No Need for DAZN, Matchroom Boxing to Panic as “Careers are Defined by the Comeback”

Joshua-Ruiz

Andy Ruiz, Jr. knocked out IBF, WBA & WBO title holder Anthony Joshua in a stunning upset Saturday night at Madison Square Garden. The loss ends Joshua’s reign as an undefeated champion and the hope of a unification bout with Deontay Wilder in 2020, but little else. Former HBO Sports President Ross Greenburg explained that heavyweight boxing is unpredictable – even the great ones (think: Ali, Louis) have been knocked out – and “careers are defined by the comeback. A.J. will have the chance to comeback bigger than he was and become a champion again.

Howie Long-Short: Saturday night’s historic result is definitive proof that a single punch (occurred in 3rd round) can alter the best of plans. Even with the loss, DAZN’s decision to build their fight sports lineup around A.J. was the right one. The English boxer was already a mega-star in the U.K. (selling out 90,000 seat venues) and at the age of 29, in the prime of his career. The 3-fight deal (one remains) guaranteed the upstart streaming service tent pole cards for their U.S. expansion, credibility with other fighters and a compelling reason for fans to sign-up – the annual price point is less than a pair of PPV events (and Joshua fights 2x/year).

On the surface, Ruiz’s 7th round stoppage of Joshua would appear to be a crushing blow to both DAZN and Matchroom Boxing (his promotion), but a single defeat doesn’t destroy a fighter’s value – Tyson, Lewis, Holyfield, Pacquiao and McGregor all earned record paydays with blemishes on their record – and the shocking result has given the upstart platform significantly more domestic exposure than they would have received had A.J. disposed of Ruiz in an orderly fashion as anticipated.

Joshua’s loss also gives DAZN/Matchroom a big date for the fall calendar. Boxing fans south of the border are going to adopt Ruiz as a favorite son – he’s the first Mexican heavyweight champion – and the heavyweight division usually “works its way into ratings or in this case subscription buys”, so the rematch should prove to be fruitful.

That doesn’t mean DAZN execs were celebrating on Sunday morning. Boxing is different than other sports in the sense that “a loss can not only derail a year, but a career.” Greenburg says there’s no reason for the streaming service to panic right now, but “a second loss [in the rematch] will hurt – losing the heavyweight champion would be a body blow” (assumes if he wins, he re-signs).

A.J. banked upwards of $25 million for the Ruiz fight, so it’s tough to say the night was a total wash, but the June 1st showdown was supposed to be little more than a “brand-building exercise” to introduce the U.K. champion to the U.S. boxing fan and while the fight made headlines, it failed to serve as the showcase needed to force the Wilder fight. In fact, Greenburg doesn’t even believe U.S. fans would buy a Joshua-Wilder showdown “unless he comes back and destroys Ruiz – he has to win that fight.

Even if Joshua had won, a fight with Wilder remained in the distance. The WBC champion is scheduled to fight Luis Ortiz next and announced – within hours of A.J.’s North American debut – a 2020 rematch with Tyson Fury (though I’m not convinced that fight is a done deal, it has been suggested Wilder’s camp may have floated the story to upstage the Joshua fight); there is also a bout scheduled with fellow PBC heavyweight Adam Kownacki. Then of course, there are network relationships that prevent fights from being made. Stephen Espinoza needs to retain Showtime’s relationship with Wilder and Haymon, while the same goes for DAZN with Joshua and Eddie Hearn. It’s a very difficult fight to negotiate regardless of how they split the money.

Fan Marino: Haymon has a potential “golden goose” on his hands with a Mexican heavyweight champion, but Greenburg warns “just because you knock out a star, doesn’t mean you’ll become one. There have been many flashes in the plan – guys like Oliver McCall and Buster Douglas – who failed to make a dent once they held the title. Now, if he beats Joshua a 2nd time and he loses a bit of weight he’ll begin to achieve that star power.

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Early Entrants: Vol. X – 4-Team Mid-Season Tournament to Serve as Trial Balloon for Change in Schedule

nbadigital_200x200

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

4-Team Mid-Season Tournament to Serve as Trial Balloon for Change in Schedule 

N.B.A. Commissioner Adam Silver has publicly expressed a willingness to explore potential changes to the league schedule – an in-season cup tournament (think: European soccer) or post-season play-in tournament (giving teams that would otherwise be headed to the draft lottery another chance at a playoff berth) are the ideas most frequently discussed. While it’s unlikely the wholesale changes referenced will occur before the end of the ’22-’23 season (the next time one side can opt out of the current CBA), JohnWallStreet has heard that the league could float a trial balloon (pending players’ association approval) in the form of a 4-team mid-season tournament (3 games over 48 hours) that would replace the annual all-star game. The tournament, which could take place as soon as ’21-’22 (the league’s 75th anniversary season), would consist of the Eastern Conference All-Stars, the Western Conference All-Stars and two international clubs.

