Fox Aligns with The Stars Group, Plans to Facilitate Sports Betting Through Fox Bet App

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Fox Sports and The Stars Group (TSG, dba BetStars in N.J.) have announced the formation of a JV (entitled Fox Bet) that will “create apps for both real-money sports wagering and free-to-play contests.” The 10-year agreement (which includes an option for an additional 15 years) positions Fox as the first legacy media company to put their name on an entity facilitating sports gambling transactions in the U.S. As part of the deal, Fox will pay $236 million for a 4.99% stake in TSG; Murdoch’s empire will have the opportunity to increase its interest in the Canadian gaming and online gambling company – up to 50% – prior to the completion of the partnership’s initial 10-year term. Fox Bet’s debut products are expected to be available “by this football season.”

Howie Long-Short: If your finger is on the pulse of the legalized sports betting industry, Wednesday’s announcement wasn’t a surprise. Eric Ramsey (LegalSportsReport.com) said “this sort of union was the natural next step in the overlap between sports media and sports gambling and it’s likely to be the first of many deals we’ll see like it.”

The entities involved have also long been on the radar of industry insiders. Alun Bowden (senior consultant, Eilers & Krejcek Gaming) wrote “a major media deal was trailed heavily by TSG. [The possibility] was mentioned in the last couple of [quarterly earnings calls and] there were only 3 companies it could have been.” JohnWallStreet pegged Fox to be one of them back in late January (Early Entrants Vol. II), when it reported that while talks were preliminary it appeared there would be a future where New Fox married live rights with sports betting.

TSG is the most valuable publicly traded online gambling company in the world (worth +/- $5.5 billion, shares spiked +22.5% on the news), but they’ve struggled to gain traction with sports betting here in the States (their poker and casino products have been relatively successful). A limited footprint (they’re currently only licensed to operate in NJ, though they do have access to the 13 states where Eldorado Resorts maintains licensure) and the inability to make their product “American friendly” have prevented the company from take a stronghold in this market. While Fox can’t solve either of those issues, they’ll certainly help with brand recognition (Fan has more on this below); critical when going up against household names like DraftKings and FanDuel.

The Stars Group has “a proven media strategy with Sky Sports in the U.K.”, so that’s the model they’ll be looking to replicate here with Fox Bet (in terms of pricing, marketing & advertising), but there are significant differences in the two markets (aside from consumer habits and gaming regulations); most notably “Sky Sports was the exclusive broadcast provider of the Premier League and Fox doesn’t have that kind of captive audience for any American sport.” That doesn’t mean Fox Bet is bound to fail, but it will have to work harder to capture the attention and earn the loyalty of the American sports fan.

One component of Sky Bet that should resonate with the American audience is their free-to-play Super 6 (pick 6 EPL games) contest. Ramsey said, “it’s not difficult to imagine a free-to-play NFL pick’em contest with a $250,000 or $500,000 prize pool. That type of product would be very appealing to the casual sports fan and a big asset for them as an operator.” The Fox Bet plan is simple – build an extensive database of prospective customers nationwide so that as states pass sports betting legislation, they can transition those playing free games over to the paid app.

Fan Marino: While Fox will be the first legacy media company to act as an operator, lottery suppliers, social gaming companies and digital media players have been flocking to the space in numbers. Fox has a leg up on all of them with a brand awareness amongst U.S. sports fans that Ramsey says exceeds “even the largest of gaming companies”; and perhaps even more importantly, it has “the distribution channels to get Fox Bet products in front of potential bettors.” As other outlets are forced to “purchase ad space if they want to be on television and radio, Fox has those native channels available to it.”

If you take the premise that Fox is positioned to succeed because they own the requisite distribution channels to reach the target consumer, it’s logical to reason that the 22 RSNs they sold to Disney would have been valuable assets to Fox Bet; “particularly those networks in the Carolinas, Tennessee and Indiana, states on the cusp of legalizing [or offering] sports betting.” Sure, they’ll be able to leverage their national platforms, but as Ramsey explained, RSNs “cater to a hardcore, dedicated, localized group of fans – the ones most likely to wager on games” – a valuable demographic to a sports betting company.

