Playoff Fantasy Football Contest Paying Out in Bitcoin

FanDuel

The NFL Playoffs start tomorrow (Tennessee at Kansas City, 4:35p EST) and FanDuel is giving daily fantasy football players the chance to win Bitcoins (BTC); the first time a sports-tech company has awarded cryptocurrency as a consumer promotion. FanDuel will host a free single-entry contest (aka the Bitcoin Bowl) that will award the winner a single Bitcoin; and a second multi-entry contest, that costs $3 to enter and offers a multi-tiered payout (winner receives 2 Bitcoins). The deadline to enter and select a lineup is kickoff of the Tennessee/Kansas City game.

Howie Long-Short: FanDuel has raised capital from the following public companies (or subsidiaries of public companies) KKR & Co. (KKR), Google Capital (GOOGL), Time Warner/Turner Sports (TWX), NBC Sports Ventures (CMCSA) and Comcast Ventures (CMCSA); so, there are no shortage of ways to play the fantasy sports outfit. As for the popular cryptocurrency, the WSJ reported that Peter Thiel’s venture capital fund bet $15 million to $20 million on Bitcoin; upon release of that report, BTC prices shot up 14% to $15,447. The digital coins were trading at +/- $15,150 on the evening of January 4, 2018.

Fan Marino: Facebook (FB) has entered the DFS space, launching TheScore Fantasy on Facebook Instant Games; accessible only through their Messenger application. The mobile game currently enables you to play NFL, NBA, NHL, MLB & Premier League contests, but only against your friends and there is no monetary incentive to win. It’s not a game for the hardcore DFS player, but the simplistic interface and small roster sizes (just 5 players) could make it attractive to the next generation of football fans; those not yet of age (18) to play DFS.

To join our free daily email newsletter list, sign-up here!

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

For the balance of today’s newsletter, sign-up here!

A Streaming Service for the Sports Fan

Sports fans that are considering cutting the cord may want to look at the channel lineup for FuboTV; a sports-centric, OTT, live TV streaming service that offers fans the “most sports for the least money”. Originally introduced as a skinny bundle for soccer fans, the service now carries a variety of sports on 37 (of 65) channels (both regional and national) including; FS1, FS2 and NBCSN. The $40/mo. niche bundle is looking to stand out in a crowded streaming TV market that includes; Hulu (TWX), YouTube TV (GOOGL), DirecTV Now (T), Playstation Vue (SNE) and Sling TV (DISH). Amazon (AMZN) and Verizon (VZ) will also be introducing streaming bundles soon.

Howie Long-Short: FuboTV has raised $75.6 million to date, with several publicly traded companies investing in the streaming provider. 21st Century Fox (FOXA), Sky (SKYAY) and Scripps Networks Interactive (SSP) all participated the $55 million Series C round that closed in June; so there are no shortage of ways to play the OTT streaming service.

Fan Marino: FuboTV has 100,000 soccer-loving subscribers, but is counting on their next 100,000 subscribers to be fans of traditional American sports. The carriage deals they’ve signed to date have given them some valuable programming (like the World Series), but you can’t convince the American sports fan to cut the cord without ESPN’s network of channels. ESPN (DIS) holds the rights to the College Football Playoffs (and NBA) through 2025 and MNF through 2021. If your key differentiator as an OTT streaming service is your sports programming, you must carry those games. The success of the service, at least as it is currently marketed, depends on it.

The next 100,000 subscribers: FuboTV’s skinny bundle moves beyond live soccer

For the balance of today’s newsletter, sign-up here!

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.

For the balance of today’s newsletter, sign-up here!

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

FACEBOOK HIRES BUNIM/MURRAY PRODUCTIONS TO CREATE REALITY SHOW ON BALL FAMILY; EPISODES AIR SUNDAYS AT 10P

Facebook (FB) has hired Bunim/Murray Productions (VIAB), the company behind “The Real World” and “Keeping Up with the Kardashians”, to create a new reality series for their redesigned Watch video tab. The show entitled “Ball in the Family”, will focus on LaVar Ball, the father of Lakers rookie Lonzo Ball, as he grooms his children for the NBA, builds his Big Baller Brand and helps his wife Tina recover from a stroke. The first 2 episodes are now available, with new episodes being released on Sunday’s at 10p, starting September 10th. Facebook is developing original content, so it can draw video advertising dollars that will drive future revenue growth.

Howie Long-Short: Facebook is coming for GOOGL’s YouTube. The company is offering to pay production costs, license and outright buy content from creators; while at least in some cases, guaranteeing ad revenue to publishers. Expect a lot of well-produced, high quality, in-demand content from the social network moving forward.

Fan Marino: LaVar recently announced that sale of the LaMelo BBB sneaker will take precedence over his NCAA eligibility. Lonzo better be a superstar or this whole house of cards is about to come tumbling down.

Facebook Lands Lonzo Ball and Basketball Family for Reality Show

TECH GIANTS HESITANT TO PAY OUT LUCRATIVE LONG-TERM DEALS TO LEAGUES; SPORTS BROADCASTING MODEL MAY GO FROM RIGHTS DEALS TO REVENUE-SHARE MODEL

Exclusive television network broadcast rights deals have been the growing source of income for pro sports leagues for the last several decades. TV networks have tripped over themselves to pay out lucrative, long-term contracts to sports leagues, in order to lock up valuable content it can resell to advertisers. League execs have long assumed that tech giants like Amazon (AMZN), Facebook (FB) and YouTube (GOOGL) would be eager to bid on future contracts in an effort to stream content. While that may still be the case, it likely won’t be in the same form of the existing TV contracts and as a result, a decline in revenues may be coming. Mark Zuckerberg has indicated that FB could be interested in streaming select pro sports, but the long-term goal would not be to pay for content, but to engage in a revenue-share model.

Technology Titans Won’t Splurge to Save Sports

Howie Long-Short: Sports leagues will follow the money. It could be a while before tech firms can outbid traditional media for top sports rights, other than carving out digital rights.

Fan Marino: If Zuckerberg can get off paying Bieber on a rev-share model, he can certainly convince pro sports leagues, with few viable alternative options, to sign off.