Sports Illustrated Branded Restaurants Coming

Authentic Brands Group spent $110 million to acquire the intellectual property and licensing rights to Sports Illustrated. CEO Jamie Salter has publicly cited opportunities in consumer goods (think: apparel), events (think: conferences), sports gambling, media (think: video), coaching (think: sports-skills classes) and even physical therapy locations – but one concept that has not been discussed to date are themed restaurants. Sources tell JohnWallStreet to expect S.I. branded eateries sooner than later.

Marquee Sports Network Destined for Basic Cable Packages

Charter Communications’/Time Warner’s inability to gain widespread carriage (across Los Angeles) for Spectrum SportsNet LA has baseball fans on the north side of Chicago concerned that their local cable or satellite operator will be unable or unwilling to come to terms with Sinclair Broadcast Group (the Cubs partner) on Marquee Sports Network. But sources tell JohnWallStreet that Cubs fans can rest easy – Marquee has a path to carriage should be far easier to navigate. Sinclair maintains leverage with distributors as the owner of 22 other regional sports networks (including YES) and the team’s standing in the pantheon of Chicago sports franchises is higher than that of the Dodgers in L.A. Cubs games are such a must have for carriers in the Chicago market that it’s believed the RSN will ultimately land on distributors’ basic cable packages, as opposed to a paid tier.

FTC Ticketing Workshop Likely to Be Blood Bath for Industry’s Biggest Players

The FTC is hosting a workshop to explore consumer protection issues within the online ticket marketplace for sporting events (and concerts) on June 11th, but insiders believe what is supposed to be a constructive gathering meant to push the industry forward will turn into little more than a finger pointing exhibition between the business’ biggest players. Ticketmaster is going to blame StubHub and Vivid Seats for allowing sellers to “short-sell” and for deceptive practices (think: marking down pricing on tickets only to increase fees on the back-end). StubHub and Vivid Seats are going to allege Ticketmaster has (at times) restricted mobile ticketing, co-mingled primary and secondary market inventory and scalped an abundance of tickets via their “Platinum Seats” program. Ultimately, the consumer (both buyers and sellers) will benefit from these issues coming to the forefront, but next week’s event is bound to be a blood bath for ticket marketplaces.

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Wilder Ducks Joshua, Takes Ortiz Rematch – No Unification Bout in 2019

Joshua-Ruiz

IBF, WBA & WBO heavyweight champion Anthony Joshua (22-0, 21 KOs) is making his North American debut tomorrow night at Madison Square Garden against challenger Andy Ruiz, Jr. (32-1, 21 KOs) exclusively on DAZN. Joshua is expected to defend his 3 belts (he’s a 40/1 favorite), but his next fight won’t be to unify the division against WBC champion Deontay Wilder; it was announced on Wednesday that the American will instead turn his focus towards a rematch with Luis Ortiz. While not unexpected – Ortiz appeared in the ring following Wilder’s 1st round KO of Dominic Breazeale on May 18th – recent denials from Wilder’s co-manager Shelly Finkel about the deal being completed and public comments acknowledging a meeting with John Skipper about “the Joshua fight” had fight fans hoping the two sides would come to terms. Instead, it appears as if boxing loyalists will wait until at least 2020 for “The Fight of the Century” to occur.

Howie Long-Short: JohnWallStreet reported that Wilder-Ortiz II was a done deal back on May 17th, so Finkel’s comments were a bit disingenuous (if technically true). Matchroom Boxing promoter Eddie Hearn confirmed as much saying that there “weren’t really any” substantial conversations with Wilder’s camp following the Breazeale fight and certainly none where Wilder’s side expressed “their intentions to get a deal done.” Hearn noted that less than two hours after Joshua went on ESPN and declared that he wanted Wilder as his next opponent (and would be willing to sit down for a face-to-face meeting to make it happen) “Deontay announced a fight with Ortiz that probably isn’t even signed, yet. It’s his way of avoiding questions about a potential unification bout.”