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Nebraska Athletics Funding Academic Scholarships for Non-Athletes

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While most collegiate athletic departments are financial drains on their Universities, the athletic department at the University of Nebraska is one of “about two dozen public D-1” schools that operate without assistance. It’s commonplace for “institutional funding, state appropriations or student activity fees” to prop up those operating at a loss, but at Nebraska not only is the athletic department self-sufficient, it contributes to the school’s academic mission by funding scholarships for non-student-athletes; 20% of the 20,000 students enrolled on NU’s Lincoln campus received Husker scholarship money within the last 12 months. In addition to funding $5 million dollars’ worth of academic scholarships, Nebraska athletics gave $5 million to the University’s chancellor to help cover university operational expenses (think: support for rec center, academic support).

Howie Long-Short: “It’s not unusual for athletic departments to fund academic scholarships” or to give back to the University, but “it’s a bit of a shell game” at most institutions; “if the athletic department wasn’t receiving out-of-state tuition waivers, they wouldn’t be operating at a profit.” At Nebraska, athletics are self-funded – so the gifts given are legitimate.

Nebraska’s athletic department is unique in that it’s one of just a few schools to have consistently generated a net surplus over the last 20 years (reported $6.6 million in operating profit in ’18). NU’s standing as the only school in the state with a D-1 football program and its ability to sell tickets “in significant quantities to both volleyball and wrestling” (in addition to football, basketball, baseball & softball) enables its athletic department to generate more revenue than most.

NU athletics’ ability to “cash flow improvements” over the last 2 decades (along with some assistance from the city) allowed it to build sporting venues without taking on long-term capital facilities debt; that’s noteworthy because “there’s a lot of schools out there with $15 million or $20 million of annual debt service choking them.” While athletic departments at those schools are tapping into their respective University’s budgets (think: UConn, USF), Nebraska athletics maintains a “beautiful balance sheet” that allows for the consistent transfer of funds to academics.

A significant portion of the money being given back to the University comes from NU’s stake in the Big Ten Network – now more than $50 million/year. That figure will continue to rise, so the University should be able to fulfill their “long-term commitment” to the scholarship program.

The P5 A.D. referenced cited three developments over the past 2 decades that have increased revenues, which set off a costly facilities arms race and ultimately drove schools to take on 30-year debt issuances on buildings that are now too large (with ticket demand down); “the development and aggregation of media rights and multimedia rights at the campus level (and remember, Nebraska’s would have been particularly valuable with football winning multiple championships in the mid-90s), the peak demand for season tickets and priority seating, and of course the media rights explosion at the conference level with the cable bundle growing in value.” A “renewed emphasis on equality” – which spurred the spending of “millions of dollars on new opportunities for women” – and a coaching salary structure that has outpaced revenues – the result of a trickle-down from pro sports flush with media rights cash – also help to explain why athletic departments making more money than ever are unable to operate at a profit; “it’s embarrassing, but it’s the truth; they’ve spent every dollar.” 

Fan Marino: It is possible for schools to cut back on spending, but the A.D. we spoke to cautioned “beware of taking money that needs to be reinvested in coaching salaries, in facilities or to keep the debt service low; you run the risk of turning athletics back into a cost center [as it was prior to the media rights explosion]. It would be nice if there were institutional policies that coaches couldn’t earn more than the school president and everyone would adhere by them, but at most places that’s not a realistic goal.” Of course, that doesn’t mean schools should be doling out $500K/year contracts to defensive backs coaches. “Those are sunken costs.”

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Proliferation of OTT Streaming Services Spur the Formation of Team/League Media Divisions

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Back in August, Juventus F.C. introduced an in-house OTT platform entitled Juventus TV. The service – which costs +/- $4.00/mo. and replaced the club’s official television channel – offers fans exclusive access to interviews, press conferences, and BTS footage, but does not include live game action.

Then in February, La Liga North America – a JV between the Spanish fútbol league and Relevant Sports Group – announced it would spend $10 million over the next 3 years to build out an in-house media business. The Spanish soccer league is determined to grow its popularity in the U.S. (already its largest market outside Spain), with its current domestic broadcast rights deal (see: beIN Sports) expiring in 2 years.

