Sports Media Start-Up Using Niche Sports (and Facebook) to Build Audience

FANTOM, a Facebook (FB) based platform, is delivering live sports (20+ games including JUCO playoffs) and sports personalities to a social audience. Having partnered with 30+ rights holders and 20+ personalities, the sports media startup generates authentic (see: passion) content that brings “fans closer to the field” while their signature Catapult product (for brands and rights holders, FANTOM is free for viewers) ties custom content to a transaction (i.e. ROI). In their first year, the company broadcast from the NBA Finals, World Series and partnered with 10 sports leagues; including Ultimate Frisbee (AUDL) and Indoor Football League.

Howie Long-Short: FANTOM is taking a wise approach, embracing FB as opposed to trying to drive traffic away from it. The company understands that the “one show for one million people model is dead”. Facebook has 2 billion visitors/day and advanced targeting technology that gives niche sports a chance to find their audience; FANTOM is the place where fans can find those sports. The company is privately held and there are no ways to play it, for now.

Fan Marino: FANTOM isn’t bringing fans “closer to the field”, it’s bringing fans on the field; as San Antonio Spurs fans got to experience last night with ESPN Radio talent and FANTOM co-founder Ari Tempkin live from AT&T Center. You aren’t going to find NFL and NBA games on FANTOM, but if you have a taste (no pun intended) for Major League Eating it might be for you.

Joe Favorito (@joefav) recently did a Q&A with FANTOM co-founder Zack Rosenberg. You can check it out here.

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Facebook Hiring “Head of Sports Programming” To Bid on Rights

Facebook has announced it is looking to hire a “top level executive” to oversee sports rights acquisitions. The “head of sports programming”, will have a budget of “a few billion dollars” to buy broadcast rights on a global basis. The social network does not intend to produce sports broadcasts; it would like to stream events, partnering with leagues or broadcasters that have linear television distribution in place.

Howie Long-Short: Back in May, Zuckerberg said “the long-term goal is actually not to be paying for specific content like that” and that he would prefer to pursue a “revenue share model”; but those comments were made under the presumption FB would be producing the broadcasts. If the plan is simply to stream events and FB isn’t pursuing exclusivity, the up-front cash outlay becomes significantly more palpable (AMZN paid $5 million per NFL game, CBS/NBC (CMCSA) paid $45 million/game for TNF). EPL rights expire in ’18, with MLB and the NFL coming up shortly thereafter (’21 and ’22, respectively). Look for linear distribution rights to increase (again) with total broadcast rights skyrocketing, as the tech giants bid on streaming rights. I do not expect FAANG to receive any exclusivity in the next round of negotiations.

Fan Marino: Whistle Sports recently announced that it was creating its first exclusive show for FB Watch, the “Next Trickshot Superstar”; a 10-episode series, hosted by Chad Johnson that features trickshot artists competing for $25,000. As a video content creator, with a following of 375 million followers/subscribers (and growing 2.5 million/week), Whistle Sports has raised $80.5 million to date; TGNA, NBC Sports and CBS Sports all participated in the company’s $29 million Series C round, announced in January 2017.

Facebook reportedly seeking an executive whose job will be negotiating sports rights

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Study Reveals Why Digital Growth is Crucial to the Future of European Soccer

KPMG published an interesting study on what would happen to English Premier League clubs, if the money generated from league broadcast rights (the most lucrative in Europe) were to be subtracted from the teams’ bottom lines; a viable concern when you consider that broadcast revenues can be worth up to 45% of an EPL team’s gross revenue. KPMG bases the study on the premise that revenue from broadcast rights is precarious; that consumer behaviors change and there are no guarantees that humans will watch television, stream video etc. in the future. What KPMG found, was that the most fiscally sound clubs were the ones that maintained the largest social presences. Those clubs are most successful in closing commercial partnerships and selling out their stadiums; factors that would help to reduce the impact, that a total loss of broadcast revenue would bring.

