to access,’ and with Amazon, it’s a service that pretty much everyone in the Pacific Northwest of the United States already has, so we aren’t asking our fans to spend any more money to watch the team.”
For the fans without Prime, de Bonis said the over-the-air offering was important. Most of the broadcasts will air on KONG-TV in Seattle. Some of the games will be on KING, the NBC affiliate in Seattle, with games also broadcast on in Portland, Oregon (KGW), and Spokane, Washington (KREM). The Kraken are currently working to find more over-the-air partners in Oregon and Alaska, de Bonis added.
There won’t be any changes to the on-air talent for Kraken broadcasts — in the United States NHL local broadcast talent are typically employees of the team, not the station, but the team will take over back-end production from Root Sports.
One of the worries NHL teams have had about leaving RSN deals has been losing the guaranteed rights-holder fee. It’s a grand plan to run your own broadcast, until you start thinking about making at least a $20 million profit on it to make up for the rights fee you used to receive.
de Bonis didn’t reveal how much Root was paying the Kraken nor did he give specific financials of the Amazon deal, but he expressed that in the long-run, Seattle views this as a chance to make more money than before.
“It’s a different economic model compared to the RSN model,” de Bonis said. “There isn’t a sub fees from the cable companies with the over-the-air model. It’s more of an advertising revenue stream. And what ends up happening here is when you release the restriction you had on fans being able to watch, the ratings will go up three or four times what they normally would be.
“So that means the economics are stronger when it comes to advertising, especially with four to five times more people watching. At the end of the day, and we’ve done the math, the math works out. More people are gonna be watching, more people are gonna come buy tickets, be part of the live experience. Sponsors are gonna be happier, and willing to invest more. In each facet of the economy, we believe this will work better.”
Other teams have tried similar models. In Vegas, for example, the Golden Knights are available on over-the-air broadcasts, but also available on a team-controlled streaming platform for a separate fee.
Other teams have looked into the a la carte option for games, which de Bonis said didn’t really appeal to Seattle if they could land an option that was “essentially free,” with such a large Prime market share.
It’s something that other teams will be watching closely next season, particularly those currently doing business with the Bally-branded Diamond sports-owned networks.
For Kraken fans, it’s a win-win scenario. And the question of, “how do I watch the game?” now has a much simpler and easier answer.
The NHL truly needs to figure something out for this. As an out of market fan, I usually am okay with my ESPN+ subscription, unless the game is an NHL Network exclusive or some other weird instance. It would be wonderful if ALL the games were available on a single platform though. I would be fine paying for it, but holy crap, just make it available.
Love these sports business/ economics articles!!!