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Volume 22 No. 8

In Depth

With New Jersey (left), West Virginia and Pennsylvania enacting sports betting legislation, other Northeastern states are likely to follow.
Photo: ap images

In one three-day span late in December, the D.C. Council approved a sports betting framework unlike any previously seen, legislators in Michigan passed an online gambling bill meant to pave the way for sports betting in that state, and outgoing Sen. Orrin Hatch and Senate Minority Leader Chuck Schumer introduced a 101-page bill that would require states that allow sports betting to meet minimum federal standards.

 

The final stretch of 2018 turned a spotlight on the all-important next phase for sports betting, a state-by-state rollout that could expand from the current eight states to as many as 20 by year’s end.

“This next year is all about this whole state situation and how it unfolds,” said Scott Butera, who joined MGM as president of interactive gaming in June after serving as commissioner of the Arena Football League and CEO of Foxwoods Resort and Casino. “It’s about which states get it right and which don’t. What state can’t get out of their own way and what state is really open? What states are going to be successful? That’s next year’s big deal. The one real governor in growing sports betting is going to be the states.”

The decision to offer sports wagering, placed in the hands of individual states by a Supreme Court ruling issued in May, is only the first in a complex series of choices. States also must decide whether to allow for wagering by mobile device, as in Nevada, New Jersey, Pennsylvania and West Virginia, or to restrict it to casinos and other retail locations, as have Mississippi, Delaware and Rhode Island. They must set a tax rate. And they must decide who will oversee regulation — a mostly political choice that will shake out based on the existing gaming structure, and whether the greatest power resides with a state’s commercial casinos, tribal casinos, lottery commission or horse tracks.

“This is how the gaming industry works,” said Sara Slane, senior vice president for the American Gaming Association. “Every state has their own unique dynamic and has their own specific gaming program. It’s not a one-size-fits-all. So I do anticipate that you’re going to see different models put in place throughout the country.”

The latest major development on that front came in the nation’s capital, where D.C. lawmakers approved a bill that will allow for both brick-and-mortar sportsbooks and mobile sports betting, but in an unprecedented framework that has been panned by both the casino industry and Washington Wizards and Capitals owner Ted Leonsis, who has been a vocal proponent of sports betting.

The D.C. bill would offer licenses to retail sportsbooks to be located at four sites — Capital One Arena, Nationals Park, Audi Field and the recently opened St. Elizabeths East Entertainment and Sports Arena — the operators of which presumably would be chosen by the team owners who control those venues. Those licenses, priced at $250,000 and good for five years, give operators exclusivity within two blocks of the venue.

The bill also allows for licenses to be issued for other retail locations.

All of this is further complicated by the fact that the D.C. Council also made its lottery the exclusive provider of mobile betting, which means that bettors will have to switch apps, and betting accounts, depending on where they are when placing bets.

“If you’re coming into D.C. every single day and then going back home to Virginia or Maryland, you may be using your app through the lottery, but then you go to a Caps game and you have to go into your MGM app,” Slane said. “But then once you get back outside you can’t use the MGM app anymore. It’s very bizarre. I’m pessimistic. I don’t think it’s going to be successful. I think over time consumers are going to be confused and frustrated.”

D.C. marked the first example of the sports industry and gaming industry coming together on a concerted lobbying effort, as the NBA, MLB and PGA Tour joined with the Washington Capitals, Wizards and Nationals and the sportsbooks of MGM Resorts, DraftKings and FanDuel all signed on to a series of recommendations for inclusion in the bill.

“I hope that [cooperation] was not just specific to D.C.,” said Butera, who pointed to the casino chain’s sponsorship of three leagues and the sportsbooks’ agreement to work together on integrity policies as precursors to working together on legislation this year. “I think it’s a model going forward. MGM Resorts is a very different platform than DraftKings or FanDuel. And we’re certainly all in a different business than the leagues and teams. But what we do know is that if sports betting is approved in the right way that allows for open competition and brick and mortar and mobile, we can all benefit from that. And it’s in our collective interest to try to make that happen.”

While the alliance of sports and gaming interests were proponents of giving teams control of betting in and around their venues, they opposed the exclusive setup that D.C. gave to its lottery operator. The sports coalition also failed to get approval for a 0.25 percent fee they wanted to collect from bets on their respective sports, a request that has been denied in all eight jurisdictions that passed sports betting legislation last year.

It’s one of the few ways in which all the states have taken the same approach.

