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March 19, 2014 06:23 PM
A panel discussion at the 2014 IMG World Congress of Sports the examined the unique qualities of the Los Angeles market picked up on a discussion from the day’s opening session about whether there’s any end in sight for rising rights fees.
Chris Bevilacqua, co-founder of Bevilacqua Helfant Ventures, said, “Since I’m aligned typically with the sellers, I have a selfish interest to say the rights are going to keep going up. But having said that, I believe that. Everybody can just go and look at the quarterly earnings reports to all of these big media companies. It’s record profitability, record shares. The business itself keeps growing and sports is a real driver.”
He sees growth in the rights because sports is not just a “television ecosystem,” but a “mass media communications information delivery system.”
Jeff Krolik, President, Fox Sports Regional Networks, responded with the quip, “My father used to always say, ‘Never ask a barber if you need a haircut.’” He thought never-ending rights growth was less likely. “There are many cautionary tales out there. Steve Greenberg was just quoted as saying he’s reminded about all the people who took out big mortgages because they were convinced that housing prices only had one way to go, and that was up, up, up. They do go up – until they don’t. There are cautionary tales aplenty out there. Before we go forth and say they have no way to go but up, they have other ways to go.”Bevilacqua wouldn’t point to a ceiling, but he conceded that “at some point, it doesn’t go up forever. Maybe it accelerates a little less.”
The value of shoulder programming
Panelists also debated the value of the shoulder programming that fills thousands of hours of air time, but, moderator John Ourand pointed out, doesn’t get ratings as high as the live games.
“From our point of view … once you get your distribution you better be able to deliver a good product,” said L.A. Lakers Executive Vice President Jeanie Buss.
“That’s what it’s really all about. Once you get on the air … make sure you’re delivering to your customers what they want. For us, when we were looking for a new broadcast partner, what was really important to us was the ability to have the shoulder programming, the ancillary programming. To have a partner that would understand how important it was for us to further our brand, not just the games, because the fans enjoy the games, but in our case our fans were letting us know that they wanted more.”
And Buss added that the shoulder programming affected more than just the fans. “With a new collective bargaining agreement in the NBA, it’s really important that you can tell a story for your franchise that will attract free agents,” she said, “and having that kind of platform is attractive for the players.”
Mark Shuken, senior vice president and general manager for TWC Sports Regional Networks, said, “This is an entirely different conceit around RSNs. This is no longer about games fitting in between poker and other team games and infomercials. I hate the term shoulder programming because it suggests a sort of good stuff and other stuff. Our programming beyond the games is measurably rated and rated very well. I think it’s relevant because people get a connection to the players and the front office that they’ve never had before and want. It all speaks to the consumers’ expectations around media and social media, and they’re used to getting behind the scenes. I think this shoulder programming notion is something we need to get over.”
The end of the panel featured a spirited discussion about over-the-top programming, online programming that is available outside of a regular cable subscription package. Krolik said, “Over the top makes me nervous. I think over the top makes all of us nervous. Our number one objective is preserve, protect and defend the basic cable model against all enemies, foreign and domestic. I think over the top is a Trojan Horse that threatens our very business.”
Bevilacqua: “I’m not sure I agree with Jeff. If you could get your RSN priced right … If you were able to able to deliver a subscription product, and you were getting paid for it, why would that be a bad thing?”
Krolik talked about an la carte business, and Bevilacqua said, “I’m not saying a la carte, I’m saying a bundled package, over the top, that addresses a segment of the population that isn’t really buying pay TV now. Shouldn’t it be additive?”
Krolik: “I don’t believe so.”
Bevilacqua: “I obviously don’t agree with that. I actually think that there is some way to make it work in the ecosystem.”
Shuken: “I think they’re not mutually exclusive. Jeff is right, if you’re Time Warner Cable, your evaluation of your entire product offering and your entire economic model is protecting that golden goose. … I didn’t say over the top is cool and it can all be great. I said if we protect the core rights, there is a way to cross promote and ultimately benefit the core rights. But I agree from Time Warner cable perspective, from a distribution perspective, we have to be very sensitive to how we protect that model.”
Bevilacqua: “But Time Warner Cable is one of the biggest broadband providers in the world and if you’re carrying something over your network and we go usage-based pricing, why is that bad?
Shuken: “Like I said, they’re not mutually exclusive if there’s a way that protects the core economic model and then elevates it …”
Bevilacqua: “Yeah, that’s what I’m saying.”
Shuken: “I’m not disagreeing with either of you. I’m saying it’s all about the execution. Trojan horse? Could be. Opportunity? Could be. It’s somewhere in the middle if they do it right.”