ONE Championship, with the launch of ONE Studios, is the latest pro sports team/league to introduce a media arm (or an owned outlet) tasked with the development of original content. The Singapore-based MMA promotion is using “the power of media and magic of storytelling” to get fans around the world emotionally invested in their fighters (so they’ll buy their fight cards).

Howie Long-Short: The concept of teams/leagues controlling their own I.P. and dictating their own message is not a new one – NFL Films was founded back in 1962 and teams have had content creators on staff for years – but the trend of teams/leagues forming formal media divisions destined to be profitable businesses has only developed over the last couple of years. TeamWorks Media co-founder and CEO Jay Sharman explained that “prior tothe introduction of OTT streaming, programming availability was limited; there were a finite number of hours an operator had to work with on television.The explosion of companies trying to build ‘networks’ that need low cost shoulder programming has given these team/league founded media properties a reason to exist.”

Technological advancements, which have drastically lowered the costs associated with shooting, editing and storing video, are another key driver of the trend. Start-up costs used to be prohibitive – cameras alone would cost $60,000+ – but Sharman says, “creators can now put out professional quality content for less than $5,000.”  

It’s wise for teams/leagues to build out in-house media divisions in this rapidly evolving media landscape. As Sharman noted, “they all have owned platforms and the content they’re capable of creating [because of the unique access] is highly desirable to media rights holders and distributors alike.” Failing to serve up targeted content to the existing fan base – and to potential fans – is also a potentially critical mistake; “you need to satiate your core audience to keep them engaged and ingratiate yourself to a new audience if you’re going to grow. Teams and leagues are betting that if they launch content arms “there will be more opportunities to reach new viewers and to turn those individuals into paying customers.”

Teams/leagues believe that shoulder programming helps to “engage fans at a deeper, more meaningful level and to convey the context needed to develop an emotional connection to a team or player”, but Juventus has managed to turn the content it’s generating into a revenue stream. Sharman believes the Juventus TV model is one more teams (think: NFL, no local rights issues) will follow as more video is consumed digitally. The challenge though for teams will be to “create programming that remains authentic. If all of the drama has been removed, fans won’t want to watch it and the clubs will have trouble selling it.”

Fan Marino: La Liga North America and ONE Championship are taking very different approaches (and using different distribution platforms) to developing fans in this market. La Liga’s domestic media strategy is focused on the production and distribution of short-form daily video content and fan events, while ONE Championship is determined to focus on feature films and TV shows (for distribution on Netflix, YouTube, Amazon and Facebook). Neither is “right”, but they’re going to reach different demographics and teams/leagues need to have a different strategy for each of them. Sharman professed “it’s like the old marketing bullseye. You have the inner core die-hard fan with an insatiable appetite for programming, your semi core fan who will watch when the sport is in season and the casual fan who will watch during the playoffs or for a human-interest story.

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Sinclair Shares Spike +35% with Acquisition of Fox RSNs

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The Walt Disney Company (DIS) has accepted Sinclair Broadcast Group’s (SBGI) $10.6 billion bid for the 21 Fox regional sports networks (not named YES Network) and Fox College Sports. Sinclair (the largest operator of local TV stations in the country) plans to acquire the cable assets “via a newly formed indirect wholly-owned subsidiary” named the Diamond Sports Group. Byron Allen – owns The Weather Channel – has purchased a minority stake (and will be a content partner) in the newly formed holding company. Sinclair CEO Chris Ripley said that the deal would “more than double SBGI’s annual revenue to $6.7 billion and triple its EBITDA to $900 million” – which explains why shares soared +35% to an all-time high ($60.48) on Monday.

Howie Long-Short: Not everyone is bullish on Sinclair’s purchase. BTIG media analyst Rich Greenfield wrote that “most, if not all of the [RSN] earnings could be wiped away over the next 4-5 years. It is no wonder that every major private equity firm pulled out of the process.” Octagon SVP (global media rights division) Dan Cohen respectfully disagrees with that assessment saying Greenfield is looking at the deal from the perspective of “today’s products, today’s rate of cord-cutting and today’s revenues; he’s not considering the expected changes in the marketplace that can propel the businesses forward. Sports betting and digital broadcast rights – which will help to balance out the linear offering – will play big roles in the years ahead.” Historically, RSNs have offered little beyond the game, pre-and postgame coverage.