“It’s impossible to predict what legislation in various states is going to look like because it’s subject to political considerations and regional and cultural preferences,” said Joe Asher, CEO of William Hill U.S. “What works in one state may not make sense for a different state. Those are policy choices that are left to the legislatures to decide. There might be competing interests in some states and there will be factors completely unrelated to sports betting that play a role in how things play out.”

Thus far, interest has been tied closely to geography. With New Jersey, West Virginia and Pennsylvania up and running, other Northeastern states, including New York, are likely to follow soon. The move in D.C. will hasten consideration in Virginia and Maryland. Mississippi has sparked interest in Louisiana. Michigan will accelerate movement in Ohio and Illinois, which will spur Missouri.

“Depending on the gaming framework that already exists in each one of those states, when legislatures are considering how to proceed with sports betting, they’re going to look at the current structure that’s in place in their state and then tailor it to fit what’s there,” Slane said. “It’s just not going to be one congruent model across the country.”  

On the sales and marketing side of sports, there are two topics when it comes to 2019: legalized sports gambling, and everything else.

 

Assessing the gargantuan legal bookmaking opportunity and capitalizing on it will be the priority.

There was speculation that this will be the first Super Bowl with bookmaking ads through regional buys. Bookmakers like William Hill or FanDuel are already prevalent on some sports talk radio stations and regional sports networks in states like New Jersey, which was among the first to legalize sports betting. Even in its nascent stages, the impact of legal betting can’t be overstated, in everything from boosting TV ratings to its effect on incumbent sponsors.

“Betting will be driving considerable TV viewership, revenues, sponsorship dollars and additional programming,” said Octagon Chairman and CEO Rick Dudley. “But with all that opportunity, we have to go in with eyes wide open.” Noting the amount of financial brands supporting sports, Dudley added, “Any financial service brand is going to have a hard time with that, because they are all about risk management.”

As legal wagering becomes commonplace, determining the value for what many feel will eventually be one of the biggest sponsorship categories is an imperative.

“We’re all pretty sure this will be a lucrative new category,” said Brian Napoli, Philadelphia Eagles vice president of corporate partnerships. “So monitoring sports betting and setting the bar appropriately for larger markets will be key.”

Brian Hughes, executive vice president of audience intelligence and strategy at IPG’s Magna Global media agency, believes legal betting already has boosted NFL ratings.

“Even in markets where gambling is not yet expressly legal, we think it’s increased interest,” he said. “Betting is definitely a viewership anchor. We don’t know how high that upside is.”

Performance clauses

After a year in which Anheuser-Busch InBev made waves by saying it would convert all of its U.S. sponsorships to incentive-laden deals, many are watching to see the industry’s reaction. “The No. 1 sponsorship trend is performance-based fees,” said Scott Becher, vice president of partnership and loyalty at Carnival Cruise Lines. “The data is there to track business objectives, like sales, brand metrics and qualified lead generation, so properties should be delivering that. … The other big thing we all want is more flexibility. As fast as things are moving, don’t lock me into the same assets for every year of a multiyear deal. That has to evolve.”

The positive news on the agency side of the business is that sponsorship and experiential marketing continue to outperform traditional advertising.

“That [traditional advertising] is a pure share game,” said Chris Weil, chairman and CEO of Momentum Worldwide, with a client roster that includes American Express, United Airlines and Verizon. “There’s growth on this side. Some reports are telling us that within a few years, experiential will outweigh price among millennials as a purchase driver. If that’s true, experiential moves from a tactic to the center of some marketing plans.’’

Adam Lippard, head of global sports and entertainment consulting at GMR Marketing, agreed. “Consumers have greater recall of what they can see and touch,” he said. “Experiential is having its day in the sun as a result.”

With the increasing importance of social and digital platforms, the American media landscape is more unsettled now than at any time since the adoption of TV as a mass medium in the late 1940s. How mass media fragmentation and the absolute and increasing demand by sponsors for proprietary content affect one another heads a long list of media concerns. As 2019 begins, it’s the most discussed topic in sports marketing, after gambling.

“The long-term impact of any of these new distribution platforms on rights fees is much discussed,” said John Slusher, Nike executive vice president of global sports marketing. “The most fascinating piece is that we’ve now got global accessibility. The ease with which a kid in Paris or Shanghai can watch the NBA or a kid in Chicago or Los Angeles can watch the EPL is a game changer. Major athletes and teams can now all be global brands. That’s a game changer.”

Athletes vs. properties

Properties have always gotten more marketing dollars than athletes. Is that equation in flux?

