Phoenix Suns and Mercury Governor Mat Ishbia discusses his industry-shattering move of ditching Bally Sports for a free local model.
Since his purchase of the Phoenix Suns and Mercury became official less than three months ago, Mat Ishbia has made two industry-changing moves. First, he traded for Kevin Durant. Then on Friday, the organization announced that the two teams are ditching their local regional sports network and airing games locally for free.
The first-of-its-kind deal with Gray Television Inc. will provide access to roughly 2.8 million households in Arizona, tripling the audience the Phoenix clubs reached during games broadcasted by Diamond Sports Group’s Bally Sports. Their contract with Diamond Sports Group expired following the first round of the NBA playoffs after their parent company filed for bankruptcy in March. Ishbia will also work with technology company Kiswe on a direct-to-consumer subscription streaming option for those outside the local market.
“It’s a great thing for our fans and our community, and I’m really excited about it,” Ishbia told Boardroom. “I’m happy they really all embraced the news and are excited about it themselves.”
In a conversation with Boardroom on Friday, Ishbia discussed ditching Diamond Sports Group, the RSN model being in jeopardy, whether other teams may follow his lead, and an update on the Suns’ plan to bring a G-League team back to Arizona.
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SHLOMO SPRUNG: Was the intention always to part ways with Diamond Sports Group, which is in financial peril?
Mat Ishbia: The goal has always been to do right by the fans and the community. When there was an opportunity to deliver this to the Suns and Mercury organizations, to 3 million households instead of 600,000 to 700,000, and do it for no cost to them, it was an easy decision. It wasn’t necessarily about the situation [with Bally Sports]. Our contract was up. So we were able to go find a new partner or do whatever we had to do. But we wanted to do what’s right for our fans and our community. That’s what the whole strategy was around and where we ended up.
SS: Were there any discussions with Diamond Sports Group about renewing your contract?
MI: I wasn’t involved in all the discussions. There were a lot of people reaching out to us that wanted to be involved with this opportunity. But at the end of the day, it came down to what was best for the fans and the community and how do we pull it off and figure it all out together. I don’t know where Diamond fits in. I read something today that they maybe aren’t that happy about it. But the reality is we focused on our fans and that’s where we ended up.
SS: When did you start thinking about a model that both goes back to the days before cable where you watched all your local teams’ games on air, and a direct-to-consumer model that will bring that access to fans all around the world?
MI: I’ve thought about it since I’ve been a fan my whole life. I’m here in Detroit and I’ve seen the world and I’ve seen that not everyone can afford it. And as the world’s changing and everyone in the world knows that there’s less cable and more Netflix, Hulu. So realizing that the world’s changing and you have to evolve with the times. And the reality is with all the content out there, how can I make it so that our teams, the Mercury and the Suns, are available to more families and more households? To more fans, and not less? We were in a very good position that our contract was up and came up with a solution that was best for our community and fans.
SS: Are there estimates on how much money you guys will lose on this? You said it’s not about the money, but I do have to ask.
MI: Honestly, once we made the decision that this was the best thing, it wasn’t about the money at all. The reality is that part of this partnership is we know that if we create a big fan base, we have some benefit on advertising. If we create a lot of interest for people to watch the Mercury and the Suns and we put a great product out there, maybe we lose some money, maybe we make some money. It’s not about the money. It really wasn’t. That’s how that actually is. I’m not saying this disrespectfully, but I have a lot of money. And I’ve made a lot of money running businesses. And the way I’ve made my money running businesses is doing right, taking care of people, focusing on success and winning. And money will follow. Money will follow on this one, whether it’s merchandise, or more fans in 18 years. I don’t know what it is. But if it doesn’t follow, it still feels pretty good to take care of the fans and do what I told everyone we’d do, which is to take care of the community and fans.
SS: Is there an estimate on pricing of a direct to consumer model?
MI: I don’t know it at all. Maybe our CEO Josh Bartelstein might know some of it. I haven’t spoken to him at all about the pricing around it. I know we’re launching it soon for the Mercury and their season, but I’m not sure at this point.
SS: You touched on Diamond Sports Group not being too happy and possibly threatening a lawsuit. Have you heard from them?
MI: I don’t even know what they’re saying or what they’re doing. The reality is I’m not concerned about it at all. I’m concerned about doing right by our organization and by our fans, good things will happen. I’m not concerned about what their positioning or their posturing is when I know we’re handling things the right way.
SS: Obviously the RSN model is in peril. Do you see other teams following your lead on this type of model?
MI: Cable subscriptions are going down in the country. And so you don’t want to have less fans watching your product. So how do you fix that? How do you solve for that? So the reality is yes, I think others will follow. I think this is the way it’s going to go in the future. We’re going to change the game a little bit. A little more skin in the game, and focus on fan experience and focus on getting the NBA‘s brand out nationwide and globally, and maybe you have to start doing things a little bit differently. We’re trying to be a little bit of a leader on this and we’re excited about it.
SS: What do you think this free model will mean to the next generation of fans?
MI: I think it’s going to create more fans, more engagement, and more excitement in being able to see more games. It’s going to make more people love the game of basketball, which I love. There’s nothing but positives coming from this. The next generation will have access to NBA and WNBA games at a level that hasn’t been seen in 30 years. And I’m excited about that. When I grew up 30 years ago, that’s when I think the RSN world started coming in. I fell in love with the game by watching the teams play and cheering for my favorite players. Now with content and social media, there’s even more out there. So to have it all over the internet but not have people be able to actually watch the game is crazy. So that’s going to change, and I’m excited about the next generation, and even the current generation, everybody, to have access.
SS: The Suns are currently the last NBA team to not have a G-League affiliate. You’ve mentioned in the past that you want to change that. Any update on that front, whether that’s back in Northern Arizona or elsewhere?
MI: No one has actually asked me that question directly. 100% I will have a G-League team. We were trying to get it done for this upcoming season, but it looks like the timing of it will be for the following season. We’re doing that as soon as we can. I’m trying to get it ready for next season, I just don’t think it’s going to work with getting the location and everything set up. But we are 100% going to have a G-League team here in Phoenix, and it’s going to be in the local community, not seven states away.
