Tony Wible on Disney: NBA costs ESPN

Analyst Tony Wible downgrades Disney stock in response to “a massive increase in NBA costs.”


As NBA training camps open Tuesday, one of the league’s most important players has already been placed on disability.

Drexel Hamilton analyst Tony Wible downgraded Disney stock on Monday in response to “a massive increase in NBA costs” for ESPN.

Disney’s deal to televise NBA games, with its increase in step-up costs over last year, could shave as much as 5 percent off pre-tax profits.

ESPN and Turner Sports renewed their TV deal with the NBA for $24 billion in October 2014.

The agreement, which takes effect in October and lasts through the 2024-25 season, works out to $2.7 billion a year — an annual increase of 190 percent over the $930-million-a-year agreement it replaces.

The media-rights windfall has created a new financial reality for the NBA, most notably by boosting the salary cap for each team to $94 million.

The $24-million increase from last year’s cap — the biggest jump the league has seen — has, in turn, created sticker shock.

On July 1, the first day of free agency for eligible NBA players, Mike Conley re-upped with the Memphis Grizzlies for five years.

His $153 million contract was the richest by total value in NBA history, according to ESPN Stats & Information.

And its annual salary of $30 million-plus put him in a league with Michael Jordan and Kobe Bryant — NBA players who, unlike Conley, had at least made the All-Star team.

Photo by Paul J. Bereswill
Article by Richard Morgan
View the original article in the New York PostAdditionally, his expertise was reported on The Motley Fool and CNBC.

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