Let me be clear, I love the Sports Business. It’s why I write so much about it. Love the players and love the game. Why? Because, it’s a space for real people to feel and be a part of real fandom. Where they put aside other the other things that might keep us apart and celebrate or commiserate around wins and losses, some felt so deeply they bring us to tears. But sports is a business and more than ever before it’s big business. Technology, access, new business models, athletes and globalization are changing the game literally and metaphorically.
But it wasn’t always this big. Depending on when you were born, you might remember when, sports was a family event? When it was simple in so many ways. It had all the ingredients of something that brings us together to create the tale our shared passions uniting us for the love of team, country, player, or memory. Whether you were in a big city or small town, you could gather with your family and friends and community to cheer on whatever the big game meant to you. Sometimes it was a daytime or nighttime outing and sometimes it was just around a screen in someone’s living room. But that was at a time where there were many other constants in the sports industry, in the distribution business, in consumer behavior and most importantly perhaps profit modeling and revenue forecasting were largely consistent over time.
But in all that simplicity and if you were reading the tea leaves of content, programming, studio models, distribution consolidation, audience fragmentation, escalating media rights, teams moving conferences in droves, and investment from all over the world into the new leagues disrupting existing ways of monetizing and doing business, even then we might not have known that we would be exactly where we are, this week today.
In their way, all those moments of nostalgia, gathering, following team, social media connection, athlete connection, media access and scrutiny were the foreshadowing of the last domaine for live eye balls. The holy grail of monetization. Last week, Netflix paid $5B for the rights for the WWE, today it was announced that Warner Discovery, Disney and Fox launched a sports streaming platform, Hulu of the days of yore anyone? And, (excitingly), Disney just committed to an 8 year $920MM rights deal for the NCAA which will provide exclusive coverage for 21 Women’s Sports Events and 19 Mens. The rights for sports are creating entirely new paradigms and if the IP/League rights for distributors to stay competitive are trying to figure out how to afford the rights? Because the future is so bright for Sports League, we will all need shades. What do I mean, for all you basketball fans out there according the Wall Street Journal article on this subject, “some experts expect the NBA to command three times its last deal, which would mean a rights package worth about $78 billion over a decade.” Let the shell game begin because the waning cable and MVPD model, forcing studios to stop battling for acquisitions by buying rights and band together to afford and monetize the eyeballs and everyone still has to report earnings.
The $100 million dollar NFL playoff game by Peacock showed that while people tried to figure out how to to get Peacock, once signed up, the other programming behind it is the opportunity to keep them there. The desire for fans and consumers to chase down games and their teams would wane quickly so arguably bringing together Fox, Disney and Warner Discovery where programming will be available to Max, Hulu, Espn + to watch all the channels owned by those companies that show sports, like ESPN, TNT and FS1, but also ABC and Fox is a smart one for the Studios/Networks/Streamers. According to the New York Times, other programming will also be available to subscribers so as to be able to watch nonsports shows like “The Simpsons” and “The Bachelor, etc. Subscribers will have access to 14 channels in total, as well as ESPN’s existing streaming service, ESPN+. According the Wall Street Journal article on this subject, “some experts expect the NBA to command three times its last deal, which would mean a rights package worth about $78 billion over a decade.”
Working in marketing, media and advertising, we also know the monetization of this new union is an important one. It will be interesting to witness the pricing as brands and advertising will surely be a significant portion of forecasted revenue. The upfronts of streaming? Which were the New Fronts, until they got bundled back into the upfronts So many questions. What will happen with all the fronts?
But the pricing war for people and eyeballs isn’t just happening on TV, if anything the real world might be exacerbating this scenario. Funflation.
Today Linkedin News Editor Bobby Armstrong shared this article outlining the rising cost of fun.
According to Bobby’s article, “Attending a sporting event these days is not for the faint of … wallet. In 2023, it cost $631 (including extras) to take a family of four to a National Football League game and $266 for Major League Baseball, according to CNN Business. Because major sports leagues make 66% of their revenue from TV deals, teams “don’t care if families can’t afford the seats,” said one analyst. Instead, they’re supplementing that TV money with “dynamic” pricing and a cut of secondary-market sales. Cheap seats? Forget about ’em.”
Even looking at the upcoming Copa America tickets in the US at Sofi. The cheaper tickets are hovering around $250. Like many Americans I am excited to go and take my family, but for the cost of $1000 for a family of 4, that’s a big Saturday!
What is likely is that while rights gobbling will continue, and people will still want sports, life is getting more expensive. Subscription overload, streamers are basically using a broadcast model for advertising, funflation is still in effect but for how long with real inflation still being an issue.
The push pull for marketers will continue as they look for the faces, spaces and places to connect with audiences without compromising brand experience and the measurable outcomes for their investment. The walled gardens continue to proliferate making strategy and relevance of the creative and media experience increasingly important in these environments while being aware that consumers ultimately just want to watch and engage in what they care about, in this case the sports, teams and athletes they love.
More announcements, more consolidation, and more shifts are sure to come, and it’s going to be a wild ride!
Diversity & Disruption with Shannon Pruitt 