Every sector of the sports business — from media to facilities to sponsors — is facing more competitive threats today than they’ve seen in decades. That was the dominant theme to emerge from last week’s CAA World Congress of Sports in Los Angeles, where panelists articulated how they’re coping with and exploiting the constant changes in doing business.
Disruption truly proved to be the buzzword of the week, whether industry experts were talking about how digital video services were affecting traditional TV networks or how best to make money from legalized gambling.
Wendell Brooks, the investment chief at Intel, said more venture capital has been invested into the disruption of sports in the last five years than the 70 years prior, putting the sports industry in the midst of perhaps its greatest period of upheaval.
“The pace of disruption is incredible and it’s accelerating,” said Michael Rubin, a co-owner of the NBA Philadelphia 76ers and NHL New Jersey Devils who also founded ecommerce giant Fanatics. “If we’ve had that much disruption in the past five years, we’ll have that much more in the next five.”
“Disruption — it’s the word of the moment right now,” said Peter White, partner at the firm DLA Piper.
“It’s an explosive time,” said Angela Courtin, YouTube’s global head of TV and originals marketing.
Practically every discussion last week was laced with the volatility of the sports business.
In some cases, like the PGA Tour’s new, edgy marketing campaign, that disruption is invited and intentional as a means of taking business in a new direction. Under Commissioner Jay Monahan’s leadership, the tour is trying new things, like walk-up songs at the first tee and more liberal use of phones on the course (see one-on-one interview, above).
In other cases, technology is driving change.
Brooks led a discussion with Rubin and Jed York, CEO of the San Francisco 49ers, about the power of disruption — both positive and negative. York and Rubin shared their vision for five to 10 years from now, which included most live game broadcasts airing on some form of digital streaming platform instead of, or in addition to, traditional TV.
“If we look five to 10 years down the road, I think the digital companies will be the primary distributors for most sports content,” Rubin said. “A lot of people don’t agree with that, but I think their ability to deal directly with the fan and better customize experiences for the fan, and do it through such great digital companies, is a massive opportunity. It’s one of the reasons why I’m still bullish on the costs of these franchises.”
One of those digital companies that could be competing for live sports rights is Hulu, whose CEO Randy Freer opened up about those prospects during a one-on-one interview at World Congress.
“The challenge we all have is to innovate on how we distribute those rights to consumers,” said Freer, who was a major buyer of live sports during his 20 years at Fox Sports and believes in live sports as a way to add to Hulu’s 17 million subscribers.
This is serious money. Serious business. And you can’t screw it up just because you want your son involved.
What platforms like Hulu will be able to offer in the future, Freer predicted, is the ability to buy a single Saturday’s worth of college football or a single weekend series or game in Major League Baseball. Any development that adds to the personalization for the fan has the potential to change the method of live sports delivery.
“Giving on-demand customers the opportunity to participate in live sports will help us grow subscribers over the long term,” Freer said.
While Rubin sees digital platforms as the primary form of distribution in the next decade, York said he could see some type of hybrid model.
“You don’t want to completely disrupt your model overnight,” York said. “If you look at it, we [NFL] have the entertainment, the new media companies will have the biggest reach and the current broadcast companies have the expertise to produce these games. There’s going to be some partnership between the three. We all know how it’s going to end, we just don’t know how we’re going to get there.”
York also urged the NFL to look for disruption opportunities, even when business is good and rights fees are generous.
By the numbers at World Congress
Percent of Dallas Cowboys fans who have been inside AT&T Stadium for a Cowboys game, said Dallas’ Charlotte Jones Anderson
Percent of every Jacksonville Jaguars decision that is based on analytics, according to Jacksonville’s Tony Khan
Amount of venture capital invested in sports-related businesses in 2017, according to Wendell Brooks of Intel Capital
Percent of total gaming revenue, including slots and all table games, that’s bet on sports, said Sara Slane of the American Gaming Association
Handicap of PGA Tour Commissioner Jay Monahan
Percent of attendees at English soccer matches who place a bet in-venue, according to Scott Secord of Gaming Nation
Countries in which Coca-Cola operates, said Andrew Davis, the company’s global chief diversity and inclusion officer
— Compiled by Michael Smith
“That’s the blessing and curse of the NFL,” he said. “We get so much revenue from traditional broadcasts, we’re not incentivized to be disruptive. I’d prefer to be more disruptive — that might mean giving up some revenue and EBITDA today to build your business of the future. … But there’s more money to be made if you’re willing to take that leap.”
There’s almost certainly disruption coming on the issue of legalized gambling, another topic that was pervasive throughout the two-day conference.
“Casinos for many years have led the way, in terms of data and analytics,” said IBM’s Shannon Miller on a panel about forecasting the future. “If you want something that’s going to pull the sports world forward, gambling will accelerate it faster than anything we’ve talked about.”
“You can’t have the conversation about fan engagement without at least talking about legal gaming,” said Dan Beckerman, CEO at AEG. “There’s a relationship between the two, and I think the leagues and the teams have a decision to make about what role they want to play in that ecosystem.”
The forecasting didn’t end there. Esports predictably garnered its share of love as an activity to watch, but panelists debated whether fans will pay to attend an esports competition. And several industry experts went deep into the in-venue experience for fans, wondering what the next evolution of that will be.
No matter the topic, that buzzword kept popping up.
“I think you have to look at the fan experiences separately, inside the stadium and outside the stadium, and figure out how to disrupt each one to make them better,” Rubin said. “I think it’s OK to keep innovating to make the experience outside the stadium better. A lot of people worry that’s going to keep fans from coming to the game, but it also puts pressure on us to make the in-stadium experience better. If one experience gets better, it pushes the other experience to get better. You can never sit still or you become antiquated.”
A lot of people have gotten scared straight.