NFL Agent Brian Murphy Discusses Rookie Salary Cap, A1P and the Potential for a CFB Scandal

A1Partners

In late April, the sports representation firm Athletes First (clients include Aaron Rodgers, Jamaal Charles and Clay Matthews) announced the official launch of Athletes First Partners, an international sales and marketing services company that will represent entities. Athletes First co-founder and President Brian Murphy will serve as CEO of A1P. JohnWallStreet recently had the chance to talk with Brian about the NFL’s rookie salary cap, the potential for a college football recruiting scandal and his new brand agency. 

JWS: Athletes First has represented NFL players, coaches and broadcasters for the last 17 years. Why make the transition to representing brands, now?

Brian: When we started Athletes First in 2001, we got an initial equity investment from Tom Gores (Platinum Equity, Detroit Pistons Owner). He explained to me that we couldn’t build an extremely successful company on two-legged assets, that we would need to represent entities (i.e. brands, organizations, federations) as well; we didn’t want to do that though until we felt we did football better than anybody. Now that we’ve built a solid foundation, we decided it was the right time to follow Tom Gores’ advice and diversify. Our first client is THINK 450, the new for-profit subsidiary of the NBAPA. We’re working with them to brand the union and all 450 players as a collective to monetize their group licensing rights domestically and internationally.

JWS: Did the implementation of the NFL rookie salary cap have any impact on your decision to launch A1P?

Brian: The rookie salary cap and the other issues you’re hearing about within the agent business (see: reduced commission percentages on rookie deals) highlight the importance of diversifying. It’s really no different than someone’s 401K plan – you don’t want to keep 100% of your money in one stock, in case something unfortunate happens. Our plan has always been to diversify though, so those issues didn’t force our hand in that direction.

JWS: How has the implementation of the rookie salary cap changed your approach to representing NFL players?

Brian: It’s important to remember that the league is sharing a larger percentage of the revenue with players than ever before and that the salary cap is at an all-time high; so, while the rookies aren’t make the same amount of money as they did (under prior CBA), the veterans are making much more. You now have high quality players, who never made a Pro Bowl, reaching free agency and breaking the bank. So, it hasn’t had a negative impact on our business; but, one way it has impacted us is we’ve become more selective with who we choose to recruit and sign. We’re not looking to sign an enormous number of rookies. We’re looking to find guys that we truly believe can play for a number of years, because at this point (rookie cap + exorbitant cost of training) if they don’t play for 3-4 years then you lose money on the player. That’s not the worst thing in the world, but it’s not a great business model.

JWS: Why should a projected 1st round NFL selection hire an agent if their salary is going to be slotted?

Brian: I mentioned earlier the high cost of training. Just from the financial point of view, the agent is going to invest more money in the player than they’re going to make representing that player on their rookie deal.

Howie Long-Short: Dentsu, Inc. (TYO: 4324), a publicly-traded Japanese advertising firm, is as much a minority investor as it is a strategic partner in A1P. The newly-formed entity plans to lean heavily on the Dentsu Aegis Network (its international arm) to secure domestic and international partnerships, create and distribute unique content and produce owned-and-operated events for the entities it will represent. For those wondering, the Dentsu Aegis Network is a global network of agencies with more than 40,000 employees in 139 countries whose expertise lie in advertising, media, digital, data performance marketing, sports marketing, partnerships and sponsorships, branding, content, communication and experiences.

The Dentsu Aegis Network (DAN) drove Q1 ’18 revenue growth (+5.7% YoY), but working-environment reforms (in Japan), capital investments in global markets and investments in DAN technology caused operating profit to decline -13% YoY. Dentsu President Toshihiro Yamamoto was pleased with the results saying, “the operating environment remains challenging, yet momentum is with the business.

Fan Marino: You recruit college football players. Is the NCAA scandal that’s hanging over college basketball going to engulf college football too?

Brian: I don’t know if college football is going to get caught up in it, but I’ll tell you the college football landscape is ripe with peril in the same regard. You see these camps all over the country and the shoe companies are all involved. It’s a place where the agents know to go to recruit players. The possibility is there for college football players to be taken advantage of and influenced by people who don’t have their best interests at heart.

Fan: We’ve seen guys like Kaepernick and Eric Reid be “blackballed” for their political views/statements. Do you warn your guys that political views/statements can impact their earning potential?

