Cubs Split from Bulls, Blackhawks and White Sox to Launch Their Own RSN


NBC Sports Chicago has agreed to a new 5-year multi-platform media rights pact with the Chicago Bulls, Blackhawks and White Sox, pending NBA, NHL and MLB approval. As of October 2019, all 3 teams’ regular season (excluding nationally televised broadcasts), pre-season and spring training games, plus Bulls and Blackhawks 1st round playoff games, will air exclusively on the Chicago RSN; WGN will no longer have broadcast rights to games. The news would also seem to confirm long-standing speculation that the Chicago Cubs are poised to launch their own television network come February 2020 (start of Spring Training); the team’s games will remain on NBC Sports Chicago through the end of the 2019 season.

Howie Long-Short: The Cubs, Bulls, Blackhawks and White Sox are currently equal partners (along with NBC Sports Group) in NBC Sports Chicago, but the Cubs are the network’s crown jewel. The Bulls, Blackhawks and White Sox will all see their stakes in the RSN rise from 20% to 25% come October ‘19, but it’s worth wondering if the network will run into carriage issues without the broadcast rights to North Sider baseball games?

Chris Lencheski is an experienced global sports, media, and private equity executive with c-suite stops at Comcast-Spectacor, TPG Specialty Lending, IRG Sports and Entertainment, SKI & Company and currently an adjunct professor at Columbia University. I checked in with Chris to get his thoughts the subject.

Chris: No, there won’t be any significant carriage issues. There’s more than enough people who are interested in the White Sox, Blackhawks and Bulls. The issue becomes if the various cable companies begin to push back on the $4.35 or $4.50 per subscriber fees during the next set of carriage negotiations. While that’s possible – they’re pushing back on lots of things –  NBC Sports Chicago will still have live professional major league sports and that content is still the best content you can have; you can’t make any more of it and there’s a finite amount of live sports programming in Chicago.

The Cubs decision to form their own “Marquee” (note: that’s the proposed name) network was derived from the Rickett’s family’s desire to continue growing revenues, but that doesn’t mean the team plans to go direct to consumer. Instead, the Chicago baseball club will align with a cable operator that can offer widespread distribution (think: Sinclair Broadcast Group) and bring some much-needed experience in both carriage negotiations and game production to the venture; issues that have plagued other start-up sports networks (see: Pac-12 Network). I asked Chris if there is any potential fiscal downside to the Cubs decision to start their own RSN?

Chris: No, even if the new network fails to generate the $3 – $4 per subscriber that NBC Sports Chicago gets, Marquee is still going to spin off significantly more revenue than the 20% that the team was going to get under the terms of their previous deal. Given that the franchise generates 3-4x the ad dollars in market (relative to the other 3 Chicago teams), the advertising dollars’ migration to Marquee is going to be significant; and that’s before any hybrid DTC model is applied, which will afford advertisers even more dynamic integration to Cubs fans.

In addition to their interest in partnering with the Cubs on an RSN, Sinclair has been mentioned as a potential investor in the YES Network (80% is for sale, $5-6 billion valuation) and is known to be in pursuit of the other 21 Fox RSNs currently on the market; CEO Chris Ripley recently called them “good fit with the [company’s existing] broadcast footprint and operations (from a cost savings standpoint).” The publicly traded (SBGI) telecom conglomerate, which owns more local TV stations than any other company in U.S., envisions the regional sports networks as the catalyst needed to grow their expansive cable business.

Fan Marino: Howie spent a lot of time talking to Chris about the financial impact of the Cubs decision to launch an RSN, but I wanted to find out how a Cubs owned television network would impact the on-field product?

Chris: Simply put, the team is going to generate much more free cash flow over the next several years. That will allow them to sustainably compete for players with the Yankees, Red Sox and Dodgers – all of whom have RSN-type models contributing to their ability to be competitive.

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MLB Attendance Hits 15 Year Low but Fans Still Watching on TV


Major League Baseball attendance declined 4.1% in 2018 (from 30,042/game to 28,830/game), with fewer than 70 million people (69,625,244) visiting league parks for the first time since 2003; it was the MLB’s 5th attendance decline in the last 6 seasons. 17 clubs experienced a YoY regression, with the Marlins (-771,910 fans) and Blue Jays (-878,605 fans) reporting the largest drop-offs; it must be noted that those clubs altered the way they calculated gate receipts prior to the ’18 season.