Howie Long-Short: The EPL’s overseas rights expire in 2019 and are expected increase in value during the next round of negotiations; so, while a fascinating study, not one that should cause immediate concern. Overseas rights for the current 3-year period, total roughly $3 billion Euros (domestic rights for the same period equal $5.1 billion Euros). There seems to be a consensus that while domestic rights may be close to capping out in value, interest from international players like Facebook (FB), Google (GOOGL) and Amazon (AMZN) is likely to send overseas rights soaring. Those rights fees will be split evenly amongst EPL teams, as the “Big 6” conceded their effort to secure a greater percentage of overseas TV money.

Fan Marino: La Liga clubs FC Barcelona (206 million) and Real Madrid (204 million) maintain the largest social followings in Europe, and it isn’t close. 3 EPL clubs; Manchester United (MANU) (111 million), Chelsea FC (76 million) and Arsenal (63 million) round out the Top 5. Bayern Munich (61 million), Juventus (JVTSF) (45 million) and Paris St. Germain (45 million) have the largest digital followings within their respective leagues and all place within Europe’s Top 10.

Data shows why digital growth is more important for football clubs than precarious broadcast revenues

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SeatGeek and Facebook Announce Partnership

SeatGeek has announced that Facebook (FB) will become an official ticketing distribution partner; enabling leagues and teams to sell tickets to games, via SeatGeek, on the social network. Best known as a resale aggregator, SeatGeek will provide FB with a 3rd party API (SeatGeek Open) that will integrate directly with their ticketing interface; giving fans the ability to purchase tickets without ever leaving FB. MLS’ Sporting Kansas City is the first professional team to take advantage of the partnership, adding a “get tickets” icon for each game on their Facebook Events page.

Howie Long-Short: Facebook has similar distribution deals in place with Ticketmaster (LYV) and Eventbrite, so while this partnership isn’t exactly revolutionary, it is significant for SeatGeek. It means that SeatGeek can now sell event organizers on Facebook’s reach and their ability to “put tickets where fans are already spending their time online”. Sporting KC is the first, but they won’t be the last to take advantage of this sensible partnership.

Fan Marino: The average price of tickets to Game 6 of the World Series dropped 21% (to $1,044) after the Dodgers lost Sunday night’s Game 5, putting the team on the brink of elimination. Fans could get in to the building last night for as little as $394. That won’t be the case for tonight’s Game 7. The lowest priced ticket available on SeatGeek, as of midnight, was $1,215.

SeatGeek signs up Facebook as primary ticketing distributor

Editor Note: The summary for this story was written by our friends at The Water Coolest. Check out TheWaterCoolest.com for the latest market news and professional advice.

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Could ESPN Abandon the NFL?

James Andrew Miller, co-author of the national #1 NYT bestseller Those Guys Have All the Fun, Inside the World of ESPN, wrote an interesting article suggesting that ESPN (DIS) could “abandon the NFL”, at the expiration of their existing 8-year $15.2 billion contract in 2021. Miller pointed to the lack of specific language in affiliate contracts requiring the network to carry NFL games, ESPN’s displeasure with the quality of game schedule, the disproportionate amount ESPN pays for rights when compared to the league’s other partners and the potential future interest from digital media companies, as reasons why the network may decide not to carry NFL games for the first time since 1987. Under the existing agreement, ESPN holds the rights to 17 Monday Night Football games and 1 Wild Card playoff game, per season.

Howie Long-Short: The basis for Miller’s article is that the combination of cord-cutting and burgeoning rights fees create a scenario where the network can no longer afford to carry NFL games. I’m not convinced. Sports leagues are going to look to maximize revenue in their next round of negotiations. I expect television broadcast rights to remain stagnant, perhaps to even slightly decline (makes sense as the audience continues to decline), which should enable ESPN stay in the game. The growth for the league will come on the streaming side, where Facebook (FB), Google (GOOGL), Amazon (AMZN) etc. can and will bid for rights.