It’s hard to argue that the Wilder camp isn’t ducking Joshua. DAZN presented the American champion with a “huge offer” – 3 or 4 fights for $100 million or $120 million that would have included a pair of bouts against A.J. – but were rebuffed. The decision to risk “generational money” coupled with questions about who invested in the Wilder-Breazeale fight (Showtime alone couldn’t have funded it) and why (the belief is that Al Haymon did it to retain Wilder with PBC for sale or raising capital), have had boxing insiders wondering whose interests Al Haymon had been representing in the meeting Finkel referenced with John Skipper – Premier Boxing Champions (as president) or Deontay (as co-manager). Hearn believes that “the decision made [to pass on a DAZN deal] and the advice given [to take the Ortiz fight next] were done with a network or PBC hat on; obviously, it wouldn’t be good news for PBC to lose Wilder to another network or for him to lose (presumably to Joshua).”

To be clear, with potentially lucrative fights against Joshua and lineal champion Tyson Fury on the horizon there’s value in remaining a network free agent (exclusive deals between fighters and broadcast platforms often get in the way of big fights being made); PPV fights against competition of that caliber could net the Wilder more than he would have earned under the terms of the DAZN deal. But those fights (and the dollars that come with them) only remain possible if he beats Ortiz – no sure thing considering “King Kong” had him on the ropes the first time around. Wilder should earn at least $20 million for the rematch (the figure he took home against Breazeale), but Hearn says that he’s “not making what DAZN offered [him] for fights with Ortiz and Kownacki” (an anticipated H1 ’20 opponent). For reference purposes, A.J. is set to take home +/- $25 million on Saturday night.

Much of the disappointment surrounding Wilder’s decision to push a potential unification bout into 2020 is that he’s turning 34 (6 years older than Joshua). The feeling is that he’s closing in on an age where as Chris Mannix said, “the outcome of the fight will be accompanied by a ‘well what would have happened’ comment”; and that’s a best case scenario. For a unification bout to happen, Wilder needs to continue winning and Joshua says that’s far from a certainty. “It’s impossible for Wilder to remain champion for the rest of his career. He’s had close fights with Molina, Fury and Ortiz. It feels like we’re getting close to a time where that belt changes hands.” If it does before a Joshua-Wilder mega-fight, boxing fans will have lost.

Fan Marino: With Wilder no longer a possibility as the next fight, undefeated lineal heavyweight champion Tyson Fury – a fellow Brit – would seem like an intriguing possibility for Joshua. A.J. has said he’s willing to fight Fury, but it’s Wilder that has what he seeks – the WBC championship belt. Hearn said “Wilder is the bigger fight, but it’s really not about who it is; it’s about what is – the undisputed heavyweight championship of the world. The biggest prize in the sport.

If Fury isn’t next up, Oleksandr Usyk, Michael Hunter, Kubrat Pulev, Dillian Whyte, Joe Joyce and Filip Hrgović will be among the names under consideration.

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Significant Investment in the Fastest Growing Team Sport Yielding Results for Non-Endemic Sponsor

PennMutual

The Penn Mutual Life Insurance Company (Penn Mutual) is the title sponsor of the Collegiate Rugby Championship (for a 5th straight year). Over the last half decade, the Philadelphia based insurer has invested heavily – far beyond what is commonly done at the sponsor level – into growing the sport. Annual collegiate tournament aside, the company has sparked a local grassroots youth movement, picked up sponsorship of the National Small College Rugby Organization (NSCRO), produced a pair of Telly Award winning documentaries on the sport and established a discount program with Rhino Rugby that helps to outfit 200+ collegiate teams. Penn Mutual has worked to become synonymous with rugby believing the sport serves as an effective platform to raise brand awareness and to assist in the recruitment of both advisers and clients.

Howie Long-Short: When Penn Mutual signed on as the title sponsor of the Collegiate Rugby Championship (CRC), the company wasn’t in the market for a sports marketing partnership – in fact, in its 167-year history it had never invested in athletics – but as Chairman and CEO Eileen C. McDonnell explained “the opportunity to increase brand awareness amongst millennials, to tap into some next generation talent for the organization (the company hadn’t recruited on campus in decades) and ultimately to obtain clients” with a local event (corporate headquarters are in Philadelphia) was intriguing; as was the chance to align with a property that remained “near the ground floor” (so there would be plenty of upside), that wasn’t bound by NCAA restrictions (rugby isn’t sanctioned by the organization, so athletes can be used in promotion). McDonnell’s decision, at least timing wise, couldn’t have been better. Within weeks of Penn Mutual signing on as the tournament’s title sponsor it was announced that rugby would be reintroduced – after a 90-year hiatus – as an Olympic sport.

If brand awareness was Penn Mutual’s main objective, efforts to achieve it through the sport have been an undeniable success. Since 2014, the life insurance company has received more than 1 billion impressions within rugby based content across television, digital, out-of-home media and social media platforms.