Brian: If we have 130-140 NFL clients, each one is very different. There is no way we can give one piece of advice to all of those players. We certainly don’t tell them to keep their mouth shut. These players all have opinions and something valuable to say. I will say we as agents have the responsibility to make our clients aware of the ramifications, of any course of conduct they may choose. At the end of the day, our players are grown men and are going to make up their own mind- and we’re going to support them.

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DAZN Exec Markowski Discusses Unseating ESPN and NFL’s Global Popularity

DAZN

U.K. based promoter Matchroom Boxing and Perform Group formed a joint venture, Matchroom Boxing USA, to promote 16 fight cards in the U.S. annually over eight years. Perform Group, which has committed $1 billion to the venture (the largest investment in boxing history), will broadcast the events on its digital streaming service, DAZN. JohnWallStreet had the chance to talk with DAZN SVP Commercial and Partnerships Joe Markowski about the company’s approach to entering the U.S. market, its global ambitions and interest in the NFL overseas.    

JWS: Chief Executive James Rushton said his goal was to make DAZN “the largest and most significant sports broadcaster in the world.” Can that be accomplished without unseating ESPN in the U.S. market?

Joe: I don’t think we would say our ambition is to become the number one sports broadcaster in the U.S. We recognize the maturity of the sports broadcast market here and we realize to “unseat ESPN” would require a significant investment and access to rights which currently are not available on the market. We have a defined set of rights we’re working with and we’re very confident we can establish ourselves using those rights here. 

JWS: I’ve seen DAZN described as “Netflix for Sports”. Please explain the comparison, as I see Netflix as an on-demand service – whereas sports are watched live? 

Joe: It’s an easy way to way to describe OTT, because that’s not a widely-known term among consumers; people have become accustomed to OTT via Netflix. We see it as an easy way to describe our ambitions, which are to be the pre-eminent global broadcaster of sports content via OTT.

JWS: It’s been estimated that there are 10 million boxing fans in the U.S., with 3 million identifying as hardcore fans that spend money on PPV fights. The May 12th Lomachenko/Linares fight that aired on ESPN drew 1 million viewers. Considering those viewers get ESPN with their cable subscription (i.e. it didn’t cost them any additional money to watch), is that the ceiling for subscriptions sold within the first year of the deal?

Joe: We don’t look at it through a 12 month lense, we are making an eight-year long-term commitment here. That is consistent with what we’ve done in other markets. Our primary rights relationships in a market will always be long-term (see: 10-year deal with Japanese soccer league in Japan), sometimes with our hand on the steering wheel – where its’s more than just a broadcast relationship (think: board membership); that’s the case here with Matchroom Boxing USA. Of course, there are KPIs, a CEO and investors to keep happy, but for us the most important metrics are three, five, eight years out.

JWS: For the last 30 years, boxing’s biggest match-ups have occurred on PPV. Your model is based on monthly subscriptions sold. Why does the sport’s business model need to be revamped?

Joe: We see the PPV model as underserving the boxing fan. We recognize PPV costs vary, but we think even at $59.99 that’s inflated for a single night of boxing and we’re going to serve the customer in a very different way. If you look what we did with McGregor/Mayweather, we made that available via our standard rolling monthly subscription mechanism, which includes a free first month. It gives the user affordability and flexibility. From a business model perspective, we want to serve you with enough content, engaging content and a schedule of upcoming content that you see value in and you stick around for it; and our price point, when we announce it in late June/early June, will reflect that. 

JWSThere is a perception that while the NBA is a global game, the NFL lacks a following outside of the U.S. You guys carry NFL games (live) and RedZone in several international markets. Do league games draw viewers? 

Joe: The NFL has done a wonderful job of internationalizing their business. We carry that content in Germany and it does really well for us there. We carry NFL content in Japan. It does well for us there, but I’m not going to pretend it’s a top-tier sport as domestic content trumps it. In Canada, it’s a jewel in our crown; you can make the argument that it’s the number 3 sport there. As a guy coming from London, that market is growing YoY. I can definitely see growth across various metrics as a fan and as a league partner (Perform Group) of theirs, across various European markets. As we scale, we see the NFL as a key partner in markets far away from North America. 

HowiePerform Group is a subsidiary of privately held Access Industries. The sports media company counts The Sports News and Goal among its U.S. publications. While you can’t invest in Perform Group, there is one way to play DAZN; Dentsu, a Japanese advertising firm that trades publicly on the Tokyo Stock Exchange under the symbol (TYO: 4324). In late March, Dentsu invested in DAZN as part of a deal “which made the service available to customers of mobile phone operator NTT Docomo.” No information has been released relating to the size of the investment or the valuation placed on the company.

