#Sportsbiz Recap – September 4, 2016

Tennis Channel to Reach 60M Homes by 2017 by Mike Farrell

Excerpts:

  • Tennis Channel acquired by Sinclair Broadcasting Group for $350m earlier in 2016.
  • According to ComScore, current distribution of Tennis Channel is at 47 million households
  • Sinclair Broadcasting plans to have reach of 60 million homes at some point 2017.

Sinclair Broadcasting bought the Tennis Channel (along with approximately $200m in debt). Sinclair Broadcasting has the reputation and additional channels in order to influence carriers for both wider distribution and subscriber fee’s. They’ve already shown leveraging their other relationships in order to influence better carriage for Tennis Channel. Tennis Channel was started in 2001 and was an independent channel, unlike Golf Channel which is owned by NBC Universal. Tennis Channel has slowly accumulated some rights to majors and other substantial tournaments along with a respectable stable of talent. They had been sub-licensing some of their rights to other entities in the past, but with the support of Sinclair Broadcasting should be better positioned moving forward.

Columbus Crew Seeking Next Jersey Sponsorship

 Excerpts:

  • Crew expect its next multiyear uniform naming-rights deal to be around $3M annually.
  • Current uniform naming-rights holder is Barbasol and they pay under the $2-4m that other MLS teams are currently averaging.
  • Last year, Columbus landed their first naming rights sponsor in the history of the 17-year old stadium. Mapfre Insurance is estimated to be paying $1-2m annually.

 

Major League Soccer continues to expand but the Columbus Crew have been one of the stalwarts of the league for over a decade. Unfortunately, being located in Columbus, OH leaves them at a distinct disadvantage when it comes to sponsorship compared to some clubs located in soccer hotbeds such as the Northwest or major cities (New York, Los Angeles, Houston, etc.). The major assets available sponsorship wise continue to be the jersey sponsorship and stadium naming-rights. It’s important for Columbus to secure a market rate jersey sponsor in order to sustain long-term financial health of the club.

White Sox get no new money from naming rights deal with Guaranteed Rate by Peter Matuszak

 Excerpts:

  • The White Sox will receive only the remaining value of the original 2003 agreement with U.S. Cellular, which amounts to $20.4 million. The remaining $4.7 million will go to the state agency that serves as landlord of the ballpark, the Illinois Sports Facilities Authority.
  • The deal to change the facility’s name to Guaranteed Rate Field, which was announced last week, runs through 2029.
  • The new naming rights deal for the publicly owned stadium where the White Sox play baseball is worth $25.1 million but will deliver no additional money to the team.

The funds generated from the naming-rights deal will not go directly in to the White Sox coffers, instead they will be used in a manner that is agreed upon by the Illinois Sports Facility Authority and the team. The most likely scenario is the funds will be used to update the facility. The team will not receive the funds due to terms of the lease. Public-private ownership of facilities always seem to play out in the favor or the private tenant. The tenant holds much of the leverage these days by threatening relocation.

Marketers Invest $2.5 Billion in NFL Telecasts by John Consoli

 Excerpts:

  • the league’s four major TV networks partners have already cumulatively sold north of $2.5 billion of commercial time.
  • Making the networks’ NFL ad sales take so far even more impressive is that they had to overcome a cumulative loss of about $150 million in ad spending by daily fantasy sport companies DraftKings and FanDuel.
  • Every one of the four TV networks carrying games says new pharmaceutical advertisers have bought ad time in their NFL telecasts.
  • For the Sunday afternoon games, buyers say CBS averaged about $600,000 for the 4:25 p.m. national games, while Fox averaged $700,000. For the 1 p.m. regional games, CBS and Fox sold units between $350,000 and $500,000.
  • NBC, according to buyers, averaged about $675,000 for a unit on Sunday Night Football. NBC averaged 22.5 million viewers for its SNF primetime telecasts last season, up 6% from 2014 and the best ever average for SNF on NBC.
  • Buyers said they like the system of buying one set of ads to appear on both and paying for them together rather than having to buy TV ads and digital ads separately and at different pricing. This season the WatchESPN audience is built into the TV rate.