McDonnell believes those who play the game have the ideal makeup to excel at the company which explains why she’s looking to the pitch for job candidates. Collegiate rugby teams rarely offer athletic scholarships, “so many of those competing go to school full-time, play a sport and manage to hold down a job to help pay for college” – an indication that they’re a disciplined, hardworking, dedicated group. It’s unclear how lettermen perform in the workplace relative to those who didn’t play, but it seems as if Penn Mutual’s investment in rugby is paying off on the recruiting front; 18% of all new advisers since ’16 have an affiliation with the sport.

The rugby viewing audience and the athletes that play the game in college are also “the right clients” for Penn Mutual’s products. McDonnell noted that “those in the rugby community tend to be highly educated professionals – doctors, lawyers, entrepreneurs – with household earnings in excess of $150,000/year.”

Penn Mutual’s investment in rugby has yielded results (which explains why the company is close to signing a 5-year extension with the CRC). In ’15 the life insurance giant emerged on the Fortune 1,000 list for the first time (at #980). The company now sits at #723, +38 spots YoY. While it’s difficult to attribute all the recent success to their involvement with the sport, Penn Mutual has not done any other national branding campaigns since it signed on with the Collegiate Rugby Championship tournament in 2014.

Fan Marino: Since ’10, rugby has been the fastest growing team sport in the country across the youth, high school and collegiate levels (lacrosse is 2nd). McDonnell attributes the increased participation to the “bad press” that football has received. Parents concerned about head injuries are driving their children to less violent sports.

The Penn Mutual Collegiate Rugby Championships is an invitational tournament, with two qualifiers, consisting of 54 men’s and women’s teams (800+ student athletes) that will determine 3 collegiate national champions – men’s, women’s and NSCRO. The event will be held this weekend (May 31 – June 2) at Talen Energy Stadium in Philadelphia. ESPN networks will carry 7 hours of live broadcast coverage over the weekend, while ESPN+ will live-stream the in stadium matches on Saturday from 8a-630p and Sunday from 10a-5p.

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NASCAR’s Takeover of ISC Another Step in Expected “Global Motorsports Roll-Up”

ISC

NASCAR’s proposed $2 billion takeover of International Speedway Corp. (ISChas been framed by many as the racing circuit’s solution to cutting down on a marathon 38-race season schedule. The theory is that private ownership of 13 tracks (ISC’s 12 + Iowa Speedway) gives the racing circuit the flexibility needed to eliminate and/or move race dates and venues. But Chris Lencheski (a sports/media private equity CEO, a winning NASCAR team owner & LeMans racing promoter in D.C.) believes that there’s a larger play at “value creation” at stake here – “the chance to own the entirety of global motorsports for the first time, should someone be so motivated.”

Howie Long-Short: Mark Coughlin suggested back in late April that Sonic Financial Corp’s bid to take Speedway Motorsports, Inc. (TRK) private was the “first step” to a NASCAR roll-up, but Lencheski points out that it was actually the second step to this “global motorsports roll-up opportunity.” NASCAR’s April ’18 acquisition of Automobile Racing Club of America (ARCA) – stock car racing’s minor leagues – eliminated a potential competitor (in the late 90s/early 00s Bruton Smith expressed genuine interest in acquiring ARCA to compete with NASCAR) and started the chain of events.

Hulman & Company’s recent sale of their consumer packaged goods brand, Clabber Girl, falls nicely in line should a buyer seek a global roll-up. Mark Miles’ decision to unload a company best known for its baking powder gives the CEO “optionality” – a prospective buyer of a pro sports organization and its venues isn’t going to want to be in the baking goods support business – and with “the world’s most famous race track (Indianapolis Motor Speedway), the single biggest event in the world on a given day (Indianapolis 500) and a series (IndyCar) with some positive momentum for the first time in 15 years there shouldn’t be a lack of interest in the opportunity.”

Lencheski and others expect that NASCAR may look to buy the sport’s other main track operator – Speedway Motorsports Corp (TRK) – or conversely, TRK may wish to sell to them out concern that they’ll be locked out of the “market effect”. The 12 ISC tracks that the France family is acquiring host 21 of 36 Monster Energy Cup Series races. A subsequent acquisition of TRK would “effectively give NASCAR every track (Pocono, Dover & Indianapolis – minus a sell – would be the exceptions) and bring 98% of all NASCAR related revenue streams under one roof”, making for an attractive asset for a single-entity buyer. Acquiring TRK‘s 8 tracks would also enable NASCAR to command the highest multiple when selling the rolled-up assets.