“Athletes, especially in the NBA, are taking way more control of their own content, and fans are going more to the personality and off-field content than ever,” said Brian Cooper, president and CEO of MKTG Canada, who sees that portending a shift in advertising and sponsorship dollars. “I know at least 20 athletes that have production companies now. Think about the possibilities of daily content from all of them and it starts to change the relationship and value of off-field and on-field content. You’d think on-field signage becomes less valuable in the face of daily direct-consumer engagement with athletes through their self-produced content.”

The number of athletes controlling and monetizing their off-the-field content is growing, from Patriots QB Tom Brady, to athletes who have launched their own production companies.

Wasserman consulting head Elizabeth Lindsey concurred: “Top athletes already have broader and more engaged reach than most media outlets these days.” Lindsey sees 2019 as a year when sponsors start adding definition to their growing, if not incessant, content demands.

“It’s kind of a hodgepodge now,” she said. “We need to know more clearly what makes content relevant for brands. It’s like signage was decades ago. Originally, everyone just threw up a few signs. Eventually, it evolved to contextual relevance.”

If digital and social media giants are going to support sports to the degree broadcasters have, “We need to get our hands around measurement, metrics and pricing for content, so we can negotiate from strength and not just make it a throw-in,” said the Eagles’ Napoli.

Technical problems aside, the real success of the Tiger Woods/Phil Mickelson made-for-TV match will be as a springboard for similar events.

“There’s an idea there of really showcasing the personalities of the biggest golfers that’s universal,” said Derek Benbow, managing director of corporate sponsorships and strategic partnerships at Charles Schwab, one of golf’s biggest sponsors. “Maybe it’s time to bring back the Skins Game or bring in LPGA golfers as a way to challenge the status quo and bring in some new viewers.”  

After successful launch and Grand Finals, the Overwatch League will experiment with local market games for three teams in 2019.
Photo: getty images

With concern growing that esports businesses aren’t monetizing their fans effectively enough, 2019 will bring a new phase of experimentation, shifts in investor strategy and even downsizing.

 

“I am excited about 2019 in many ways: A lot of investment that has been going into esports in recent times will emerge through new products, services and adding value to the ecosystem,” said Jens Hilgers, co-founder of ESL and the esports venture fund Bitkraft Esports Ventures. “Inevitably, though, we will also see the first big wave of failing business models and approaches. This is a time of great learning, progress and opportunity for esports.”

Hilgers notes that these cycles are not new to competitive gaming, but the new money that’s flowed into the space in the last three years has raised the stakes.

The highest-profile experiment will be the Overwatch League’s steps toward local market games for their teams. In preparation for full home-and-away schedules in 2020, three teams — the Dallas Fuel, Atlanta Reign and L.A. Valiant — will each host a slate of games in their own venues on separate weekends.

These steps are crucial to the future growth prospects of OWL teams, which are eager to develop more of their own revenue streams. But the home games are a big unknown. Esports fans have proved that they’ll show up for major tentpole events, but it’s an open question if there’s much of a market for live attendance at routine contests.

ESG Law founder Bryce Blum, lawyer to many of the top North American teams, said 2019 will shed new light on the wisdom of each game publisher’s different approach to esports. “Fortnite” publisher Epic Games has focused on content creation and promoting the game itself, looking for traction among noncompetitive streamers and celebrities instead of building a pro-league-style elite circuit. OWL is going down the localization path, and Riot Games now has franchised models in both North America and Europe, with more regional balance than ever in its global ecosystem.

“There could be multiple winners here, but whichever models prove they can create long-term value will go into the playbook that will impact decisions being made in the space for decades to come,” Blum said.

Another theme for 2019: More attention on casual gamer culture, which is a far bigger market than hard-core esports.

“The line between competitive esports and entertainment is becoming thinner, particularly when it comes to attracting the attention of major consumer sponsors and partners,” said Nicola Piggott, a partner in the esports public relations firm The Story Mob. “The smartest teams, publishers and orgs are looking at ways to create additional value through smart influencer strategy and content that widens their lens beyond hard-core competitive play.”

Carlos Rodriguez, founder of the European team G2 Esports, predicted publishers will start looking into new genres in pursuit of broader audiences than the current big hits of “Counter-Strike,” “League of Legends,” “DOTA 2” and “Overwatch” do.