Most interesting takeaway from this article was that the sales were not hurt by the Olympics sales which were north of $1.2b. It’s interesting as ratings of other entertainment units continue to fall and primetime programming is not as strong as a decade ago, that the NFL continues to see high single digit to low double digit percentage increases every year. ESPN selling a singular advertising unit across linear and digital will drive up the rate they are able to command but also strengthens their position with advertisers as reaching the younger fan base that many NFL advertisers are trying to reach.

#Sportsbiz Recap — August 28, 2016

NBC Moves to Trump CBS’ Ad Prices for ‘Thursday Night Football’ (EXCLUSIVE)

Excerpts:

  • CBS and NBC each have rights to air five games each, for which they are each believed to be paying $225 million.
  • Both networks (NBC & CBS) seeking between $550,000 and $590,000 for a 30-second spot
  • “It was important for us to get the games at the beginning to have the opportunity to launch our primetime schedule,” said Sean McManus
  • A 30-second spot in CBS’ package of games in 2015 went for an average of $462,222.
  • NBC will seek premium for their Thursday night package due to ‘holiday season’

CBS had an exclusive 8-game package last year, this year the NFL has split a 10-game package between CBS and NBC. NBC now has a piece of two primetime NFL windows with Sunday Night Football and this Thursday Night Football package. NBC may be able to command a premium for their commercial inventory, but it is interesting to see the difference in strategy between the two. The increase in the value of the 30-second spot by approximately $100,000 over a year ago is also very interesting.

This College Football Team Doesn’t Want to Join the Big Leagues

Excerpts:

  • Matt Larsen, the North Dakota State University’s athletic director, who was hired to make this decision, says he’s torn: “Our teams can compete at that level, but we need to ask, ‘Can we afford to make the jump?’ A lot of programs have moved up, looking for glitz, glamour, and glory, and sometimes it’s not there.”
  • Each home game contributes about $1.5 million to the local economy
  • Larsen’s budget is $22 million. The nation’s top programs have kitties in excess of $120 million.
  • NDSU’s new $50 million athletic complex was privately funded, as was a $5.5 million indoor track-and-field venue.
  • Would need to upgrade their football stadium in order to accommodate FBS crowd’s. Houston recently spent $120m on a new stadium.

I had been unfamiliar with Matt Larsen prior to reading this article. I was aware of North Dakota State due to their continued success at the FCS level, and agree with Larsen’s sentiments on the matter. While fans, boosters and some familiar with the program may feel that they have eclipsed the level of others at the FCS level; we’ve seen programs such as UMass falter at the next level. At this time of instability in the FBS, with the recent introduction of the College Football playoff and the never-ending realignment within the conferences (especially the Group of 5 schools), I don’t see a situation that would financially make sense for North Dakota State. I look forward to seeing how Matt Larsen continues to grow the Bison, with their continued success at the FCS level.

PGA Tour Streaming OTT Coverage on Facebook, Twitter For Start Of FedExCup by John Lombardo

Excerpts:

  • The Tour’s OTT Service is powered through a partnership with BAM Tech. The Tour has a distribution deal with Perform Group.
  • PGA Tour will provide new digital offerings on Twitter and Facebook Live offering coverage from both tournaments.
  • The deal with Perform Group offers the live streaming service DAZN in Japan more than 30 events annually through 2018
  • The Tour will also offer a trial run to allow players to stream live video during practice rounds and pro-am days on Tour-approved social media outlets.

Great to see that The Tour is adapting to 2016 by allowing additional access and further accessibility to their product in new digital platforms. Twitter and Facebook Live at this time are non-authenticated platforms that do not allow for easy integration of sponsorship, but through a presenting sponsorship allow for additional opportunities for revenue and exposure for the sports. The additional access to the players is the key to this in my mind. Golf has a reputation as ‘exclusive’ and ‘expensive’. In order for casual viewers to feel engaged they need to be able to identify with professional golfers. Golf’s popularity continues to dwindle in the aftermath of the Tiger Woods’ downfall. There are tons of marketable young stars that continue to benefit themselves but none has stepped in to the gap left by Tiger to fill  the sports void. Engaging with viewers on these social platforms will give these players additional opportunities to showcase their personalities and build fan loyalty.