Liberty Media Corp. (already owns Formula One) and Fenway Sports Group (think: Red Sox, Liverpool F.C.) are the most logical buyers for a NASCAR roll-up and the remainder of the Hulman & Co. portfolio. Aside from their deep understanding of entertainment, sanctioning bodies, ticket sales, media sales and licensing sales, both operate with “global business models” – and that’s critical because it’s where the opportunity lies (NASCAR and IndyCar both have larger international aspirations and F1 could use the ISC/TRK tracks to increase North American awareness).

Liberty is also motivated to take down as many qualified global sports properties that it can “level up” with their existing portfolio. As Lencheski pointed out, between stakes in “Live Nation, Trip Advisor, Expedia, QVC etc. the opportunity to increase their pipeline with global events to sell tickets, rental cars, flights, hotel rooms and merchandise is attractive; and that’s before the ‘new normal’ digital media ecosystem cuts across continents, which will increase economic opportunities for those that can create value from synergy and expense-side redundancies.

As for Fenway Sports Group, they’re “invested in a NASCAR team, have access to capital and [John Henry] has expressed interest in buying NASCAR.” It’s certainly feasible Fenway would align with Liberty on what would be the only independent world-wide entertainment asset as large as the World Cup or Olympics; yet, it would be held on an annual basis.

Fan Marino: The reason that Lencheski believes the talk surrounding schedule changes is “nothing but noise” is because “there’s no way NASCAR is going to buy these companies, merge them together and then not keep the existing schedule essentially intact.” There will be some changes – and there should be based on the product – but NASCAR doesn’t need to complete a merger to alter its schedule. Existing contractual agreements with the tracks expire at the end of the 2020 season.

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N.Y. Sports Business Community Rallies to Support BOSS

NYCBoss

New York City public schools posted a four-year high school graduation rate of 75.9% in 2018. While that’s a record-high for the city, it still trails far behind the national average of 84.6% (2016-2017). The Business of Sports School (BOSS), a NYC public high school with a focus on sports management and entrepreneurship, will perform on par with the national average this spring, though; graduating +/- 84% of its 2019 senior class. Co-chair Steve Horowitz (partner, Inner Circle Sports) says that the program works – the urban H.S. is graduating kids at far higher clip than the city average – because Principal Dr. Joshua Solomon has been able to successfully “weave education in with sports, personalities, internships and swag.”

For those interested in supporting the Business of Sports School (and mingling with a who’s who of the NYC sports world), their 10th anniversary celebration will take place on Thursday evening at the New York Athletic Club. Tickets to the fundraiser can be purchased for $150. BOSS is also always looking for mentors. If interested, please email solomon@nycboss.org.

Howie Long-Short: When BOSS was first introduced, administrators had to explain to prospective students that its mission wasn’t to turn kids into pro athletes. The school operates on a standard NYC public school curriculum, simply applying a “sports edged theme” to its math, science and English lessons. Horowitz said that “it’s simply been a way for us to get through to the kids, to get them to focus their attention on academics using something they have a passion for [sports].”

BOSS is graduating significantly more students than other NYC schools on the same curriculum, so it’s worth wondering what it is about their approach that’s resonating with the kids. My sense is that by communicating information in a manner that allows students to make the connection between academics and the business world, teachers have created a more engaged classroom. The collective of local industry professionals – often in their mid-late 20s or early 30s – that donate time to work with the students, serve as proof that hard work yields the results they desire. Of course, the quality of the faculty and the interest they take in the students’ growth cannot be understated.

Industry professionals who work with the students are teaching skills (as opposed to theory) applicable to the business world (think: sneaker design, graphic design), so it’s not surprising that the school has found success placing 80% of Jr. and Sr. students into internship programs (BOSS students have the contacts and knowledge base). But even those without internships are gaining valuable experience on location. Contacts on the Board and Committee have opened doors for BOSS classes to visit Madison Square Garden, the CBS production studio during the Final Four and SNY. Considering 88% of BOSS students are “first generation college”, it’s likely many have never had exposure to a professional office environment before.

The school’s Industry Advisory Board and Young Professionals Advisory Committee are also mentoring students – not just on “how to think through finding the right sports business job, but then getting them ready for college and post-graduation.” Horowitz says that the program includes training (in collaboration with Morgan Stanley) on how to dress (for interviews), shake hands and make eye contact and a career day where students have the chance to inquire about the skill-sets needed to pursue various sports related careers.

The BOSS’ graduation rate is particularly impressive considering the school’s enrollment is determined by a lottery without regard to background or academic record (as opposed to a gifted program).

Fan Marino: Horowitz mentioned personalities, but he was understating the star power just a bit. The long list of high-profile speakers that have been through the BOSS school over the last several years includes Adam Silver, LeBron James, Steph Curry and Jamie Foxx.