On the importance of a broad base:
Bevilacqua: “One of the things we always try to do is put together a portfolio. Any team, even great teams, are going to have cycles where they are down. The broader your portfolio, the better the product that you can bring to the market.”
Shuken: “Chris is right. Ultimately these multi-billion dollar evaluations and investments are predicated on long term successes.”
On the appeal of the L.A. market: Bevilacqua: “The Los Angeles market is different than you might see in other markets around the U.S. in terms of how local sports is viewed and consumed here. There’s a lot of choice here … in terms of entertainment options. It’s a large geographical market, it’s dense and it’s got all the right ingredients to have a really robust RSN market. L.A., just because of all the other options you have, is much different that other markets where there is more specific passion around the local sports teams.”
March 19, 2014 05:26 PM
We're using the Burst app to showcase attendees, speakers and exhibitors at this week's World Congress of Sports.
March 19, 2014 04:54 PM
BBDO Worldwide Chief Creative Officer and BBDO North America Chair David Lubars sat down for a morning one-on-one session during the first day of the 2014 IMG World Congress of Sports. Lubars’ work has included sports-related creative for brands such as Snickers, Guinness, AT&T, Visa, Diet Mountain Dew and Foot Locker.
Here are a few quick hits from the session:
On how the consumer has changed: “The consumer used to be a victim. Creative was designed by brands behind a curtain. Now, consumers can flip away whatever they don’t want to see. They look at a lot of things at the same time. They also understand marketing incredibly well. They all talk in jargon. Very sophisticated. They just want marketing to be transparent and honest and authentic. … The truth was the only thing that ever worked. … Leaders are now becoming more comfortable where the consumer actually shapes the brand.”
On why sports creative tells a good story for brands: “If you look at what makes the human animal go, it is competition and to be incentivized. That’s why communism was such a disaster. You need to be rewarded and recognized for accomplishment. Sports crystallizes that. It’s dramatic. It’s exciting. It’s entertaining. And it happens live and it’s visceral. So sports marketing is very important, as long as you do it right, which is with quality and creativity and not being a shill.”On the use of athletes in creative after Tiger Woods: “We have analytics and metrics that show beyond a doubt that people love athletes. Tiger’s problem was not what he did. A lot of athletes have done far worse. His problem is that he’s not fun. Today’s audience wants athletes to be able to make fun of themselves, and that’s just not his personality.”
On making entertaining vs. effective creative: “It has to be rooted in a strategic idea that really is true to the brand. What we’ve found is that the same pieces that end up being entertaining are also effective. To do it right, it really takes both.”
March 19, 2014 04:35 PM
MLS Commissioner Don Garber said the decision to award Qatar the 2022 World Cup and the potential that the event may have to move from summer to winter because of weather was a “monumental disaster” for soccer worldwide. He added that he hopes the event is moved.
“We certainly would be happy to host it here and have a lot of big stadiums that could turn it around and host on very short notice,” said Garber, who spoke on the opening panel of 2014 IMG World Congress of Sports. “But we’re going to be on the sidelines on this and hope that FIFA can resolve this in a way that’s good for the sport.”
Garber’s comments followed a question about reports claiming that former FIFA executive committee member Jack Warner took $1.2 million in bribes from a Qatari group prior to FIFA’s vote to award Qatar the 2022 World Cup. FIFA is investigating the allegations.
“That now is going to get a lot more legs,” Garber said. “If more comes out, who knows what happens. It’s very disappointing. It’s an unpleasant aspect of the global football business.”
Garber said the uncertainty around when the 2022 Qatar World Cup would be held “is a very difficult situation for our sport.” There’s talk that it could be in November of 2021 or January of 2022.
“Their broadcast partners here might have a problem with it going up against (NFL) football,” Garber said. “It affects all of us for many, many years.”
March 19, 2014 04:19 PM
In the never-ending debate over whether sports rights have peaked, rightsholders remain bullish that their TV revenue will continue to rise.
During the opening panel of the 2014 World Congress of Sports, Maple Leaf Sports & Entertainment President Tim Leiweke said cable and satellite distributors said 15 years ago that sports rights had hit a ceiling, but “it’s just not true.”
“Today we live in a world where the most valuable programming of all is that unpredictable, live event,” Leiweke said. “Because we’re unpredictable, because no one knows what’s going to happen, our rights are going to continue to explode. The whole world now is our market, not just North America.”
MLS Commissioner Don Garber said that his league has just negotiated a rights increase of more than 50 percent from TV broadcasters. He declined to name the broadcasters because the deals haven’t been signed, but MLS reportedly is finalizing an 8-year deal with Fox and ESPN that will pay it more than $70 million a year.