#Sportsbiz Recap — August 21, 2016

Atlanta Mayor Approves Plans for Future Turner Field

Excerpts:

  • Turner Field, the home of the Atlanta Braves and the 1996 Olympics, will get its “third life” when Georgia State University converts it to a college football stadium
  • Officials announced a signed purchase and sale agreement between Georgia State and the real estate firms Carter and Oakwood Development Group. Details of the financing weren’t immediately available, though Reed has told reporters that Georgia State has committed at least $200 million toward redevelopment of the 70-acre site.
  • Georgia State, with more than 53,000 students, is one of the nation’s largest universities. Its main campus is in the heart of downtown Atlanta, just north of Turner Field.

Georgia State will continue to compete in Atlanta for fans with Georgia Tech. Neither State nor Tech will be able to outgrow University of Georgia in terms of football fandom. Georgia State’s investment in to Turner Field and the development of the 70-acre site will have additional benefits for the school. While lauded as a move for their football team, I wouldn’t be surprised to see this venue after receiving renovations look to compete with other local venues for small to mid-size events such as football and soccer games.

Dolphins’ deal with Hard Rock worth a quarter of a billion by Barry Jackson

Excerpts:

  • The 18-year deal to rename the facility Hard Rock Stadium is believed to be worth about $250 million, equal to $14 million per year.
  • AT&T pays the Dallas Cowboys about $19 million per year for naming rights, while MetLife’s deal for the Giants/Jets stadium in East Rutherford, New Jersey, is worth $16 million annually.
  • “Instead of selling [personal seat licenses] to fans for $100,000 a seat or something, this money helps us partly pay for that $500 million [stadium] renovation,” Dolphins CEO Tom Garfinkel said.
  • Hard Rock International chairman Jim Allen said the company had been approached about stadium naming rights deals in other markets but “this was the only one of interest to us, because of the location, the tribe being here, and Miami is a gateway to Latin America.”

I don’t necessarily agree with Hard Rock International that this agreement makes sense. This will be the 10th official name change and the fourth different ‘brand/name’ attached joining Sun Life, Landshark and Pro Player respectively. Will the Miami fans identify with this new name? The length of the deal along with the financial terms are great news for the ownership in Miami that just made a large investment in to the infrastructure of the stadium. This naming-rights deal hinges upon Stephen Ross securing additional soccer games at the venue and being able to get the Super Bowl back in Miami. If Miami is able to swing multiple Super Bowl’s out of this, it could pay off handsomely for Hard Rock International. Garfinkel said this will help them to avoid hefty PSL fee’s, I am unsure if they have the market in Miami to sell the PSL’s.

ESPN Tops Sports Sites In July Unique Visitors, But MLB.com Leads In Avg. Time Per User by Eric Fischer

Excerpts:

  • MLB.com avg. time per user beat out ESPN: 65.5 minutes to 59.4 minutes
  • ESPN tops ranks in reach engagement for 29th straight month and unique visitors by a long shot
  • MLB At Bat remains most popular app with over 5 billion minutes of consumption since start of 2016 season.

MLB has an aging fan base per many recent articles but their digital products are top of the line. ESPN remains the World Wide Leader, but their consumption numbers are down on digital platforms from a year ago, albeit at a much smaller loss than their linear subscriber rates. ESPN has no competition in terms of unique visitors, but it will likely raise some alarms that their avg. time per user has been eclipsed. The MLB.com visitors are most likely utilizing MLB.TV to stream games which raises the avg. time immensely. ESPN needs to continue to find ways to keep visitors on their sites engaged for longer periods of time. They have the content rights, now it’s just a matter of re-packaging that content for digital consumption.

Area colleges boost spending on sports teams to lure students by Jay Tokasz

Excerpts:

  • Sports expenses nationwide ballooned to $10.8 billion in 2015, up 30 percent over five years.
  • Spending per athlete increased at 16 of 18 area colleges during the last five years including up 23% in Western New York.
  • This trend is true of not only DI, but DII and DIII as well.
  • Economist Andrew S. Zimbalist says that deep down college administrators know athletics are ‘simply not a profitable venture’.
  • Some collegiate administrators argue that increased revenues are driven from sports through tuition and ancillary fees such as housing, meal plans, etc.
  • Very interesting interactive chart is available for New York based schools in regards to their average spending per athlete.