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WarnerMedia Sees Pro Wrestling as a Safe Investment

AEW

All Elite Wrestling (AEW) – the start-up promotion founded by Cody Rhodes and The Young Bucks (and backed by Tony Khan, son of Jags owner Shahid Khan) – has announced a broadcast agreement with WarnerMedia. TNT will televise AEW’s live weekly show and B/R Live will be its exclusive digital streaming provider. AEW’s flagship show on TNT won’t begin until this fall (when it becomes the 1st weekly wrestling program to air on the network since WCW Monday Nitro in ’01), but the promotion’s inaugural PPV event ‘Double or Nothing’ is slated for Saturday night (May 25th). Financial terms of the deal were not disclosed, though it’s been reported (on the Mat Men podcast) that “TNT is covering the [show’s] production costs and splitting advertising revenue with AEW.”

Howie Long-Short: As Dave Meltzer noted in his ‘Wrestling Observer Newsletter’, a “network paying for the production costs of a wrestling show is incredibly unusual in a rights-fee deal.” Attribute AEW’s advantageous deal to timing. Live sports programming is particularly attractive in today’s on-demand environment and the explosion of OTT streaming services has created the need for more content. The result has been a seller’s market for rights holders.

WarnerMedia was willing to invest in production for AEW – when they weren’t for the Alliance of American Football – because pro wrestling is a safe play relative to a spring football league. Harvey Schiller, who was the President of Turner Sports during the WWE/WCW Monday night ratings wars, explained that “there are a large number of dedicated wrestling fans out there that can’t get enough ‘sports entertainment’. A new promotion is always going to have a core audience that will watch it, read about it, buy merchandise etc. Wrestling is less like other sports and more like a successful movie franchise, where fans are always waiting for the next iteration to come out.”

AEW will find success on TNT if the quality of their show is “competitive with what the other promotions are putting onAs long as they build the characters and develop the storylines, people will watch.” That was the formula that WCW relied on to surpass WWE in the Monday night ratings wars and Schiller believes that if AEW is to have a similar impact on the industry “they’ll need a Macho Man, a Hulk Hogan and a few of the other guys [Kevin Nash, Scott Hall].” Khan’s promotion won’t have the N.W.O., but with a stable that includes Rhodes, The Young Bucks, Adam “Hangman” Page, Chris Jericho and Kenny Omega (considered by many to be the best wrestler in the world) they’re off to a good start.

AEW isn’t the only wrestling outfit with a national platform that’s trying to take market share from WWE, but having a weekly showcase on TNT is a bit different than one on AXS TV (see: NJPW) or Pop TV (see: Impact Wrestling); “an established brand in cable has a certain drive to it – especially when there’s desirable programming leading in.” A prime-time slot on TNT is also very different than having content air on an OTT service (think: WWE Network). “When a show is on established cable viewers will find it just rolling through the channel lineup, when it’s on a streaming service viewers need to seek it out.

Fan Marino: WarnerMedia did not disclose what night AEW’s weekly show would air, but it’s presumed to be Tuesdays; a night that WWE plans to vacate with SmackDown moving to Fridays. Schiller supports the idea of placing the show in SmackDown’s old timeslot, as opposed to initiating a 21st century ratings war. He said that a decision to go head-to-head with RAW or SmackDown! would be an “ego driven decision, not a revenue driven one. No matter what, when you’re up against a similar show you’re going to lose viewers; you’re not going to destroy WWE, that’s not going to happen.”

AEW isn’t going to destroy the WWE, but it’s going to do it’s best to stand out from them – promising fans “less scripted, soapy drama and more athleticism and real sports analytics.” Win-Loss records are going to become meaningful again, as will championship reigns. The promotion plans to crown its first world champion on Saturday night at ‘Double of Nothing’.

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As Technology Advances, MLB Blackouts Impacting Fewer Fans

MLB

With 18 of 30 Major League Baseball teams experiencing a YoY attendance decline, many are asking what the league can do to stop the slide and spark a return to the ballpark. Alleviating the friction that prevents fans from watching league games seems like a reasonable place to start, but defined home markets and existing local broadcast deals complicate the matter. There is hope on the horizon though. With technology continuing to improve, young fans gravitating towards players over teams and MLB considering reallocating digital media rights to its teams (as opposed to the RSNs), it’s possible if not likely that the future will be one in which fans willing to pay for games “on demand” have that option.

Howie Long-Short: Major League Baseball’s blackout policy is in place to promote competitive balance. While the league sells national broadcast and distribution rights and those revenues are split evenly amongst its teams, the clubs retain 100% of local broadcast revenues. If defined home territories didn’t exist, the league’s most popular franchises [and the RSNs they play on] would appear on TV sets across the country, while the remainder of the league’s teams would struggle to even gain carriage in their local markets; and needless to say, it’s difficult for a team to build a local following if the games aren’t being broadcast on television.