“The consumer is changing,” Garber said. “They’re younger. They’re coming into being influencers, and not necessarily going into households that are paying for cable the way the vast majority of households are today. I don’t know where it looks 20 or 25 years from now, but it’s going to continue to grow.”
NASCAR CEO Brian France said not much can reverse the recent increases in rights fees because most of the rights in North America have been locked up for the next decade. Only the NBA and Big Ten have rights deals up for negotiation in the next few years.
“Things are settled, and the more digital we become, the more platforms we extend out in clever ways, the very valuable appointment viewing program just gets better,” France said. “As long as the world gets bigger and … sports is still the one thing you can’t miss live, we’re in good shape.”
Google/YouTube Global Sports Head Claude Ruibal said that as long as the number of distribution platforms expands, the rightsholders will continue to have the upper hand in negotiations. He noted that properties like to say that they have met with Google about their rights, even though Google has no plans to compete with traditional broadcasters for rights.
“I keep trying to pitch that we’re just a distribution platform and not a buyer of content,” Ruibal said. He added that “for now” the company won’t be at the table for NBA or Big Ten rights.
Leiweke said that he hasn’t seen the rights situation change for more than a decade and doesn’t think it will change in the next decade either. “One thing’s consistent,” he said. “For 15 years, sports teams have said the rights fee are going to go way up. For 15 years, the networks and distributors have said they won’t. And for 15 years, the sports teams have been right.”
March 19, 2014 04:02 PM
The biggest story in the sports world lately has been the Knicks’ hiring of Phil Jackson as team President. Knicks Owner James Dolan drew mixed reactions when he said during Jackson’s introductory press conference that he was going to leave basketball-related decisions to Jackson. Dolan attempted to reiterate this while making the rounds on N.Y. radio stations yesterday. He said, "The way that I manage is that I try to empower the people underneath me. They bring me a plan for the year or a longer term plan and we agree on it, we agree on the goal. They're the ones with the strategy. I'm the one with the checkbook.” Dolan said of how expensive it is to attend Knicks games despite his announcement they would not raise ticket prices, "I'm not the creator of the economics of NBA basketball. But I think that the NBA and the Knicks have to figure out a way for us to be able to get basketball to that family (who wants to attend).” Dolan, on being liked by the fan base: “I know what my job is. I know what I have to do. I go about doing it. You're not going to be liked by everybody. If your goal is to be liked by everybody I don't think you're going to do such a good job because you will worry more about that than making the right decision" ("The Michael Kay Show," YES, 3/18).
SAY WHAT? FS1’s Trevor Pryce, on Dolan’s admission that he is not an expert in basketball: “Even if you don’t know what is going on and you are the owner of the New York Knicks … fake it till you make it." The Wall Street Journal’s Jason Gay: “Didn’t it look like Phil wrote the speech in the cab from the airport there? It wasn’t exactly inspirational” (“Crowd Goes Wild,” FS1, 3/18). ESPN's Pablo Torre said, "All of this also has the whiff of it being a trap because we have ten years of evidence that indicates James Dolan may not know anything about basketball, but he has never cared, he has never let that stop him" ("Around The Horn," ESPN, 3/18). ESPN's Steve Levy said of the Knicks hiring Jackson, "His signing as team president is yet another classic example of how New York sports teams have always operated: Overpaying for free agents who are past their prime" ("SportsCenter," ESPN, 3/18). ESPN's Keith Olbermann said of Jackson's engagement to Lakers Exec VP/Business Operations Jeanie Buss, "The president of the Lakers engaged to the president of the Knicks. No appearance of a conflict of interest there!" ("Olbermann," ESPN2, 3/18).
SILVER LININGS PLAYBOOK: FS1’s Katie Nolan said, “At least fans see that they have moved someone in. They hear Phil Jackson’s name and that brings hope to an organization that had no hope and that’s probably why they are selling a Phil Jackson jersey at the NBA store" (“Crowd Goes Wild,” FS1, 3/18). ESPN's Chris Broussard said of Jackson, "If he can win in New York this could arguably be his greatest achievement" ("OTL," ESPN, 3/18).
March 19, 2014 03:58 PM
NBC’s Mark Rolfing said of the ’21 U.S. Open being played at Torrey Pines, “It has to do with one thing: Television rights. And if you take a look at how much money is being spent on television rights for the USGA package, you are going to see more and more west coast U.S. Opens. There is no doubt about it, regardless of whether that may be the best quality venue you could find for the U.S. Open” (“Morning Drive, Golf Channel, 3/19).