I will expand on my thoughts in another blog post. This is a very intriguing albeit minuscule look at a larger debate. Recommended reading for all…

#Sportsbiz Recap — August 14, 2016

Disney Completes $1B Deal For Stake In BAM Tech; ESPN-Branded OTT Net Coming Soon

Excerpts:

  • Disney acquires 33% stake in BAM Tech for $1B (paid in 2 installments) with future option for majority control.
  • BAM Tech currently services wide array of clients including NHL, HBO, PGA Tour and WWE.
  • ESPN, BAM Tech will collaborate on new OTT multisport network due to debut before end of the year. No new content rights will be acquired, they will instead leverage existing content rights held by ESPN and BAM Tech, including MLB, NHL, college football and basketball, tennis, rugby and cricket.
  • NHL will acquire percentage of newly formed BAM Tech, due to partnership with MLBAM last winter.

ESPN’s subscriber numbers continue to fall, and are reportedly as low as 88.8 million U.S. homes. In order to combat this, ESPN continues to look for a way to monetize on their digital assets. At the moment, ESPN’s live digital offerings are all ‘cable authenticated’ and their VOD content is available free of charge. Utilizing the BAM Tech infrastructure, Disney as a whole will look to further monetize through additional OTT platforms. Disney will be able to use this infrastructure for ESPN, ABC and movies related content in an effort to compete with Netflix, Hulu, Amazon etc. The direct-to-consumer OTT platform will present many challenges for ESPN, first and foremost figuring out the content they will place on the platform along with the price point.

Manny Pacquiao to come out of retirement for Jessie Vargas fight by Dan Rafael

Excerpts:

  • Pacquiao to fight Nov. 5 against Jessie Vargas at the Thomas & Mack Center in Las Vegas
  • HBO already contracted to put on Nov. 19 PPV between Kovalev and Ward.
  • Pacquaio will continue to handle his Phillipines’ senate duties after vowing to not allow boxing to interfere with his political career any further.
  • Pacquiao also conceded that his ring return is financially motivated, even though he has earned hundreds of millions in his career
  • If HBO makes Pacquaio a free agent, potential for him to go to rival CBS/Showtime.

Unbelievable to think that after earning $150m in his loss to Mayweather that Manny Pacquaio would need to fight again for money. It’s crazy to imagine that HBO won’t televise this fight, even as they have been resistant to put two PPV’s in one month. Some type of agreement will come through for this fight and even as I have no care for the result of the fight, the financial implications of another Pacquaio fight will be interesting to follow. Kovalev vs Ward will be the fight of the year for boxing purists’ but Pacquaio’s return to the ring will open the purse strings of many and get the media chattering about a potential rematch and the return of Mayweather. Floyd ‘Money’ Mayweather has been out of the limelight for a few years now and with another chance at a big money payout, will he give in and return to the ring?

NEWS ACCESS RULES APPLICABLE FOR THE BROADCAST OF THE GAMES OF THE XXXI OLYMPIAD, RIO DE JANEIRO, 5-21 AUGUST 2016

Excerpts:

  • Only RHBs may have the right to Broadcast and Exhibit the Olympic Games.
  • Six Minutes per Day for non-RHBs. May not appear in more than (3) news program per day, any news program may use no more than (2) minutes of Olympic Material and programs must be separated by a period of at least (3) hours. They may only be used for a period of forty-eight hours following the completion of the Olympic event.
  • Similar restrictions are in place on digital platforms such as websites and social media platforms.

Olympics rights are thoroughly protected for the exclusive use of the rights holders (which in the United States is NBC). NBC has come towards agreements for expanded use of digital highlights with several platforms in arrangements that have redirected traffic towards NBC’s cable-authenticated streams of the events. NBC terminated their digital partnership with ESPN due to a disagreement on the presence of advertisements on the same web page as the video, in order to protect the premium price paid by their own advertisers. NBC/IOC have been criticized by many other outlets and individuals for their protection of these rights that have left many shows to display still images of the events and the victors on non-NBC platforms.