Cord cutting and changing consumption patterns are undeniably, negatively impacting the cable industry, but as Cohen emphatically stated “live sports [and news] remain the most compelling programming a broadcaster can own and live community based viewership remains very healthy. The live broadcast of games will take different forms, but it won’t be going away.” Ripley agreed saying “no matter what happens to the cable bundle, streaming, digital — these games will have a place in any ecosystem.”

A lack of competition enabled SBGI to take down the lot of RSNs for less than initially projected. Without “the new digital tech giants” (think: Amazon, Facebook, Twitter) involved in the bidding process and companies like Comcast and Fox content to sit on the sidelines, DIS was unable to command in return what it paid to acquire the cable networks (lost +/- $6 billion). It’s not that the tech giants weren’t/aren’t interested in local sports programming – they simply “lack the technological capabilities to effectively monetize local advertising; which explains why all of the rights they’ve chased to date (yes, AMZN’s minority stake in YES is the exception) have been national or global in nature.”

Collectively the 21 RSNs hold the local broadcast rights to 14 MLB, 16 NBA & 12 NHL clubs. Maintaining those rights is crucial to SBGI’s long-term success and in a rapidly changing sports media environment there’s certainly no guarantee the company will be able to hold on to them beyond the expiration of the current deals, but with a weighted average of 11 years remaining on each of the team agreements and staggered expiration dates, SBGI does inherit a level of security.

RSNs carry amongst the highest retransmission fees on cable television and some will continue to rise with escalators in their current deal increasing payments to teams, so the possibility that SBGI runs into carriage disputes – much like SportsNet LA has in Los Angeles – is another potential threat to the business. To avoid the same results, Sinclair plans to take a different approach to negotiations; “they’re talking about tiers, bundling (sports with local news) and discounting based on the amount of programming a distributor will take on.” 

Moving forward Cohen believes that the leagues and teams themselves pose the greatest threat to SBGI’s ownership of the broadcast rights. “There’s an inherent interest on the part of content developers to own the pipes that their content flows through and the projected meteoric rise of sports gambling has teams and leagues wanting to retain a bigger slice of the pie.”

That doesn’t necessarily mean that Sinclair is going to be left on the outside looking in during the next round of local rights negotiations. Cohen says “it’s one thing for a team to say they want to take the rights back, but it’s another to become a DTC technology company; streaming sports remains a challenge. The alternative is to reacquire the rights and then re-sell them. But if the marketplace doesn’t shift much, there’s no one to sell them back to except Sinclair” (or a competitor like Comcast).

Fan Marino: As the runner-up for the RSNs, it’s unclear where Liberty Media goes from here. Cohen said, “they’re not going to buy local stations – if they were, they would have bought Raycom with the Braves in the Atlanta market – they didn’t get the RSNs, the rights to the WWE or the UFC.” One possibility is that they “continue to buy up more properties and own the IP.” NASCAR is on the market, but it’s not like Liberty has been successful with the first foray into motorsports. As we wrote back in January, the company is looking to decrease their stake in F1.

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Wall Street Titans Fund Largest Grassroots Inner City Wrestling Program in U.S.

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Beat the Streets Wrestling (BTS) – the largest grassroots inner city wrestling program in the United States – and USA Wrestling will hold their 10th annual benefit competition (Grapple at the Garden) at the Hulu Theatre at Madison Square Garden this evening. Thirteen matches are scheduled, several will feature former NCAA champions against current members of the U.S. World Team. The money generated from the non-profit wrestling showcase (goal is $1.2 million) will go towards covering expenses associated with youth wrestling in New York City.

Howie Long-Short: The Beat the Streets Benefit competition (began in ’10) was the brainchild of former Princeton wrestler and Wall Street titan Mike Novogratz (formerly: Goldman Sachs, Fortress Investment Group) and long-time coach Al Bevilacqua (formerly: Massapequa H.S., Hofstra). It was their belief that to grow the sport, it needs to gain popularity within urban centers with a demographic “atypical to the wrestling community; most wrestlers are from rural blue collar towns, not cities.” In 2005, BTS and the NYC PSAL formed a partnership that led to the introduction of 40 new programs across the city (there were 25 at the time) and as BTS executive director Brendan Buckley explained “from there it just continued to grow and grow. Now there are +/- 150 programs, a girls-only league and a league for middle school age kids.”