Fan Marino: You don’t replace the NFL, as it gives the network 18 of its biggest draws of the year. On Sunday evening, for just the 2nd time since 2013, the World Series outdrew SNF head-to-head (12.8 to 9.4 overnight). The 9.4 SNF drew opposite the World Series rated higher than the highest rated college football game in Fox (FOXA) history (last Saturday’s Penn State/Ohio State game, 9.0) Ratings are down, but the NFL is still king; and you’re not the “worldwide leader in sports” without it. As for me personally, ESPN has my $7/month so long as they have the college football playoffs.

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CUBS PARTNER WITH FACEBOOK; TO EXPLORE SELLING OTT RIGHTS SEPARATE FROM TV RIGHTS

The Chicago Cubs television broadcast contact with NBC Sports Chicago expires in 2020 and the team is exploring selling OTT streaming rights, separate from a new linear TV contract. The Cubs partnered with Facebook (FB) this past season on a test run, simulcasting 4 games, and came away pleased with the results. The 4 games averaged 222,000 unique viewers, with first 3 averaging 259,000 (no marketing was done for the 4th game). For comparison purposes, the 2016 WS Champion Cubs averaged just 156,000 viewers for their local TV broadcasts (35% increase from ’15).

Howie Long-Short: The next round of TV contracts (for all leagues/teams) may not dramatically rise in value as the television audience continues to shrink, but the aggregate for live broadcast distribution rights will keep professional sports revenues on an upwards trajectory. Selling OTT rights separate from linear rights is a no-brainer as it provides a wider audience and another lucrative source of revenue. The structure of these contracts is going to be interesting to follow. Zuckerberg has already expressed that unlike traditional broadcast rights deals, he’s far more interested in rev-share partnerships than he is in paying out billions in guaranteed rights fees.

Fan Marino: Cubs Manager Joe Maddon was ejected from Game 1 of the NLDS for arguing an umpire’s call on a play at the plate. Maddon wasn’t upset with the rule itself (preventing a catcher from blocking the plate without possession of the ball), but the interpretation (the trajectory of the ball put the catcher in the runner’s path to the plate). Maddon went on to explain that not all rules are good rules, using Chicago’s unpopular soda tax ($.01/ounce) as an example. Perhaps Madden has a point. 9 days after implementing the tax, lawmakers voted to repeal it. As for the Cubs playoff series against the Dodgers, Justin Turner hit a 3-run walk-off home run on Sunday night to give the Dodgers a 2-0 series lead.

Cubs pleased with Facebook livestream test

NBA SPONSORS’ RECORD SPEND; NUMBER TO GROW IN ’17-’18 WITH NIKE UNIFORMS AND JERSEY PATCHES

NBA sponsors spent a record $861 million during the 2016-2017 season, a 7.8% jump from 2015-2016 and a significant increase from the projected 4.3% annual increase in overall sports sponsorship expenditures. Sponsorship dollars are expected to rise again during the 2017-2018 season, with a new 8 year/$1 billion Nike (NKE) uniform deal beginning and teams selling advertising patches on their jerseys for the first time. State Farm, Anheuser-Busch Inbev (BUD), Gatorade (PEP) and Tissot (OTC: SWGAY) were the league’s most active sponsors during the ’16-’17 season.

Howie Long-Short: The data was compiled by ESP Properties, a sports & entertainment research and consulting firm owned by WPP (WPPGY), an international advertising & PR firm. Back in August, WPPGY cut full year revenue projections to between 0-1% for 2017 as some of their high-profile clients have cut back on ad spend (the consumer goods sector, in particular). CEO Martin Sorrell warned that Facebook (FB) & Google’s (GOOGL) dominance as advertising platforms and Amazon’s (AMZN) disruption of the retail sector are holding back ad growth world-wide. If he’s right, things are going to get worse for WPPGY (and others in the advertising world) before they get better.

Fan Marino: 9 of the league’s 30 teams had team sponsorship revenues below the league average last year; Charlotte Hornets, Denver Nuggets, Detroit Pistons, Milwaukee Bucks, Minnesota Timberwolves, New Orleans Pelicans, Philadelphia 76ers, Sacramento Kings and Utah Jazz. Only Charlotte and New Orleans do not have jersey patch sponsorships in place for this season. Is it a coincidence that the other 7 were proactive in securing lucrative ad patch deals? Probably not.