While MLB experienced a decline in fans at the ballpark, television viewership remains strong; Nielsen reported that between March 29th (earliest opening day ever) and September 30th (final day of regular season) the league’s 29 RSNs (Toronto not included) saw ratings rise +2% YoY. MLB games remain the most watched programming in primetime on cable television in 28 of 29 U.S. markets (Miami is the exception) and 12 RSNs carrying MLB teams are tops in their market in primetime, amongst all programmers.

Howie Long-Short: MLB blamed the attendance decline on the “historically bad weather” in April (102 games were played under 50 degrees), but they should have blamed it on the Marlins and Blue Jays accounting methods; 54% of the league’s total decline can be attributed to those 2 clubs.

Of the 12 RSNs that rank first in primetime within their market, 6 are owned by Fox Sports (Cardinals, Indians, Brewers, Yankees, Royals and Diamondbacks) and will be sold. It’s been reported that Sinclair Broadcast Group (SBGI), YouTube (GOOGL), Amazon (AMZN), Blackstone Group (BX), CVC Capital Partners and Apollo Global Management (APO) have all expressed interest in acquiring the block (22) of RSNs. Bloomberg has estimated that the assets could command upwards of $20 billion.

Advertisers value sports properties because a) they’re live (so you can’t fast-forward through commercials) and b) viewership consumption is greater for sporting events than it is for entertainment programming. In fact, the average MLB club has fans tuned in longer than the top 10 primetime television shows combined in their respective markets.

Fan Marino: The St. Louis Cardinals lead the league with an 8.05 rating on Fox Sports Midwest. On the other end of the spectrum, the Chicago White Sox were the only club to post a Nielsen rating under 1 (.68); a figure that indicates fewer than 1% of the total TV households in the Chicago market are tuning in to watch the South Siders on FSN Chicago. The Atlanta Braves experienced the league’s greatest YoY rise, with viewership climbing 79% in 2018 (to a 3.46 rating); a trip to the postseason following 3 straight years of 90+ losses explains the renewed enthusiasm.

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Pro Wrestling Business Experiencing Boom

The pro wrestling business is experiencing a boom, as evidenced by the newly signed U.S. broadcast television deals for WWE “Monday Night RAW” and “SmackDown Live” (worth $468 million/year), the scheduling of the largest indie wrestling event ever on September 1st (“All In”) and the news that Ring of Honor and New Japan Pro Wrestling sold-out (18,500 seats) Madison Square Garden for their “G1 Supercard” in April ‘19; the first wrestling show at MSG without a McMahon promoting, since 1960. The next marquee event on the wrestling calendar is WWE SummerSlam, Sunday Night in Brooklyn. Brock Lesnar and Roman Reigns are the main event; Ronda Rousey will take on Alexa Bliss for the WWE RAW Women’s Championship. Fans around the world can live-stream the event on WWE Network, August 19 at 7pm ET; there is a 30-day free trial period for all subscribers.

Howie Long-Short: Q2 ’18 was another landmark quarter for the WWE. The company posted record quarterly revenue (+31% to $281.6 million) and reported it had nearly doubled operating income (to $21.2 million) from the prior year quarter, news that sent share prices to a new all-time high ($85.93) on Thursday July 26th. The +31% revenue increase represents the company’s greatest YoY sales increase in 2 years.

In addition to strong financials, WWE reported significant growth in digital engagement; video views rose +58% YoY (to 14.4 billion) and the number of hours consumed watching WWE content across digital/social grew a staggering +71% YoY (to 509 million). The company also just crossed the 30 million subscriber threshold on YouTube, a figure that represents a larger following on the platform than that of the NBA, NFL, MLS, MLB, NHL, PGA TOUR and NASCAR combined. While YouTube subscribers don’t directly correlate into dollars, WWE Network subscriptions do; and the company reported paid subs rose +10% (to 1.8 million) during the quarter ending June 30th. Co-President George Barrios said the company plans on growing its international subscriber base by adding more localized content and languages.

WWE shares are up +/- 275% over the last 12 months, closing at $79.01 on Thursday. Concerned the WWE trades at too high a multiple (60x ’19 earnings estimates)? Consider the company trades at less than 25x ’20 earnings projections.