Fan MarinoConsidering NFL, MLB, NBA and NHL rights are tied up into the early part of the 2020s, I asked Joe what else U.S. sports fan can expect to see on the service upon its launch? 

Joe: Our approach to rights acquisition is not going to be in a silo (i.e. fight sports), we’ll make some other announcements soon; this is very much a multi-sport service that will carry premium rights for a number of top-tier sports. Again, we are in this for the long-term; we have engaged and will engage with the big 4. Immediately, you’ll see a broad offering touching on soccer, international sports and domestic content where it’s available.

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Perform Group Makes Largest Investment in Boxing History

Matchroom

U.K. based promoter Matchroom Boxing and Perform Group have formed a joint venture, Matchroom Boxing USA, to promote 16 U.S. based fight cards annually over 8 years. Perform Group, which has committed $1 billion to the venture (the largest investment in boxing history), will own less than half the company, but will gain valuable rights to broadcast the events on their digital streaming service, DAZN (self-proclaimed Netflix of live sports). Pronounced Da Zone, DAZN currently controls sports broadcast rights in 5 countries; including Canada, where it owns exclusive NFL live steaming rights. With rights to the Big 4 leagues under contract, the company will use boxing as its entree to the U.S. market.

Howie Long-Short: Perform Group is a subsidiary of privately held Access Industries. The sports media company counts The Sports News and Goal among its U.S. publications. While you can’t invest in Perform Group, there is one way to play DAZN; Dentsu, a Japanese advertising firm that trades publicly on the Tokyo Stock Exchange under the symbol (TYO: 4324). In late March, Dentsu invested in DAZN as part of a deal “which made the service available to customers of mobile phone operator NTT Docomo.” No information has been released relating to the size of the investment or the valuation placed on the company.

This is the 2nd high-profile announcement that Perform Group has made within a week. On Tuesday, the company hired former ESPN President John Skipper to be their Executive Chairman. Skipper has indicated his focus will be on DAZN, which is particularly interesting as he’ll now be competing head to head with his former company and their OTT service, ESPN+.

Fan Marino: I’m excited about 16 cards being added to the annual sports calendar, but strongly dispute Perform Group CEO Simon Denyer’s assessment that “the U.S. boxing market has almost eaten itself alive. It’s pushed anything compelling to pay-per-view, and the pricing is now around $100, which is insane.” This weekend’s Lomachenko fight is on ESPN. 3 weeks ago, Adrian Broner, Jermall Charlo and Gervonta Davis fought on the same Showtime card. 3 weeks prior to that, Anthony Joshua and Joseph Parker fought on Showtime; and Deontay Wilder has never fought on PPV. U.S. boxing fans are getting more big-time fights on cable television than any time in the last 30 years and with the addition of OTT players like ESPN+ and DAZN, up-and-coming fighters on the undercard can now be seen too.

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Turner Introduces B/R Live, Untethered Premium Sports Streaming Service

B:R Live

Turner (TWX) has announced plans to launch “Bleacher Report Live”, an untethered (i.e. no subscription needed) premium sports streaming service. Designed to serve as “the central hub for both the discovery and consumption of live sports content”, B/R Live will “provide direct access to live games for purchase on an individual or subscription basis.” The new service will launch on April 7th with Johnny Manziel’s debut in The Spring League; Turner is offering a free preview period.

Fan Marino: The B/R Live virtual network will include UEFA Champions League matches, EUFA Europa League matches, 65 NCAA Championships and the PGA Championship (plus a lot more); but, it’s their partnership with the NBA that will put B/R Live on the map. Push notifications are among B/R’s strengths and its “House of Highlights” brand has over 8.6 million engaged millennial basketball fans following on Instagram. The ability to reach those users during crucial moments of games, with the opportunity to watch live in-app (via NBA League Pass) at a reduced price (think: $.99 for last quarter), means the future is here (and Turner has a winner). As noted in Tuesday’s newsletter, there are a ton of digital video broadcasting services (with more to come); this is one that will succeed.

Howie Long-Short: One digital video streaming service I didn’t mention yesterday was DAZN (pronounced Da Zone), as it’s owned by the Perform Group; a subsidiary of privately held Access Industries. There is one way to play DAZN through, Dentsu; a Japanese advertising firm that trades publicly on the Tokyo Stock Exchange under the symbol (TYO: 4324). Dentsu recently invested in DAZN as part of a deal “which made the service available to customers of mobile phone operator NTT Docomo.” No information has been released relating to the size of the investment or the valuation placed on DAZN.

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