The money BTS raises – most of which comes from their annual benefit competition – funds all 35 middle school teams and covers many of the ancillary charges incurred by the city’s high school wrestlers. Buckley said that the organization “operates 3 training centers so wrestlers can receive year-round training and mentorship from coaches. We also cover all costs associated with tournament travel for the kids trying to pursue collegiate careers and the program includes off-the-mat enrichment, like SAT prep, too.”

Few associate urban areas with wrestling – granted, there aren’t many cities capable of raising the money needed to build the program NYC has – but “Wall Street is loaded with past wrestlers, many of whom wrestled in the Ivy League.” Those individuals remain supportive of the sport and it’s their backing that enables BTS to act on its mission to “help the city’s kids achieve their full athletic and human potential.” Buckley estimates that 90% of the $1.2 million they hope to raise this evening will come from the “New York financial services industry.” Josh Harris (co-founder, Harris Blitzer Sports & Entertainment, Penn) and Stephen Friedman (former Goldman Sachs CEO, Cornell) are among the highest profile finance executives to have wrestled at the collegiate level.

Fan Marino: Jordan Burroughs (won gold at the ’12 London Olympics) is facing Ben “Funky” Askren in tonight’s main event. Askren was a 2x NCAA champion (’06, ’07) at 174 pounds during his time at Missouri, but he’s spent the last 9 years fighting inside of a cage. After stops in Bellator MMA and One Championship, Askren made his UFC debut with a controversial first round stoppage over Robbie Lawler in March. His next fight is scheduled to be against Jorge Masvidal on the undercard of the Jon Jones/Thiago Santos PPV event on July 6 (UFC 239). Not in NYC, but want to check out the action? FloSports is broadcasting the card live.

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Early Entrants: Vol. VIII – Is the NFL “Quietly Collaborating” with the XFL?

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Editor Note: Early Entrants is a bi-weekly series of sports business “rumblings” before the news breaks.

Is the NFL “Quietly Collaborating” with the XFL?

The Alliance of American Football’s inability to secure a formal partnership with the NFL (beyond its relationship with NFL Network) led Tom Dundon to shutter the league after just 8 weeks. While the media fixated on the NFLPA’s opposition to the idea, the NFL’s lack of interest may have had more to do with the discussions they’re holding with a different upstart football league; JohnWallStreet has heard that Vince McMahon’s XFL is “quietly collaborating with the NFL on a variety of rules and technology initiatives.” There’s no reason to expect the NFL to swallow up the startup league before McMahon burns through his $500 million war chest and any allocation of players between the two leagues remains “years away”, but it’s apparent that the XFL is closer to becoming the NFL’s minor league than the AAF ever was.

The Athletic “Hemorrhaging Capital at a Faster Rate Than Ever”

The pivot-to-video was considered a failure for many sports publishers (see: Fox Sports), but The Athletic is betting that original video programming (and their new podcast network) will convert fans into subscribers. They better be right with sources telling JohnWallStreet that the company is “hemorrhaging capital at a faster rate than ever”, but we wouldn’t count on it; as one industry insider professed, “video doesn’t work without live rights” and The Athletic doesn’t have live rights.

NASCAR Envisions the Opportunity to Generate Gambling Revenues Abroad

NASCAR has formally entered the gambling conversation with Friday’s announcement of their first data partnership (with Genius Sports). Most think of NASCAR as an American racing series, but sources have told JohnWallStreet that high ranking officials within the sport believe that “gambling can be a valuable source of revenue abroad too.” The UK bettor is knowledgeable about both auto-racing and gambling and races take place at a time of day when they won’t conflict with soccer; “that leaves an interesting engagement window for the casual fan looking to bet on live racing.”