“In 2019, I expect the esports community to start demanding a new type of competitive video game, beyond battle royale, that will evoke significant changes for 2020 and beyond,” Rodriguez said. “I also predict that esports will look into developing and promoting more family-friendly games [e.g. Rocket League] to widen the audience and find new places to attract and engage with fans.” 

NBA

One of the biggest storylines in 2019 is whether the NBA can continue its upward trajectory that has brought an unprecedented level of viewership, attendance and overall fan interest in the league under the leadership of Commissioner Adam Silver.

Silver

The league’s major narratives are on the West Coast as LeBron James looks to restore luster to the Los Angeles Lakers, while in the Bay Area, the Golden State Warriors are seeking their fourth championship in the past five seasons.

Gambling remains a major story for the league that has been out front of the issue. How will the NBA evolve to take advantage of the rise in sports betting and what new business opportunities will arise as more states legalize sports wagering? — John Lombardo

NHL

Commissioner Gary Bettman likes to say that the league has never been stronger. It will look to continue that in 2019, from the launch of player and puck tracking, the development of the New York Islanders’ new Belmont Park arena, hopes for new arena progress in Arizona, Calgary and Ottawa, and further efforts to diversify its fan base and executive ranks.

Bettman

But 2019 across the NHL will be about one story — the next CBA. The current agreement runs into 2022, but both sides hold an opt-out that they can exercise in September, which would end the deal ahead of the 2020-21 season. A commitment to the Olympics and a more focused long-term international calendar are important issues, but the debate will likely center on escrow, as players will look to benefit more from the league’s growth and Bettman tries to avoid a fourth lockout under his watch. — Ian Thomas

NFL

The NFL in 2019 will be facing two remaining seasons on its decade-long collective-bargaining agreement and a big decision on whether to keep Sunday Ticket with DirecTV. The league has an option to exit the long-standing DirecTV deal in March, which would leave one season on the satellite deal.

Photo: getty images

The NFL also will focus on sports betting and seeking federal oversight of the regulatory framework, said Marc Ganis, president of consultancy Sportscorp. A leaguewide gambling sponsorship is likely coming in 2019 as well.

The NFL will also be speaking with all the major digital players about how streaming fits into the league’s future. The broadcast deals run past the expiration of the CBA, so no major streaming deal is likely to be signed this season. Ganis, though, described 2019 as a key negotiating year for digital in which the league gets a good sense of which direction it will head once it has labor peace and can focus on extending the media rights. — Daniel Kaplan

Golf

Dramatic schedule changes will be a major storyline for both the PGA of America and PGA Tour in 2019. The PGA of America is moving the PGA Championship to May from August, while the tour shifts The Players Championship from May to March. Also, changes to the FedEx Cup Playoffs will reduce the number of events from four to three, allowing the playoffs to end prior to the start of the NFL season.

The LPGA will also see some major changes as it boosts the purse for its CME Group Tour Championship to a record $5 million. The tour will feature 33 official events this year, one more than 2018, and total prize money will grow to a tour record $70.55 million. — John Lombardo

MLS

The next 12 months might feel like déjà vu for MLS — a new team will launch, a new stadium will open, cities will chase expansion spots, and the league’s business lines will expect growth. In 2019, FC Cincinnati, Minnesota United’s Allianz Field, and Phoenix and St. Louis will fill those seemingly annual respective roles. However, some questions remain for MLS:

After breaking USL attendance records, FC Cincinnati begins play this season as MLS’s 24th team.
Photo: getty images

How will it approach sports betting as the only major pro league besides the NFL to not sign a leaguewide deal in 2018?

What can it do to boost tepid television ratings as its critical next deal in 2022 draws closer?

Can Atlanta United keep lightning in a bottle, and can struggling original markets like Chicago and New England harness it?

How will Columbus move forward after a tumultuous 2018?

Can Miami avoid any snags, and can Nashville be the next Atlanta as both cities prepare for a 2020 launch? — Ian Thomas

USOC

The U.S. Olympic Committee will face intense pressure in 2019 to deliver on its promise of reform after the USA Gymnastics sex abuse scandal. Meanwhile, courts and Congress will have their own ideas about what should happen to the USOC. In Washington, talk of opening the Amateur Sports Act is reaching a fever pitch. While the odds are against a comprehensive rewrite of the Olympics’ governing law, the unpredictable deliberations will put the USOC on the defensive. Meanwhile, a bankruptcy court in Indiana will decide whether the USOC’s push to decertify USA Gymnastics can proceed with the governing body in Chapter 11. Another major question to watch: Does the USOC consider settling with victims, or will it continue to fight the lawsuits? Don’t forget: By New Year’s Eve of 2019, the Tokyo 2020 Olympics will be fewer than seven months away. — Ben Fischer