New Japan Pro Wrestling is owned by the Japanese card game company Bushiroad (privately-held). You can play the promotion via the Japanese television network, TV Asahi Holdings (trades under the ADR THDDY) or the Japanese music artist management company, Amuse, Inc (TYO: 4301). Both are minority shareholders. Ring of Honor is a subsidiary of the Sinclair Broadcast Group (SBG).

Fan Marino: The WWE recently announced it will host the company’s first all-women’s PPV event, entitled Evolution, on October 28th. The event, which will be live streamed on the WWE Network, will feature more than 50 female competitors from Monday Night Raw, SmackDown Live, NXT and NXT UK rosters. While current stars like Sasha Banks and Ronda Rousey are sure to be in attendance, so too are WWE Hall of Famers Trish Stratus and Lite; both already confirmed to be participating.

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ESPN Acquires Soccer, Boxing Rights for ESPN+, Adding Subscribers Faster Than Expected

ESPN 200x200

ESPN has announced a multi-year deal with Italy’s Serie A to broadcast league matches in the U.S. Most games will air on the WWL’s subscription streaming service ESPN+ (340+), but a Match of the Week will be broadcast on ESPN or ESPN2; those matches also be available in Spanish on ESPN Deportes. The exclusive rights agreement with the Italian futbol league is set to begin on August 18th with Ronaldo’s Juventus debut (8.18.18) on ESPN+.

ESPN also signed a new 7-year deal with Top Rank Boxing to replace the 4-year agreement the companies agreed to back in the summer of 2017. The new pact calls for ESPN to bring fight fans 54 cards/year, 36 of which (includes 24 international cards) will be exclusive to ESPN+ subscribers.

Howie Long-Short: ESPN’s television subscription base continued to dwindle in fiscal Q3 (though not as fast as it had been), ad revenue declined (see: NBA Finals sweep) and programming costs increased, but the company still managed to post mid-single digit revenue growth (to $15.23 billion) for the quarter thanks to rising affiliate fees and “rapid growth in digital MPVD subscribers.” CEO Bob Iger added that ESPN+ is adding subscribers faster than projected. As for Disney, their cable networks business in aggregate reported a 5% decline in operating income (to $1.4 billion); their investment in ESPN+ was among the reasons given for the regression. DIS shares have fallen 2.5% since Tuesday’s earnings call, closing Wednesday at $113.98.

For those wondering about the 22 Fox RSNs, Iger did mention that “the process of selling them” is underway. We wrote on June 29th, that an “established linear player” was most likely to acquire the RSNs (minus YES); mentioning CBS (think: CBS Sports HQ), Turner Sports (T, B/R Live) and Discovery Communications (DISCA, which has made a significant push for rights in Europe) as possible landing spots. Add Sinclair Broadcast Group (SBGI) to that list. CEO Chris Ripley expressed interest in the assets on their earnings call this week, calling them, “a good fit with the broadcast footprint and operations.”

Fan Marino: ESPN’s EVP of Programming & Scheduling Burke Magnus has been vocal about making “ESPN+ home to the world’s best soccer leagues” and by proxy, “an indispensable destination” for domestic soccer fans. While it’s an admirable goal and one that would certainly grow subscriptions, it’s certainly not representative of the splintered market we have today. In fact, with rights spread out amongst so many broadcasters U.S. soccer fans are likely to have to choose the leagues/games they’re willing to forego. It’s certainly not reasonable to expect fans to sign up for ESPN+ ($4.99/mo.) B/R Live ($7.99/mo.) NBC Sports Gold ($50/season) etc. and still carry a $80+/mo. cable bundle to watch games on ESPN, Fox Sports and BeIN.

It needs to be noted that Top Rank will not be promoting the 24 international cards contained within their deal with ESPN. Bob Arum & Co. acquired the U.S. broadcast rights from Frank Warren (U.K.), Zanfer Promotions (Mexico) and Teiken Boxing (Japan).

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Indie Wrestling Event to Draw 10,000 Fans, Largest Non-WWE Show Since ‘99


The largest indie wrestling event ever, entitled “All In”, will take place in Chicago on September 1st; when more than 10,000 fans attend a show promoted by Cody (formerly Cody Rhodes, WWE legend Dusty Rhodes son) and The Young Bucks (Matt and Nick Jackson). 10,000 tickets sold represents a significant accomplishment in squared circles (pun intended), as no pro wrestling promotion besides the WWE or WCW has drawn the figure since Lucha Libra in ’93; and there hasn’t been a promotion targeting English speaking fans to fill 10,000 seats since 1984. Sears Centre Arena (capacity 10,218) will host the self-financed event and the card will be comprised of stars from Ring of Honor (ROH), New Japan Pro Wrestling (NJPW), National Wrestling Alliance and Impact Wrestling. Tickets went on sale on Sunday May 13th and sold out in just 29 minutes.

