The Basketball Tournament Founder & CEO JON MUGAR is far removed from his original day job as a comedic writer and producer for TV. He now heads the unique winner-take-all event that started in ’14 and last month had its championship game broadcast on ESPN. The prize money has grown from $500,000 to $2M in just two years and earlier this month Mugar announced a partnership with Chinese NBA All Star YAO MING. Through global sports marketing and management company Starz Int’l Sports Management Co. and Yao’s Team Yao agency, TBT is expanding into basketball-crazed China. Mugar wants to get a tournament in China up and running by ’18, and he spoke with SBD Global about TBT’s origins and its future global expansion.
On how he got TBT off the ground ... Jon Mugar: The idea [for TBT] came to me and I developed it, with a good friend of mine since I was 13 years old named DAN FRIEL, over the course of a year or two. We tried to figure out if we could make it happen, and make it work. The original premise was a completely open professional tournament for $50M that would basically change the way professional sports leagues structure payments that maximize the intensity and reward of team achievement over individual achievement. I’ve always loved March Madness and that format really resonated with me, and I wondered what would happen if you put that format on the professional level.
On TBT’s revenue model ... Mugar: The model that we are going for is the same model that exists for March Madness or NBA, MLB, any of these sports properties. We’re no different other than we’re only 2-and-half-years old. So the same revenue models exist for us as it does for them, which is primarily sponsorship and then broadcast revenue and then, in a smaller form, ticket sales and merchandise.
2015 Champions Team Overseas Elite repeated to win the 2016 Tournament.
On taking TBT int’l and China’s appeal ... Mugar: It became pretty apparent as we were working on this idea that a lot of apparel companies and the NBA are focused on getting [to China]. That made us really dig into about what it is about that market that is so appealing. And it is the sheer numbers of people and the passion they have for basketball. When we thought of this concept, it has always been an idea to take it worldwide. And if we are going to expand beyond the U.S. we always thought, ‘Well wouldn’t it be great to start in China?’ It is probably the biggest country in the world in its consumption of basketball. The decision to take it internationally is one thing. We’re not going to just do it because we have the idea, we’re going to do it because we have the right partner. In that time we were introduced to Yao and his sports management firm and his business manager, so it became a natural conversation and progression. It started from an introduction from people we have mutual connections with.
On how TBT got the foot in the door ... Mugar: It started with Yao’s longtime business partner and Manager ERIC ZHANG with Starz Sports and then it just went from there. We’ve been talking to them now for eight to 10 months. It took about eight months to really flush it out, get comfortable with one another and align our goals. A big part of this was us making a trip over to China, meeting them and discussing how this model can possibly be adapted to that country. Because as a whole, it will take on a much different presentation. The elements that really resonated with them with TBT was No. 1: the open tournament model in China was extremely appealing because there are so many players there and they don’t really have a lot that is similar to that there. No. 2: The social media aspect of TBT really appealed to them, the idea that fans can not only support a team and help it get in, but be on a team and be paid when the team wins. That concept, they thought, would potentially explode over there.
On how TBT will be branded in China ... Mugar: It is to be determined, certainly the biggest decision for America was: what is the distribution going to look like. What format are these games going to be presented to the audience, who is that going to be with and is there a distribution partner there? And I think that definitely is a big consideration for us and Starz. Just what this will look like, are we bringing this to people digitally, linear TV, what kind of partnership are we looking at? That is the biggest first point that we need to develop and work out. There is definitely value in the [TBT] brand, and we want crossover for the event in China.
On the challenges of working with a Chinese company ... Mugar: It was challenging enough as a man of comedy to sell this idea to people and convince ESPN that this is broadcast-worthy basketball, and to do that in China is an entirely different thing. The timezone was the biggest hurdle to get over. It sounds simple, but doing business over there is hard. And when you connect in person it makes those days very valuable. Getting together in person as much as possible was very important and that was the first road block. Once we got there we were in a good position. Having people vouch for you and being able to show our property and having our property exist now on ESPN for two years, it all helps. They can read headlines so they know it is a concept that is being embraced by U.S. basketball fans. First we had to sell them on what we are and what we want to do, after that point it was just logistics.
On if TBT plans to expand to other global markets ... Mugar: We do, and I think Starz would want to be in the discussion in expanding within Asia. Australia has come up a number of times. We’ve had people reach out to us, unsolicited, and talk about how there are people in Australia that watch TBT now and the culture there is growing and it is potentially a market for us. We always think about things like that, but goal No. 1 is to work out the format in China and go from there. Once people see that we can do it in China, then that will open up a whole new level of interest from other countries.
On what drove him to create TBT ... Mugar: I like creating things that would not exist but for my existence. And I appreciate originality, and trying new things. We certainly did that on the comedy side all of the time and I think there is a lack thereof in sports. People who look at things differently, and I’m not saying mine is the only answer, but it is fun to look at things that I love like basketball and think of a different way it can be presented.
Hangin' With runs each Friday in SBD Global.