WNBA

The WNBA will have a new president in 2019, a key hire for the league as it looks to drive fan interest. Whoever replaces former President Lisa Borders will need to build a new executive team eager to tackle the challenge to increase the league’s attendance and bottom line. Labor also will be a major storyline. Players have opted out of the current collective-bargaining agreement, which expires at the end of the 2019 season. WNBA players are pushing for higher salaries and better travel conditions. — John Lombardo

MLB Commissioner Rob Manfred announces London games, joined by Red Sox owner John Henry and London Mayor Sadiq Khan.
Photo: getty images

As Major League Baseball continues to experience historic waves of change both on and off the field, 2019 promises to be another eventful year. A sampling of expected highlights this coming season:


LONDON CALLING: An aggressive special event plan has MLB staging games in Japan; Puerto Rico; Mexico; Omaha, Neb.; and once again in Williamsport, Pa., this year. But the focal point will likely be two scheduled games in late June in London featuring the sport’s foremost rivalry: the Boston Red Sox and the New York Yankees. The games will be MLB’s first played in Europe, long a more elusive territory in the league’s overseas development efforts.

LOCAL MEDIA UNREST: Local market rights have long served as an economic bedrock for the sport. But the future of that foundation will be established in the forthcoming year as Disney is required to resell the regional sports networks it is acquiring from Fox, and the league seeks to renew expired in-market streaming agreements.

ON-FIELD ACTION: Potential rule changes to boost on-field action have been a key source of ongoing negotiations between MLB and the MLB Players Association. Potential developments for 2019 include the long-expected implementation of a pitch clock, which has been used at the upper levels of the affiliated minor leagues.

BALLPARK WATCH: Oakland and Tampa Bay’s pursuits of new ballparks have each lasted more than a decade. But the efforts in both markets will take on a heightened urgency in 2019 as the A’s try to get approvals on the club’s aggressive two-stage plan to develop both Howard Terminal and the Coliseum property, while the Rays are now back to square one after their Ybor City proposal fizzed out last month.

TURNSTILE TRACKING: After attendance — still an all-important indicator for baseball — fell in 2018 to its lowest level in 15 years, the daily counts in 2019 will receive plenty of attention not unlike the stock market indices. And more creative sales approaches, such as the A’s new membership-based ticket model, will continue to grow in prominence.

After a year that spotlighted the powerful #MeToo movement, expect gender issues to stay front and center throughout the sports industry in 2019, according to diversity and inclusion experts.

 

“It is really about the progress of women in the wake of the #MeToo movement,” said Oris Stuart, executive vice president and chief diversity and inclusion officer for the NBA, which is the most diverse among all the U.S. leagues, according to The Institute for Diversity and Ethics in Sports at UCF. “Companies have been mobilizing at a foundational level to make sure that workplaces are harassment free and respectful. There is more investment than ever that seeks to close any gaps that exist in how men and women are represented. There is a recognition of having women represented in fair and equal force in all levels.”

The expected effort for teams and leagues this year to add more women in the workplace begs the question: Will 2019 be the year that a woman is named a head coach or ascends to a general manager role?

“We need to see continued emphasis on that,” said TIDES Director Richard Lapchick, who predicted that the glass ceiling will soon be shattered.

Longtime WNBA team executive Kelly Krauskopf became the NBA’s first female assistant GM last month.
Photo: getty images

In December, the Indiana Pacers named Kelly Krauskopf as assistant general manager, the first woman to hold the title in the NBA.

“I think it will happen soon,” Lapchick said. “It always takes a pioneer to break the ceiling, and once it is broken, it will be easier for others to have breakthroughs.”

Whether that day comes in 2019 or later, there is little doubt that the coming year will bring more women to key organizational jobs.

In addition to the Pacers hiring Krauskopf, the Toronto Maple Leafs last year hired four-time Canadian Olympic hockey gold-medalist Hayley Wickenheiser as assistant director of player development. Becky Hammon, assistant coach of the San Antonio Spurs, last year interviewed for the head coaching job of the Milwaukee Bucks. 

In December, the Denver Nuggets hired WNBA star Sue Bird as a basketball operations associate, while Comcast Spectacor recently hired Valerie Camillo as Philadelphia Flyers and Wells Fargo Center president of business operations, one of only a few female executives to lead an NHL team.