A bigger Big 12? Maybe … by Michael Smith & John Ourand

Excerpts:

  • Bowlsby assured network partners that expansion was not imminent.
  • Need to re-negotiate media deal that runs 9 more years in order to stay competitive, especially as network partners recently told Big 12 that conference network would not be viable for the 10-team league.
  • Current deal is 13 year, $2.6B, supposed to expand pro rata for any additional schools. Network partners looking to trim costs do not agree that potential new schools will add value to the conference package.
  • Most insiders do not think Texas & Oklahoma would expand length of current deal past 2025 due to questions about the league’s future.

I believe that network partners will end up reaching an agreement with the Big 12 that will see them increasing pay-outs to existing members in order to keep the league from expanding and to remove the pro rata clause from their deal. Michael Smith & John Ourand of SBJ/SBD do a great job of outlining the other possible outcomes in this subscriber protected piece. If you do not subscribe I highly recommend it.

#Sportsbiz Recap — August 7, 2016

NBC’s Rio Plans: A Focus on Prime Time and a Flood of Streaming by Richard Sandomir

Excerpts:

  • Most-streamed sports event ever, NBC will also offer 4,500 hours of coverage online.
  • More people are watching live sports on mobile devices.
  • Research found, streaming all day does not hurt viewership of the critical, lucrative broadcast in prime time.
  • NBC reported that it had sold $1.2 billion in advertising for the Rio Games, about 75 percent of which was targeted at prime time…10 percent of the revenue is from streaming, which is up by a third from the 2012 Summer Olympics in London.

My opinion is that NBC Sports is smart to realize the full value of their Olympic rights. Giving consumers access to all events in real-time (with exception to the Opening Ceremony). Rights-holders still need to figure out a way to capitalize on the streaming rights, with over 4,500 hours of coverage pulling in only $120 million in revenue.

ESPN Front Row: ESPN operating within video usage restrictions for Olympics coverage 

Excerpts:

  • SportsCenter and other ESPN news programs cannot air any Olympic highlights until the conclusion of NBC’s prime time coverage on the west coast, roughly 3 a.m. ET. Also, no news conference video can be used until 30 minutes after the conclusion of the conference.
  • ESPN may air Olympic video in all ESPN news programs, with a maximum of six minutes per program, and up to 72 hours after the window of opportunity opens.
  • ESPN will link to NBC’s live streaming coverage from ESPN.com and the ESPN app during the Games, in exchange for 10 daily digital video highlights (available 30 minutes after the conclusion of an event).
  • The 10 a.m. edition of SportsCenter, hosted by Hannah Storm, will air daily from Rio Aug. 8-12, the first week of the Games.

All non-NBC networks will be affected by the rights agreement exclusivity. ESPN joins many others with some type of digital rights agreement. ESPN supplementing their coverage of the Olympics games with live coverage and interviews from Rio will have to cover their highlight shows without the use of highlights.

Buying an MLS Franchise just got a lot more expensive by Scott Soshnick

Excerpts:

  • Major League Soccer is preparing to nearly double expansion fees to about $200 million, MLS Deputy Commissioner Mark Abbott said in an interview.
  • Owners of the L.A. Football Club paid $110 million to put a second franchise in Los Angeles.
  • MLS teams are worth an average $157 million
  • Target is to expand to 28 teams

MLS will continue to grow due to the growth of the game in the United States along with the high get-in price of the other professional sports leagues in North America. My only concern would be that the league may be looking to expand too quickly.

Want to Sponsor the NFL Season on Snapchat? You’ll Need $7 Million by Garett Sloane

Excerpts:

  • Asked for as high as $7 million for season-long deals.
  • It may be a steep price, but it fits Snapchat’s business ethos, which is to never undervalue its itself.
  • Many advertisers are interested in the platform, because of its young audience that’s hard to reach outside of their mobile phones.
  • Snapchat is taking the lead selling NFL sponsorships, the agency executive said, and some deals could include Super Bowl marketing on the platform.

Snapchat’s young user base along with the success of campaigns such as the Gatorade filter during the super bowl attracts brands. As the article discusses, the high price for exclusivity is similar to the NFL content on Twitter’s platform due to the large avid fan base. Snapchat as an advertising platform was questioned up until about 18 months ago. Since then, the platform has proved to be a highly interactive, engaging platform for a hard to reach young demographic that are often on their mobile devices. I’m not sure how many advertisers they will lure in at the $7m price tag but they will inevitably do very well as they unveil other NFL ad packages.