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Derby Favorite Scratched 24 Hours After Breeding Rights Sold For $22 Million

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Twenty-Four hours after Spendthrift Farm acquired the breeding rights to Kentucky Derby morning-line favorite (4-1) Omaha Beach for $22 million, the horse was scratched from the 145th run for the roses. Trainer Richard Mandellas raised concerns about the 3-year old’s health on Wednesday morning after the horse began coughing. An examination discovered that Omaha Beach has entrapped epiglottis, a condition “that compromises a horse’s ability to breathe during exercise.” It’s unclear if Spendthrift Farm was aware of the medical condition before finalizing the deal for Omaha Beach’s career at stud earlier in the week. While the ailment is not expected to be career ending (expected recovery time: 2-3 weeks), the timing of it is unfortunate; all 3 Triple Crown races will take place over the next 5 weeks. Game Winner has since been installed as a 9-2 favorite in tomorrow’s (5.5) race.

Howie Long-Short: It’s not atypical for breeding rights to be sold before a horse is retired, but it is odd that a deal would be consummated so close to the running of the Kentucky Derby – transactions typically occur before a horse’s 3rd year (those deals include contingencies for future wins) or once an owner has gained the leverage of a Triple Crown victory. Ahmed Zayat sold the breeding rights to ’15 Triple Crown winner American Pharaoh before the horse began running as a 3-year-old; bonuses in that deal brought its total value to $35 million by the time Pharaoh went out to stud. Last year, WinStar Farms waited until Justify captured both the Kentucky Derby and Preakness Stakes to sell the horse’s breeding rights; Coolmore Stud ultimately paid $75 million, including a $15 million escalator once Justify became just the 13th horse to capture the Triple Crown of Thoroughbred Racing. It’s worth noting that the price of stud rights to an elite race horse have actually declined over the last 20 years; Coolmore Stud paid $70 million ($103 million in 2019 dollars) to control the breeding career of Kentucky Derby winner Fusaichi Pegasus – after the Belmont Stakes (horse did not race) – back in 2000.

The Action Network’s Darren Rovell reported that a victory in the Kentucky Derby would boost a horse’s value at stud by “at least $15 million”, so even if Omaha Beach were to return to form in time for the Belmont Stakes (with surgery imminent he’s going to miss the Preakness Stakes in 2 weeks) the opportunity lost this weekend is significant. As for owner Rick Porter, he’ll miss out on the chance to capture the richest purse ($3 million) in Derby history. The $3 million that will be paid out is $1 million more than last year’s purse and twice as much as the Preakness Stakes or Belmont Stakes ponied up (pun intended) last year. Early returns from Churchill Downs’ (CHDN) investment in historical racing machines (think: slots with outcomes based on completed races) enabled the publicly traded racetrack and casino to “pump more than $10 million into its spring purses in the first year of operation.”

Fan Marino: This will come as a shock to many of you, but horse racing is popular with Gen-Zs (those who have been to Saratoga, Monmouth Park or Del Mar recently can confirm). It’s not the action on the dirt (or turf) that is drawing them in though – it’s the “craving for Instagram-able experiences” that is leading Gen-Zs to spend a day at the track. Mark Beal, the author of Decoding Gen-Z, said the demographic “loves the venues. They love the excitement. They love that they can dress up and socialize, but most importantly they love that they can capture it all in video and in photos and share it.”

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XFL Tabs Elevate Sports Ventures to Sell Reimagined Guest Experience

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The XFL has tabbed Elevate Sports Ventures – a JV between the S.F. 49ers, Harris Blitzer Sports & Entertainment, Ticketmaster, Live Nation and Oak View Group – to design, implement and manage database marketing and ticket sales strategies for the league office and each of its eight clubs; the league has also hired Elevate to oversea day-to-day ticketing operations within each market. Elevate CEO Al Guido said that his company’s efforts would focus on “engaging prospective fans through social and digital media” and selling those individuals on the XFL’s reimagined vision for “what the guest experience inside of a football venue should look like.” The 2-year deal between the league and Elevate extends through the XFL’s inaugural season in 2020 and its sophomore season in ‘21.

Howie Long-Short: XFL president Jeffrey Pollack said that the league intends on improving the game-day experience by delivering “affordable quality football” (no ticket pricing information has been released to date) and by “opening up points of access that bring the avid fan closer to the game.” Pollack declined to disclose any specifics, so it’s too early to tell if the XFL truly intends on reimagining what the in-stadium experience looks like, but a conversation with commissioner Oliver Luck last month indicated that the league is willing (at least on the TV side) to bring fans places they haven’t been before (think: locker room for pre-game speech).