With several operators in each MLB market, the RSN distributing the home team’s rights must strike deals with multiple carriers (if all fans in-market are to have access to the games). If the RSN and a cable company are unable to come to an agreement, the local team’s games aren’t broadcast to that carriers’ subscribers; those same fans also aren’t eligible to watch the home team’s games through MLB.tv or MLB Extra Innings as those services exclusively carry to out-of-market broadcasts. The blackout policy is meant to protect the RSNs – which pay teams significant amounts of money for their local broadcast rights on an exclusive basis – from losing in-market viewers to a national package.

Blackouts were particularly disruptive to baseball fans when cable television companies were the primary method of RSN distribution. As distribution technology has advanced and the reliance on cable has eased, MLB’s blackout policy has had less of an impact on fans. Those who reside in cable blackout zones can now subscribe to a satellite provider like DirecTV (has RSNs with the broadcast rights to 27 of the 29 U.S. based clubs, Phillies and Dodgers excluded) or a virtual MVPD service like YouTube TV (has RSNs with rights to 22 teams’ games) and catch the home team’s games unencumbered by territorial restrictions.

Howard Handler, former head of NFL and MLS marketing (currently leading h2 Advisors), explained that blackouts are the result of your classic “rights seller vs. fan centric” conflict. “Teams, leagues, owners of intellectual property have historically sold media rights to the highest bidder, technology has now created the ability for them to go direct-to-consumer I expect leagues to ensure that during their next round of media rights negotiations the fans’ ability to watch all of the games – for a price – is protected. These entities are in the business of maximizing the value of their rights and you do that by making them available as broadly and expansively as possible. It’s simply not logical to impede the access and engagement of your highest value customers.”

Fan Marino: MLB teams’ home television territories are not defined by a common radius from ballparks, but by a multitude of factors including historic broadcast patterns, team marketing initiatives, geographic location and fan interest – which leads to multiple teams claiming large swathes of the country without a local franchise. No state makes it more difficult for fans to watch MLB games than Iowa, where the Brewers, Cardinals, Royals, Cubs, Twins & White Sox all stake a claim to the market. With cable operators in the Hawkeye state unlikely to carry the RSNs that broadcast those teams’ games and blackout rules preventing the games from being shown on a national package, fans in Iowa aren’t getting to watch much AL or NL Central ball.

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Sports Betting Expected to Drive Bookmakers to Operate More Like D-T-C Content Businesses

MinuteMedia

Sports media entities are taking varied approaches to capitalizing on legalized sports gambling. Fox Sports recently announced the formation of a JV with The Stars Group (entitled FoxBet) that will facilitate real-money sports wagering, theScore (in partnership with Darby Development) plans to take bets and issue payouts through their online platform and mobile app and both Bleacher Report and ESPN have struck content based partnerships with Caesars Entertainment. While Fox Sports, theScore, B/R and ESPN are all new to the gaming sector, Minute Media (owner of 90min – one of the three most trafficked soccer sites in the world) has had the experience of publishing in established gaming markets (like the U.K.) for some time. Company president Rich Routman explained that regardless of the monetization model that a publisher ultimately chooses, enticing a sports fan to place a wager “starts with content.”

Howie Long-Short: Minute Media (MM) has found success monetizing legalized sports betting with two distinct strategies. The first is a traditional advertorial or sponsorship based strategy “where MM creates dynamic content in collaboration with the licensee. Native placement. Live odds. All the things one would expect a publisher to do to entice a reader to place a bet on one of its partners’ platforms.”

The other is based on MM serving as the engine [providing both the programming and product technology] behind a bookmaker’s content experience (see: FanDuel’s The Duel’). Routman says that “there’s a strong correlation between an end user consuming sports betting related content on a bookmaker’s website and that individual following through with a wager. There’s a lot less friction in getting a reader to place a bet if they’re already on the platform, it’s much more effective than relying on publishers to drive traffic to a gaming site.” For that reason, Routman believes we’ll see a trend of bookmakers beginning to operate more like direct-to-consumer content businesses.

Routman doesn’t deny that there is an opportunity for publishers to align with licensees and operate sportsbooks (think: FoxBet, theScore) – if the end user is already on their website/app reading about the game, why not allow that individual to place a bet there – but he doesn’t believe that is where “scale comes from. Media companies can drive incremental revenues by enabling betting inside of their existing environments, but when you consider the investments bookmakers are making in advertising and the scale they have in the market – it’s really difficult to compete.”