All the moves have helped create increased momentum for greater inclusion in 2019.

“It is role modeling for women to look up and see that you have a path,” said Shannon Hosford, vice president of marketing and communications for Maple Leaf Sports & Entertainment. “Diversity and inclusion has to be a state of mind in organizations going forward. It is more than a check box on a human resources chart.”

Worth watching in 2019 is how much diversity progress is made in sports such as golf, which historically has been dominated by white men.

Organizations such as the PGA of America and PGA Tour are increasing their diversity efforts, including a new program that the tour launched last month called Closing The Gap, which creates internal employee groups within the organization to address diversity and inclusion issues. It’s the latest initiative within the tour’s Advancing Women Leadership program.

“These are not just groups that meet for coffee,” said Allison Keller, chief administrative officer for the PGA Tour. “We want them to help our culture get more inclusive.”

But as the tour and other sports properties create new diversity programs, the industry will be looking for quantitative results from their efforts.

“People are putting the right leadership around it,” Keller said. “It is on the agenda. I’d like to see people show measurable results. That is an important trend. We are excited about the results.”

Will Fox buy back RSNs from Disney? It’s the biggest media question of 2019.
Photo: getty images

Endeavor’s Karen Brodkin and Blue Sky Media’s Leslie Gittess were sitting on a Hawaiian beach over the holidays with their families. It didn’t take long for their conversation to speculate on who was going to buy the 22 Fox regional sports networks from Disney.

 

“One of us says several are going to the FAANGs [Facebook, Amazon, Apple, Netflix or Google],” the two executives emailed from the beach. “The other says they are going back to Fox.”

It’s not every day that a $20 billion acquisition hits the sports media market in the United States, and predictions about who will own and run the RSNs has become one of the most popular parlor games in sports media. Disney has 90 days to sell the RSNs from when it closes its purchase of 21st Century Fox’s entertainment assets.

The RSN sale comes as pay-TV distributors continue to shed subscribers. Desser Sports Media’s Ed Desser said he is most interested in seeing if cord cutting will continue, or if sports fans become the key line of defense in stemming that trend.

“I expect a number of big content deals to start closing [NFL, MLB, AAC] in 2019 but most will be similar to current arrangements with changes mostly around the edges,” he said.

Pilson Communications’ Neal Pilson agreed, saying the value of sports leagues will continue to rise given the current sports media climate.

“Properties like the NFL, NBA, MLB, CFP, NHL, NCAA Tournament, MLS, Olympics, power five college conferences, major golf and tennis events are more attractive as selling platforms today than they were 25 years ago because the competition for viewers is more intense and the lesser options cannot deliver the desired audience,” he said. “Yes, the more things change, the more they stay the same.”

But sports media in 2019 will be defined by much more than the RSN sale and cord-cutting trends. Several top sports media executives also are looking at the impact of sports gambling, which Octagon’s Dan Cohen believes will be a catalyst for audience growth — both in-arena and on television — in the same way that the popularity of fantasy football helped the NFL’s TV ratings a decade ago.

Legalized betting will categorically alter the sports business ecosystem, said Cohen, senior vice president of Octagon’s global media consulting group. “Leagues will design and carve up new rights packages and the smart ones will profit greatly. … Broadcasters will innovate with interactive betting technologies, new content and in-game digital products. We will witness a rise in M&A activity in this sector to accelerate revenue growth and reach.”

LHB Sports President and CEO Lee Berke agreed, saying he expects 2019 to be the start of a multiyear process where sports properties sync up media and gaming rights.

“It will be challenging as new gambling laws are rolled out state by state, new media technologies attempt to reduce the cross-platform latency and national and regional media agreements expire and are revamped,” he said. “Eventually, all of it will be structured to offer up a frictionless multiscreen experience as fans watch and some bet on the favorites in-venue, at home and anywhere online.”

Wasserman’s Dean Jordan said he expects 2019 to be the year that media companies implement policies to reduce password sharing.

“The financial impact on distributors and content owners across all formats is too significant for the issue to continue unchecked,” he said. “Technology solutions are either currently available or are in development that range from simply capping the various user machinations against a subscription to several advanced options, including geographic proximity requirements, approved user registrations and limits on total devices, among others.”

