Negotiating Media Rights Deals: 10 Considerations for Emerging Sports Properties

Congratulations—you’ve done the hard part: your emerging sports property has reached an understanding with a third-party distributor (e.g., a streamer or sports network) to make your games or events available through their platform. You’ve even agreed upon the principal financial terms and the length of the deal.

Now the other side sends over the contract.

What do you need to consider before sitting down to negotiate?

Decisions around ownership, use rights, exclusivity, production responsibilities, distribution obligations, sponsorship rights, talent, and future negotiation rights can have lasting implications for growth, monetization, and long-term control of your property.

Let’s take a closer look at 10 legal and commercial issues to consider evaluating before you sign.

1. Ownership.

Retaining ownership over content can be critical to the long-term business strategy of an emerging sports property. Ownership preserves your right to control and license out your content in the future. Without it, someone else could be selling your rights and your brand.

To ensure your ownership over your content, the contract will usually need to address this matter.  Absent a written agreement on that issue, the company producing the content will be deemed the copyright owner. ¹

• • If you produce the content with the help of a 3rd party production company and simply deliver it to the distribution partner, ownership is less likely to become a point of negotiation in the distribution agreement (although it remains important to address in the production company agreement).
  • If the distribution partner (e.g., a sports network) produces the content, you may want to address whether the content is being produced on a “work made for hire” basis, which means that you – and not the distribution partner – are the author and owner of copyright in the content.  Again, absent a written agreement on this subject, the company producing the content will generally be deemed the copyright owner.

You might be surprised to learn that in the early days of sports telecasts, many of the major sports leagues and teams did not take care to add this important provision to their agreements.  Presumably, nobody foresaw the value that this content would have.

2. Use.

While ownership matters, use rights are equally important as they often determine who captures value from the content over time.

Distribution partners may seek broad rights to use content across existing and future platforms (even in perpetuity), including the right to license games, events, clips, and highlights from the content to third parties.

Since you are probably looking for all the exposure you can get at this stage, broad use rights for the distributor may feel like a worthwhile tradeoff. However, they are still worth evaluating carefully, including:

• • License term
    Will use rights last indefinitely or only for a defined period, such as year or for the remainder of the season?
  • Territory
    Does limiting distribution by geography preserve opportunities future expansion (e.g., license internationally)?
  • Clips and highlight reels
    How can clips be used by the distributor (e.g., only as part of general news or highlight type programming)?
  • Third party licensing rights
    Will licensing rights be reserved for you? While most distribution partners these days want rights for all platforms, it may make sense to limit certain uses. For example, the sports network could be given the right to make the content available using whatever technology or platform it wants, but its distribution must be part of an network-branded service (or as it airs on a particular network service) and cannot be distributed via TikTok or Facebook unless it is part of a full linear stream of the network).

At this stage, broad exposure may be an important objective. At the same time, preserving some flexibility and control for the future may create additional options as you grow. Even if rights are granted broadly, a finite license term can help ensure that the grant will come to end, providing you with an opportunity to start fresh – that is, assuming you are the owner of the content (see above).

3. Exclusivity.

This is often a heavily negotiated elements of a distribution agreement.

Exclusivity can be granted in any number of ways:

• • Live vs. non-live
    A distribution partner may receive exclusive rights to a live-stream or telecast of your event, but you retain the right to distribute the event on a non-live basis.
  • Duration
    Exclusivity is tied to a specific time frame (e.g., only during the live event, for the first 24 or 48 hours post-event, or some longer period of time).
  • Territory
    Rights may be exclusive for a specific geographic region, allowing different distribution arrangements elsewhere.
  • Full vs. partial program
    A distribution partner may be given exclusive rights to the distribute the program or event in its entirety, while you retain the right to distribute clips (e.g., either during the program window with some limits or after the program window has closed).
  • Specific vs. broad
    Exclusive distribution rights may apply to a specific game or event rather than to all of your games or events.
  • Third party distribution vs. own channel
    You may be willing to restrict 3rd parties distribution for a particular period of time, while preserving the flexibility  to publish the program or clips on your own platforms.
  • Coverage Access
    A distribution partner producing the program may seek exclusive recording access, while you might want to preserve the right to have others there for news coverage or to capture different types of content (social media content).

As you consider these issues, remember that nobody is going to be as invested in promoting your own content as you are.

4. Production Responsibility.

Production can be one of the most significant cost and operational considerations in a distribution agreement. Deciding who will produce the content and bear the associated costs, either you (likely through a 3rd party production company) or the distribution partner, is typically addressed early in the process.