Sponsorship Spend On NBA Tops $880M, Will ‘Skyrocket’ With Nike, Jersey Deals

NBA OWNER THINKS WAY TO PREVENT CORD CUTTING IS TO SELL TV VIEWING EXPERIENCE

Mark Cuban stated earlier this week that pro sports leagues can prevent cord cutting, by “advertising the fact that watching a game on television is the best viewing experience”. Cuban insisted that despite their popularity, streaming services like Facebook (FB) and Amazon (AMZN) are not viable competitors to cable and satellite providers for sports programming. While acknowledging streaming services have effected television broadcast ratings, the Broadcast.com founder pointed to the buffering issues created by bandwidth requirements/constraints, as the primary reason why TV remains a fans best option.

Howie Long-Short: NBA media rights are tied up through the 2024-2025 season, so Cuban isn’t negotiating through the media here. He’s right, television is currently the best way to watch a sporting event. Technology moves fast though and we’re not far off from a day when games on broadcast on cable, satellite and OTT streaming services are indistinguishable.

Fan Marino: I watched the Jags/Ravens game last Sunday morning; via the Amazon website, on my laptop. The feed was good, I didn’t experience any buffering, but the picture clarity wasn’t always HD quality. I’m not streaming games if the option to watch them on cable or satellite exists.

Sports leagues have ‘failed miserably’ at keeping viewers glued to their TVs, Mark Cuban says

FACEBOOK PARTNERS WITH NFL; ADDS GAME HIGHLIGHTS TO WATCH PLATFORM

Facebook (FB) and the NFL have announced a multi-year partnership that will bring game highlights and recaps to the Watch platform. Users worldwide will be able to view video from all 256 NFL regular season games + the playoffs & Super Bowl; while domestic users also get access to programming content from the league’s production arm, NFL films. It is important to note that the agreement does not provide Facebook with the rights to deliver live NFL game action. Financial terms of the agreement have not been released.

Howie Long-Short: Seems like a sensible partnership. Facebook adds premium content to their burgeoning Watch platform; while the NFL gets access to 2 billion users world-wide. The NFL needs to grow its game internationally for the value of its franchises to continue to skyrocket. U.K, Mexico, Germany and China are going to be the first to adopt the game.

Fan Marino: It’s only a matter of time until the Jaguars move to London. The Rams saw a 100% increase in value (from $1.4 billion to $2.9 billion) after moving from STL to LA; while the Chargers saw a 36% bump ($1.525 billion to $2.08 billion) after making the move from SD to LA. Jacksonville plays in the NFL’s 4th smallest market and London has a larger population than Los Angeles. Once Shad Khan can get the votes, he’s gone.

The NFL partners with Facebook to distribute game highlights and recaps on the social network

MLB PARTNERS WITH INTEL TO OFFER FREE OUT-OF-MARKET VR BROADCAST WEEKLY

MLB offers fans a free weekly (Tuesday evenings) out-of-market virtual reality broadcast, powered by Intel (INTC) True VR. Using the Intel True VR App fans can control the broadcast POV, get access to postgame highlights and on demand replays of each game. To watch the VR steams, you’ll need a Samsung (KRX: 005930) phone, a Gear VR headset and to download the VR app from the Oculus (FB) app store. Curiosity is driving viewers for short windows of time, but the challenge ahead for MLB is figuring out how to keep that viewer tuned in for a 3-hour game.

Howie Long-Short: When Intel was looking for a VR partner, they were looking for 3 things. Defensible IP, scalability and the ability to stream its feed into a two-dimensional screen as well as to head-mounted goggles. It found its match in Voke VR. Intel lead their $12.5 million Series A round in March ’16, before acquiring the company in November 2016.

Fan Marino: True VR offers views down the first base line, from the right field corner and behind home plate, but the most popular views thus far have been the dugout views. That doesn’t surprise me. It’s a chance for fans to get “behind the scenes”, without the content being scrubbed first (i.e. Hard Knocks).

Virtual Reality Reaches The Big Leagues With Intel