ON FURTHER REVIEW…: FS1’s Mike Pereira, on reports that NFL VP/Officiating Dean Blandino may assist with in-game replay this season: “I don’t think I would want my head guy of the department making the final decision and have that decision to be wrong” (“Fox Football Daily,” FS1, 3/18).
BIG BUCKS: Basketball HOFer Kareem Abdul Jabbar said of possibly buying the Bucks, "The team is probably going to change hands soon. Don't know what's going to happen specifically. But I'm keeping an eye on it. I might possibly try to be involved. It would be great to be able to help a franchise that I worked for get back to the top" ("Fast Money," CNBC, 3/18)
March 19, 2014 03:31 PM
Maple Leaf Sports & Entertainment President Tim Leiweke generated controversy when he took over the job and called its teams “losers,” but he said he has no regrets.
“Our teams, our players, our coaches, our fans are now talking about winning,” said Leiweke during the opening panel at the 2014 IMG World Congress of Sports. “(The comment) provoked a conversation and a mindset they were afraid to have in the past.”
Leiweke noted that Toronto FC now has its first winning record in history. “It’s good we set the tone,” he said.
While the former AEG executive's move from Los Angeles to Toronto hasn’t been without its hiccups, he joked that the biggest learning curve had been the weather.
“You’ve been outside today right?” said Leiweke alluding to the sunny, 70-degree weather in Dana Point, Calif., where the conference is taking place. “It’s snowing in Toronto.”
Outside of that, he said that he failed to fully appreciate how large the Toronto market was before he took the job. He underestimated it. “It’s the third largest market in North America,” he said. “It’s a uniquely poised capital market to do some remarkable things going forward. I had no idea it was that big, that dynamic, a marketplace.”
March 19, 2014 02:57 PM
The biggest challenge facing sports in the next few years is determining how to engage Millennials in a way that’s relevant to their demographic, said a panel of league commissioners and team presidents at the 2014 IMG World Congress of Sports.
“Everybody’s ability to manage and figure out the Millenial fan and how that continues to unfold this year and over the long term (is the most important issue in sports business),” said NASCAR CEO Brian France.
MLS Commissioner Don Garber added, “It’s a whole new world and I encourage everyone to spend a lot of time thinking about it.”
Garber said that the Millenial generation is about 80 million people, and that they view their teams and favorite sports radically different than generations before them. They multi-task. They consume sports on multiple platforms. They may or may not have cable. They want their in-stadium experience to include interactivity.
Garber pointed to a situation MLS ran into in San Jose as an example of how Millennials’ perspectives can affect sports teams. The Earthquakes opted to charge more for tickets for a game against the Seattle Sounders, and Sounders and Earthquakes fans united through social media to create a supporters group that raised their concerns with the league. They protested together.
“That’s not something anyone in our generation thought of,” Garber said. “A Giants fan wasn’t hanging out with an Eagles fan to figure out how they were going to deal with away ticket pricing. We better understand that. It’s going to affect the way we do business.”YouTube Global Sports Head Claude Ruibal said that while that type of response among Millennials is creating issues for leagues and teams, it’s also creating new opportunities for the sports industry.
“The social amplification, something like Kick TV (a soccer channel on YouTube that MLS launched) that people are sharing with 10, 20 and 30 of their friends [is] spreading out,” Ruibal said. “You have to see the power of that.”
Maple Leaf Sports & Entertainment is trying to engage the Millenial generation with its relaunch of the Toronto Raptors’ brand. It brought on Canadian rapper Drake to assist in developing a new logo and look for the team.
“We’re using him as an opportunity to understand social media because we absolutely believe that is the platform to reach our future fan base,” said MLSE CEO Tim Leiweke.
Both Leiweke and Seattle Seahawks and Sounders President Peter McLoughlin said that their soccer teams, Toronto FC and the Sounders, tend to have more young fans. Leiweke noted that avidity among young fans for MLS is now equal to avidity for MLB, according to the ESPN Sports Poll. McLoughlin said that the way they interact with their team is different.
“They believe they are owners of their own club,” McLoughlin said. “It’s just a whole new world in our business.”
France said that NASCAR, which has an aging fan base, is working hard to find new ways to engage Millennial fans. It created a Fan and Media Engagement Center to monitor social media, where most Millennial fans communicate, and its top facility, Daytona International Speedway, is adding new social media interaction areas as part of a $400 million renovation project.
“They’re getting interested in sports differently,” France said. “It’s not the male in the house idea that your father or brother or uncle take you to a game or a race. And then the device — they want the device to have relevance into the actual game. That’s not going to be upon us tomorrow morning, but over the next decade and longer, it’s going to be a very big factor.”