Data and analytics were a key underpinning of many of the sports industry’s biggest stories of 2018, including the arrival of legal sports betting around the country and baseball’s ongoing battles with diminished on-field action. That trend will only accelerate in 2019, fueled primarily by several key developments:

 

BETTING, BETTING, AND MORE BETTING: Operators across the newly opened sports wagering scene including MGM Resorts International, FanDuel, Sportradar and Genius Sports last year signed various agreements to use or distribute official betting data from major sports leagues. Many more such pacts are expected in 2019. But that development could be mandated if a recently introduced federal bill eventually becomes law. A bill proposed by Sens. Chuck Schumer (D-N.Y.) and Orrin Hatch (R-Utah), titled the Sports Wagering Market Integrity Act, would create a national clearinghouse for wagering data and require sportsbooks only use official game data from leagues.

Beyond using the data to create betting lines and monitoring for irregularities and potential match fixing, betting data will also be increasingly deployed for fan engagement and media purposes.

“What we’re watching … is how betting companies will look more like media companies using content to attract and engage users,” said Steve Byrd, Sportradar US chief commercial officer. “With the flip side of being how media companies will leverage betting content and move more closely to betting companies to monetize their audiences. Convergence!”

In-game tracking is likely to grow as teams seek more player data.

IN-GAME DATA USE: The last decade has seen a historic wave in the ability to track and measure player and ball movement with many developments such as RFID chips in football shoulder pads, MLB’s Statcast system, and an array of video-based tracking platforms. But the deployment of that generated data in live in-game settings has been far more measured as leagues have looked to ensure fairness and competitive balance. The accelerating power of those tracking systems and a continued thirst from teams for more data will heighten the push to allow more tracking and biometric data during live games.

INVESTMENT ATTENTION: Data and analytics are receiving heightened investor interest on two primary fronts. Not only is the rising prominence of data generating its own organic boost in investor focus on the space, but many more teams and leagues are building new investment vehicles and business accelerators, in turn creating forums for companies to access funds, industry insight, and the use of team and league intellectual property. But some executives wonder if all the investor attention could create a funding bubble.

“With the amount of money going into sports technology startups, [2019] could be a key year to see some successful up-rounds or exits,” said Brian Kopp, chief executive of visual performance training firm Vizual Edge. “Otherwise we may be headed toward a bubble with some high-profile failures on the horizon.”

YOUTH EXPANSION: The youth sports market is being eyed as the next big target for many wearable technology and video-based analysis providers, with diminishing costs and increasing ease of use serving as key catalysts. The disparate nature of youth sports makes it much harder to develop larger deals. But the prevalence of data in sports makes a move into the youth space inevitable.

Merrimack College was one of five recent converts from Division II to Division I competition.
Photo: getty images

The only constant within college athletics is its volatility and propensity to change. That will be an ongoing theme in the college space in 2019, according to experts who work in the business.

 

Front and center this year is the Alston v. NCAA antitrust lawsuit. Plaintiffs argue against a cap on what student athletes can earn. Currently, they are limited to whatever income is tied to the scholarship, like cost of attendance, or financial need, such as the Pell Grant. The NCAA is fighting to maintain that model. A judgment is expected, but appeals are expected to carry on for years.

“The potential outcomes of the Alston trial could create disruptive new challenges for Division I leaders,” said John Currie, the former Tennessee and Kansas State athletic director. “National sentiment for ‘pay-for-play’ centers on a handful of legacy institutional brands, marquee coaches, and a relatively small number of the 170,000 Division I student athletes.”

Industry speculation has focused on one group of schools breaking off with a pay-for-play model, while others stick to the old scholarship structure, which will challenge institutional leaders.

“The majority of presidents, chancellors and boards already grapple with the scrutiny of rising costs, salaries and institutional and student-fee subsidies of athletics, pressures that have contributed to recent cuts to sports programs, scholarships and teams,” Currie said. “How institutional leaders respond to Alston could dramatically reshape the ‘big picture’ of college sports as we know it.”

Those who operate on the business side of college sports will continue watching the impact of the merger of Learfield and IMG College, the two mega powers in collegiate marketing and media. The merger was completed just before the end of the year.

“The expected consolidation on the multimedia rights will drive schools to find new nontraditional revenue streams,” said Lawton Logan of The Whitener Co., and a former IMG College executive.

Logan said the licensing business also is ripe for disruption, evidenced by Oregon’s recent deal with Fanatics.

“I see continued disruption to the traditional collegiate licensing business with bright, aggressive execs making big bets in the space,” Logan said. “Data analytics will play a much more significant role in commercial decision making than in years past.”

The volatility normally associated within the Division I ranks is apparent in Division II as well, said Russell Wright, managing director of the Atlanta firm Collegiate Consulting.