Howie Long-Short: This is NOT a Ring of Honor event. Cody and The Young Bucks (stars within the ROH promotion) took all the financial risk associated with putting on the event, a gamble that appears will pay off. While the 3 wrestlers will profit on the event, it must be noted that “All-In” wasn’t designed to be a cash grab (the highest priced ticket was $153). Cody decided to put the event on when Wrestling Observer Newsletter editor Dave Meltzer tweeted that he didn’t think ROH could sell 10,000 seats. In other words, it was a “bet.”.

Ring of Honor is a subsidiary of the Sinclair Broadcast Group (SBGI). On May 9th, the company reported Q1 ’18 revenue grew 6.1% to $626.9 million. CEO Chris Ripley said, “advertising revenue was soft” (many stations not carry the Super Bowl or Olympics), but because the company’s “distribution revenues ($314 million) now make up approximately half its media revenues ($643 million)” the “business model very resilient to ad market volatility.” Shares are up 12.6% since reporting a “first quarter that came in well ahead of guidance in all key financial metrics.”

Fan Marino: In addition to Cody and The Young Bucks, New Japan Pro Wrestling (NJPW) Heavyweight Champion Kazuchika Okada, NJPW fan favorite Kenny Omega, NWA World Heavyweight Champion Nick Aldis and former WWE Heavyweight Champion Rey Mysterio will all be on the card. Rumors are circling that former WWE star turned MMA fighter, CM Punk, could also make his return to wrestling on the card.

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Wide-Spread Corruption Within Tennis’ Lowest Levels


An independent task force has determined that “tennis is responsible for more suspicious betting than any other sport”, resulting from wide-spread corruption at the sport’s lowest levels. 14.5% of the 3,200 players polled in the investigation reported 1st hand knowledge of match-fixing. The review panel offered a dozen proposed solutions to curb match-fixing including; a ban that would prevent betting companies from participating as sponsors, discontinuing the sale of official live scoring data and the elimination of gambling on the game’s lower levels. It must be noted that the study did not indicate a “widespread problem” at the sport’s top level and found no evidence of cover-ups or collusion by International Tennis Federation (I.T.F.) officials. The final report will be released in its entirety this fall.

Howie Long-Short: The report incorrectly attributes the I.T.F.’s 2012 deal with Sportradar, (worth $70 million) to distribute live scores from low-level tournaments around the world, for the “tsunami” of corruption within the sport’s lower levels. While it’s true that the deal provided bookmakers with the ability to offer odds on Futures events, that market existed prior to the partnership. The insufficient prize money offered at Futures events is what make them susceptible to manipulation.

It’s simply misleading to insinuate the sport would be better off without Sportradar’s Integrity Services, as the report suggests. As Sportradar’s Director of Communication, Alex Inglot, told us last month, “we’ve identified over 3,506 matches (that have been manipulated) since 2009 and have initiated or supported well over 200 sporting sanctions and 24 criminal convictions.” You can read our full-length interview with Alex on preventing corruption, here.

While privately-held, there is one way to play Sportradar; EQT Holdings Management (EQGP). The publicly traded private equity/venture capital firm with 11 exits (IPO/M&A) to its name, invested $55 million into the company in July ’12. In October ’15 the company raised another +/- $45 million; Revolution led the round that also included Michael Jordan, Mark Cuban and Ted Leonsis.

Fan Marino: Speaking of Tennis, 2017 was a banner year for the Tennis Channel, no television network added more subscribers (12 million) and 2018 has gotten off to an equally strong start. In January, the network announced it would be doubling the number of live tournaments aired on its OTT service, Tennis Channel Plus. Then in March, the network reported subscriber revenue had grown +42% YoY. Viewership numbers were also impressive in March, as events at Indian Wells (+19%) and Miami (+21%) drew big YoY increases. The network has also added several high-profile sponsors in Q1 2018 including; BMW, Pfizer, Bristol Meyers Squibb, Clorox, Ford Motor Co., Weight Watchers, Alfa Romeo.