Selling tickets to a start-up league where fans have no allegiance to the teams is never an easy endeavor – which is why Elevate was hired in the first place – but the AAF’s failure to make it through the first season won’t make their job any easier. AAF season ticket holders have been told they won’t be receiving refunds for home games scheduled after the league folded, so it’s reasonable to assume that prospective buyers may hesitate before making the commitment to purchase season tickets to another start-up football league. McMahon has a $500 million war chest and Pollack has guaranteed that the XFL would “finish its first season”, but that’s unlikely to sway skeptics; there’s no doubt Charlie Ebersol would have told them the same thing.   

Six of the XFL’s eight teams will be based in cities with warm or mild winter weather. New York and Washington D.C. on the other hand maintain average February temperatures of 42 degrees and 47 degrees, respectively. Pollack insists that football fans enjoy the cold weather and said he has no doubt fans will come out “in a bit of snow or if it’s chilly.” He cited the Green Bay Packers as a club that’s “been managed successfully in a pretty cold climate.” He’s not wrong, the Packers are among the NFL’s model franchises, but there’s 100 years of tradition there and there is no other team in the city to compete with for attention. The XFL is going to find that New York and Washington aren’t Green Bay – tickets for NFL games in those cities are plentiful come December if the home teams aren’t playing for playoff spots. Of course, the XFL doesn’t need to convince 70,000 fans to show up every week. Commissioner Luck told us that the league is basing its budget on being able to sell 20,000 tickets/game.

Fan Marino: Elevate’s ticketing sales strategy will leverage insights from various data sources to ensure the league is marketing to every prospective fan “inside of each of the local markets”. Guido said the company would “work with the venues to market to their existing patrons, with Ticketmaster to reach their existing client base of football fans and we’ll target those who have already expressed an interest in receiving information about the league.”

Guido says that part of the league’s strategy to develop fan bases within each market is to invest in and engage with youth groups, flag football and tackle football organizations. “Those are the people we’re going after. If we provide the next generation of sports fans with access to the players and the tremendous coaches we have, we can develop loyalty to the organization.”

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Nevada Sets a New Record for Monthly Handle, Legal Sports Betting Grows the Gambler Pool

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The state of Nevada “set a new record for monthly handle” in March, despite sports fans now having the ability to place bets in 7 other states. Remarkably, the $600 million that the state accepted in wagers bested its previous high by +5.4%. Sportsbooks within Nevada combined to win $32.5 million during the month (7.1% hold), also a new record in the Silver State.

Howie Long-Short: There’s a common misconception that because “New Jersey is such a strong market” (March handle: $370 million) – and 6 other states also offer legal sports betting – that Nevada’s business would suffer, but Adam Candee (managing editor, LegalSportsReport.com) says “that presumption only works if you assume that there is a limited pool of bettors. As legal sports betting becomes more readily available, the pool of participants will grow – it’s not limited to trying to bring in those currently betting in the illegal off-shore markets.”

Sportsbooks in Las Vegas are buoyed by the city’s reputation as a party destination. Nevada’s record month had more to do with “people coming in for the experience, than it did visitors arriving to place bets on games.” Unless another city were to begin offering all the entertainment and dining options that draw visitors to Sin City, it’s unlikely that the state’s operators will lose a significant portion of their business as legalized sports betting becomes more prevalent.

Candee suspects that even if sports betting expansion were to cause a decline in visitors, brand loyalty could help to offset any losses that Nevada casinos might experience; “I can tell you anecdotally that there is a lot more advertising of mobile apps in NV casinos than there was in the past. Companies like Caesars and MGM – that operate in multiple states – are really trying to get bettors to use their app when they go home to states like New Jersey or Pennsylvania [where sports betting is legal].” He’s right, the average sports bettor is not going to shop lines. They’re “going to find an app (or two) they like, and place their bets with that book. Even if it means they don’t maximize their EV or have to pay a bit more.”