If bookmakers are going to become content machines and start publishing the best sports betting insights, it’s worth wondering if there’s still a role for the traditional sports media publisher in the space. Routman says that it’s not a concern, that “there will always be a role for media companies to cover sports gambling because regular bettors – the ones actively looking for an edge in data and information – only comprise a small segment of the market. Gaming operators are still going to need the scale that media companies can provide.” 

Fan Marino: While sharps crave analysis from all angles, mainstream sports media publishers seeking to capture the attention of the casual sports bettor need to “go wide, rather than deep. It’s about focusing on the fun forms of wagering like prop bets and futures.” Routman estimates that upwards of 80% of the opportunity for media companies is in “bringing the casual fan into the betting space” because the bettor who has been gambling off-shore likely already has sources for all the insights they require.

The opportunity Routman speaks of is relatively limited today as sports betting remains “inherently local.” But over time, as deregulation occurs, “every major sportsbook operator is going to be competing for market share in every state with legislation on the books; and the path to market share, starts with media companies with scalable audiences.”

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Only Teams, Leagues & Broadcasters Can Prevent Persistent Sports Betting Advertisements

AGA

Last week, the American Gaming Association (AGA) – a trade group representing the interests of the U.S. casino industry – introduced ‘The Responsible Marketing Code for Sports Wagering; a series of guidelines designed to keep operators and suppliers out of government regulator crosshairs. In recent months, multiple foreign governments have begun to crack down on gambling advertisements as addiction rates rise. AGA vice president of public affairs Sara Slane explained that “perception drives policy and if the perception is that the industry is over advertising (see: DFS circa ’15) and it’s leading to problem gambling, then it’s likely to result in arbitrary policies and regulations.” The AGA’s Responsible Marketing Code calls for a ban on advertising in locations where the majority (71.6%) of the audience is too young to gamble. Advertisements in collegiate newspapers and the use of cartoon characters in marketing campaigns is also prohibited.

Howie Long-Short: AGA members were wise to learn from others’ mistakes and to take a proactive approach to self-regulation. Slane says that “one of our takeaways [from following the gaming markets abroad] was that there was this consistent regulatory backlash to overt and persistent advertising and if we want to play the long game on sports betting – which we do – then we need to self-regulate to prevent what’s happened in the U.K., Belgium, Italy and Australia from happening here. Each of those countries has implemented (or is planning to implement) some sort of a ban on gambling advertising.

To be clear, the Responsible Marketing Code was designed to keep attorney generals and state legislatures at bay, not out of concern for the gambling addict. That’s not a criticism of the AGA – it’s unclear if there is even a direct correlation between advertising and problem gambling; and it’s not exactly as if the government’s actions are being done to protect the public. Slane says “the assumptions [governments] use to address this issue are often not even based in science, they’re policies instituted to address the perception of problem gambling. Silly rules like requiring that an ATM machine be at least 20 feet from the casino floor – as if that distance somehow gives problem gamblers the cooling off period needed to restrain themselves from withdrawing more money.”

The Responsible Marketing Code is a start, but there’s currently little in place to prevent AGA members from overstepping its boundaries. Slane said that “the hope is that phase two will add the teeth or the regulatory mechanism needed to review instances where advertising doesn’t fall in line with Association standards and to provide the follow through to bring members back in line.” Some might assume that the bylaws would hamstring AGA members in competition with unscrupulous licensees, but Slane believes that it provides her organization with the opportunity to “go to FTC or FCC and to point out the bad actors in the space that are causing the industry as a whole to be painted in negative brushstrokes.

While all AGA members (operators & licensees) have agreed to abide by the terms of the Responsible Marketing Code, Slane explained that the only way to truly prevent overt and persistent advertising is to get the rights holders to act responsibly. It requires “getting the leagues, teams and broadcast community to take ownership of [the issues causing government intervention]. They’re the ones who are going to have to set frequency limitations because they’re the ones who control the pipes and tubes.”

Those critical of the code say that it doesn’t go far enough as it fails to address television or in-game advertising, but Slane said that “it’s one step at a time and the code can always be updated. Getting the industry to align behind the regulations as is, was not easy. Our members are all competitors and they’re hesitant to do to anything that might put them at a disadvantage. As far as TV is concerned, it’s a non-issue. We’re not at critical mass where you are going to see national ad campaigns. It’s too expensive and the advertising needs to be far more micro targeted.”

Fan Marino: Despite reports to the contrary, AGA members can advertise on college campuses. While advertising in the school paper is off limits, as long as it’s “tasteful and responsible” licensees can market to college students in other parts of campus life. Slane cited UNLV and Nevada (Reno) as proof that the casino industry could successfully work in tandem with administrators.

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