Sinclair Broadcast Group (SBGI) owns the Tennis Channel. Sinclair is awaiting the Department of Justice’s approval on its $3.9 billion acquisition of Tribune Media (and their 42 television stations). Should the deal be approved (SBGI just agreed to sell 23 stations to comply with FCC rulesSBGI would own channels in 215 networks in over 102 markets (in an unprecedented 70%+ of the country).

The company has had a rough start to 2018, as its share price has declined +/- 30% over the last 90 days (since Jan. 19). Its “fake news” scandal, certainly didn’t help.

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New Deal Gives Tennis Channel Exclusive Broadcast Rights to 21 ATP Tour Stops


Tennis Channel has agreed to multi-year extensions with the ATP World Tour (tennis’ governing body) and ATP Media (tour’s broadcast arm), ensuring the network of exclusive broadcast rights to 21 ATP Tour stops (Masters 1000 & 500 events) and the season-ending Nitto ATP Finals (non-exclusive). Matches will air on the linear cable network and via authenticated digital stream on Tennis Channels’ affiliated OTT service, Tennis Channel Plus (for the 1st time); combined they’ll carry every round of all but a handful of men’s tournaments (Indian Wells, Miami & Nitto ATP Finals). Under the terms of the new deal, Tennis Channel will be granted expanded video-on-demand rights and increased network access to classic matches. Terms of the deal were not disclosed.

Howie Long-Short: Tennis Channel is owned by Sinclair Broadcast Group, Inc (SBGI). Sinclair is awaiting the Department of Justice’s approval on its $3.9 billion acquisition of Tribune Media (and their 42 television stations). Should the deal be approved (it likely will be, though SBGI may be forced to sell a few stations to comply with FCC rules) SBGI would own channels in 233 networks in over 100 markets (in an unprecedented 72% of the country). Back on November 1st, the company reported Q3 net income fell 39.7% (to $30.6 million); hurricanes Harvey and Irma, a loss of certain technical school advertisers and one-time acquisition related charges (see: Bonten Media) blamed for the negative differential. The company is expected to report Q4 ’17 and full-year ’17 earnings on February 28.

Fan Marino: Fans in NYC will get to see Serena Williams live as she plans to participate in March’s Tie Break Tens tournament, the first of its kind in the U.S. The short-form one-day knockout tournament (each match is a super tie-break to 10 points) will be held at Madison Square Garden. 8 competitors will participate, including Serena’s older sister Venus Williams.

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Stadium Partners with Facebook, 47 College Basketball Games Will Air Exclusively on Watch

Facebook continues to add live sports programming to its Watch platform, announcing a partnership with Stadium that will enable the social network to exclusively live stream 47 college basketball games this season. Stadium, a multi-platform sports network, will tailor the stream to the Facebook audience; communicating with fans in real-time and implementing social elements to the broadcast. The companies have aired 13 football games together this fall; generating over 10 million views. FB is paying Stadium for the rights to air the games, though terms of the deal have not been released. There is no cost for fans to stream the games.

Howie Long-Short: Stadium was created from a merger of Campus Insiders (live games), Time Inc.’s (TIME) 120 Sports (studio operations) and the Sinclair Broadcast Group (SBGI)-owned American Sports Network (distribution). SBGI reported a 3.3% YOY drop in Q3 earnings, but it hasn’t been all bad news for the company of late. The FCC just voted to relax rules limiting broadcast and print media ownership in a single market. That decision, combined with Bruce Karsh’s (Tribune Media Chairman) recent resignation, would seem to indicate that the company’s purchase of TRCO is likely to be approved by regulators. SBGI expects the sale to close by early ’18.

Fan Marino: The 47-game slate includes some compelling teams, 11 of which made the 2017 NCAA Tournament; Dayton, Saint Mary’s, Middle Tennessee State, Nevada, Florida Gulf Coast, Wake Forest, Rhode Island, U.C. Davis, VCU, Minnesota and New Mexico State. #14 Minnesota, #21 St. Mary’s and R.I. are the best of the bunch. It also includes three first-round Mountain West tournament games and two quarterfinal Conference USA matchups. You can find out if your team is on the schedule, here.

Facebook will stream exclusively 47 college basketball games this season

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