When New Jersey outearned Nevada – for the first time – in January, some suspected that the state might be losing its stronghold as the country’s gambling mecca; recent comments by NJ gov. Phil Murphy – that it would occur as soon as 2020 – have only fanned the flames. Candee isn’t convinced. He notes that fragmentation is going to have a “major impact on the New Jersey market. We’re just a couple weeks out from the launch of mobile in PA and obviously if New York were to ever get its act together in terms of legalization, that too would hurt NJ licensees; a lot of New Jersey’s business is coming from folks making the trip across state lines.” It must be noted that even without NY and PA capitalizing on PASPA having been struck down, the state’s handle was just +/- 61% of the money wagered in Nevada during the month.

80% of the bets placed in New Jersey last month were done through a mobile application, while just 50%-70% of the wagers made in Nevada originated via that medium. The influx of out-of-towners gambling in Las Vegas sportsbooks (while watching the games) and a state bylaw that requires gamblers to make deposits for their mobile accounts within a brick and mortar casino help to explain the variance.

Fan Marino: The first weekend of the NCAA tournament has long been Nevada’s most lucrative 4 days of the year, but there’s been a “dramatic upward trend” in the state’s basketball handle over the last 5 years; rising from $324 million in ’15 to $437 in ’18 before climbing to $495 million this year. Candee suggested that a bounce-back in the U.S. economy (think: “people spend more in Vegas when they have more to spend“) and the “increased recognition and marketing of Las Vegas as a March Madness destination” are among the reasons for the rising handle.

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“Economic Decisions” Driving Investments in Women’s Sports

WNBA

Over the last 90 days, Barclays made the “single largest investment in British women’s sports” (a 3-year deal worth $13 million), Budweiser announced its “first-ever sponsorship of [a] women’s football” club (England’s national team) and AT&T became the 1st non-apparel company to put their logo on a WNBA uniform – evidence that “there is momentum right now around women in sport.”

Howie Long-Short: Barclays, Budweiser and AT&T are among a growing list of companies pumping dollars into women’s sports. Former WNBPA director Pam Wheeler suspects the increased interest on the brand side has to do with the increased visibility of the women’s game over the last few years (think: introduction of OTT services) – as recently as ’14 just “3.2% of all broadcast time” was dedicated to female athletics. Wheeler said “the talent level is there, so once companies start to see the skill-sets that the players have their interest in investing in them grows. It’s logical that brands want to align with elite athletes.” League exposure is about to “nearly double.” The WNBA just announced a new multi-year deal with CBS Sports that will see the cable sports network broadcast 40 regular games/season.

Brands have historically ignored female pro sports teams. In fact, GumGum found that between ’11-’13 just .04% of all sports sponsorship investments made were in women’s sports despite the barrier for entry (see: costs) being far lower. While shockingly low, the figure does make some sense – at least here in the U.S. When Wheeler first joined the WNBPA in ’98 “everybody who was aware of the league was my age or older [so, sponsors didn’t have the ability to reach the desirable 18-34 demo]. My 12-year-old daughter has never lived in a world without professional women’s basketball, so the fan demographics have become far more appealing to an advertiser.” Of course, females aren’t the only individuals who watch women’s sports; according to Nielsen, 84% of all sports fans have an interest in watching the ladies play. It does need to be noted that the number of women’s sponsorship deals has climbed +47% since ’13.

Studies have shown that girls who participate in sports are “less likely to become pregnant, have greater self-confidence and self-esteem” so there is certainly a component of these brands doing well by doing good, but while one can appreciate what female sports brings on a “social level”, Barclays, Budweiser and AT&T are in the business of generating returns for shareholders; and it’s the “big live crowds (see: attendance for female sports in U.K is +38% YoY since ‘13) and viewing figures (see: final of ’18 U.S. Open outdrew the men) [that are] feeding their [investment] interest.” Wheeler says that sponsorship pacts being signed today are being made as the result of “economic decisions, as opposed to emotional connections.” That’s an important differentiator because “in order for women’s sports to succeed, the public (think: fans, sponsors, broadcasters etc.) must recognize them as businesses that require economic support to survive.”  It’s worth mentioning that female participation in sport is at an all-time high; 3.3 million girls are playing in U.S.

Fan Marino: While investments have been made in leagues and teams, brands have yet to put big money behind female athletes in team sports. However, looking at the evolution of women’s sports it’s likely that day is not far off. Wheeler believes that within the “next few years” it would be “attainable for a female basketball player to make $1 million without having to play overseas.”

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