• • If the distribution partner is producing the content:
    In addition to addressing ownership and ensuring production is done on a “work made for hire basis,” allocation of roles and responsibilities is a priority. Usually, the sports property is responsible for managing game or event operations, while the distribution partner is responsible for production. That said, you may still want to have some input on how your property is being presented. Other operational issues include who will bear the cost of power, lighting, and other production-related expenses, as well as access and venue requirements, which may depend upon the terms of your specific venue agreement.
  • If you are producing the content:
    Understanding the distribution partner’s production and technical delivery requirements can help ensure your content can be delivered as expected. If a third party production company is engaged, you generally want  the two agreements to align – that is, that the obligations of production company meet the obligations imposed by the distribution partner, including applicable technical and delivery requirements.

5. Distribution Commitments.

At this stage, exposure may be your number one priority. If so, it is important to consider how those rights will actually be exercised:

• • Does the distributor have the right to distribute your content but no obligation to do so?  If so, what happens if the distributor simply warehousing your content or only makes it available in a hard to find manner?
  • What minimum distribution commitments can be put in place? (e.g., a promise to air live or on a particular network or platform)
  • Are the distributor’s exclusivity rights conditioned on meeting certain distribution expectations?

6. Sponsorship and Entitlements.

Generally, television networks and other distribution partners make back their investment in programming through the sale of advertising and other commercial inventory.  As a result, distribution agreements often allocate rights to sponsorships, telecast enhancements, advertising, and other monetization opportunities. Those rights, however, do not always operate independently from existing sponsorship arrangements.

Relevant considerations include:

• • Do you want to preclude the distributor from selling sponsorships or telecast enhancements that conflict with your existing corporate sponsors? For example, if GM is your exclusive car sponsor, you may not want the telecast of your event “brought to you by Ford.”
  • Maybe you just want the distributor to approach your sponsors first before selling more broadly?
  • If your deal is a time buy (where you are essentially paying for air time), are sales rights clearly allocated between the parties, and how you can monetize the inventory that you have retained?
  • If both parties have the right to sell commercial inventory, are there coordination mechanisms in place to reduce duplication and confusion in the marketplace?

7. On-Camera Talent.

You may not (yet) have the leverage to approve the distribution partner’s on-camera talent selections (e.g., their announcers). Still, recognizing that their talent arrangements can impact your usage and ownership rights, you may wish to consider:

• • Assuming you have the right to distribute (e.g., air) the program or license additional distribution rights to third parties, does the distribution partner’s deal with on-camera talent support those rights as well?
  • Do you have the right to consult on their choice of talent? This is especially important when familiarity with your sport, audience, or property may influence the quality of the broadcast.

8. Representations and Warranties.

It’s easy to overlook these seemingly “legal boilerplate” provisions, but they merit your attention because of their broader business implications. Among other things, they will help to answer:

• • Has the distribution partner secured all the necessary rights to produce and distribute your content?
  • Are additional third-party approvals, consents, or payments required?

For example, if the program is being created on a “work made for hire” basis, it is generally the responsibility of the entity producing the telecast to have the necessary agreements in place with all those involved in the production so that they can confer those ownership rights to you.  You may want to confirm whether they are willing to represent and warrant this to you.

9. Rights of First Negotiation and Rights to Match.

These “future rights” provisions often come up in media rights and sponsorship deals, but they can create different commercial outcomes.

• • Rights of first negotiation (ROFN) provides the distribution partner with the first chance at a future deal, but once that exclusive window is over, you can sell to others without the need to come back to the existing distribution partner.  In setting the timing for a ROFN, you will want to consider when you need to be in market looking for a new partner if a renewal deal with the incumbent cannot be reached.
  • Right to match provisions, on the other hand, give significant leverage to the incumbent and can complicate future negotiations with third parties.  This is because, if there is a right to match, then before going to a new partner, you will need to bring the proposed deal back to the incumbent to match. In practice, such rights have proven to be a good source of future lawsuits (see the recent spat between the NBA and Turner Sports).  They also create disincentives for the incumbent to give you their best offer because they know that they can always match later.

10. Date and Location and Force Majeure.

Things happen—whether that is a weather event, a natural disaster, a public health emergency, or something else. Since media arrangements are usually built around assumptions regarding timing, location, and even availability, it is important to address how unexpected changes in circumstance may impact your obligations.

• • Is your deal contingent on a particular venue, time window, or certain date?
  • What happens if, for reasons beyond your control, that date, time or location have to change?
  • Will you be held in breach of the agreement?

As an emerging sports property, distribution may feel like the finish line—but in many ways, it is just the beginning. The terms you negotiate today can influence how your content is created, distributed, monetized, and expanded over time.

While every arrangement is different, approaching these issues thoughtfully at the outset can help you maximize exposure today without unnecessarily limiting future opportunities.

Jonathan Galst is a Partner at Outside General Counsel and has years of experience negotiating all sorts of media rights deals (as well as other commercial agreements) for the NFL, the NBA, HBO Sports, and now various sports clients, particularly emerging sports properties.