“We’re watching the number of schools at Division II that are exploring options at Division I,” Wright said. “I truly believe that Cal Baptist, Merrimack and North Alabama [that initiated a move to D-I] from this past year are the tip of the iceberg. Our firm is currently conducting four D-II to D-I studies — Augustana just announced their intentions to explore D-I.”

All of the movement is certain to create conference realignment at the FCS and Division I-AAA levels.

“We know firsthand there are four conferences aggressively and actively looking to expand membership, and I believe you will see significant realignment,” he said.

The motorsports industry is preparing for a seminal year in 2019, as several of the world’s foremost series are revamping themselves with key decisions set to be made in the coming 12 months.

 

NASCAR and Formula One are in the midst of some of the most consequential decision-making processes their respective series have ever faced. 

This year will also see the debut of the new W Series, an open-wheel series for women that will race solely in Europe in 2019 before trying to expand to the U.S. in 2020.

NASCAR

NASCAR’s sales and marketing teams have been working behind the scenes to map out a new sponsorship model for the sport. The new model will be more akin to the NCAA’s, which features tiers of sponsors but no single brand that has its name attached to the league. But it also will be unique to NASCAR, including the integration of assets from other stakeholders.

Sponsorships make up about 75 percent of teams’ annual revenue and salespeople continue to face a tough market for selling their inventory. While new sponsors are still coming in, and there has been the occasional home-run deal like Hendrick Motorsports landing Ally Financial, many companies are either coming in with fewer assets or cutting back on some they’ve held. Because of this, and spurred by Furniture Row Racing’s closure, teams are now being audited by Deloitte as part of an initiative that could result in a budget cap or other measures to rein in spending.

The NASCAR industry is flooding casino operators with sponsorship opportunities related to sports betting in 2019, while the governing body finalizes new rules related to sports wagering. That sets up this year as the one in which deals should start being struck between motorsports operators and casinos and other gambling entities.

IndyCar

Although its identity has yet to be revealed, IndyCar is close to naming a new title sponsor to replace Verizon. The open-wheel series also enters its first year in which NBC — which is building itself into the new home of motorsports in the U.S. — will be its sole media rights holder.

Formula One

F1’s quest to grow in the U.S. has likely come slower than Liberty Media was hoping for. While Sean Bratches, managing director of commercial operations, has run into major hurdles in his efforts to land a second U.S. race in Miami, he’s said to be having conversations with Las Vegas about possibly adding a race there. McLaren CEO Zak Brown also recently said that F1 plans to host a second demonstration event in another destination city in the U.S. in 2019 after debuting one in Miami last year.


Photo: ap images

Djenaba Parker

General counsel and chief talent officer, New York Red Bulls

Story: Sports betting is such a hot topic. With its legalization in the state of New Jersey (home of Red Bull Arena), there are significant growth opportunities in several areas of our organization.

Executive: Kim Fields. She is a superstar executive, problem-solver and strategic thinker. I am looking forward to seeing how she continues to effect change at the NFL, including prioritizing diversity in technical and on-the-field positions.

Rich Kleiman

Partner, Thirty Five Ventures

Story: I’m looking forward to seeing the continued evolution of the WNBA and its growth, especially after its popularity has surged in the last year. The players have all been very outspoken about their CBA, and I’m interested to see their negotiation results as well.

Executive: Hands down, Brodie Van Wagenen. For all of my life, I’ve been a huge Mets fan and I am really excited about his fast start with the organization. I can’t wait to see how it unfolds in 2019.

Joe Lacob, Peter Guber, Bob Myers and Rick Welts
Photo: getty images

Brandon Schneider

Chief revenue officer, Golden State Warriors

Story: The evolution of legalized sports betting. I am really intrigued to watch the effect this will have on fan engagement as we constantly strive to create the best possible experience.

Executives: Joe Lacob, Peter Guber and Rick Welts (above with Bob Myers). I work with three of SBJ’s 50 most influential people in sports business, so I am watching them closely as they will play a huge role in continuing to lead this industry forward into 2019 and beyond.

Lon Rosen

Executive vice president and chief marketing officer, Los Angeles Dodgers

Stories: The legalization of sports betting, and the continuing emergence of esports.

Executive: MLB Commissioner Rob Manfred, and how he’ll continue to improve and drive the growth of America’s pastime.

Photo: getty images

Bob Babbitt

Co-founder, Challenged Athletes Foundation

Story: The beginning of the qualifying process for the 2020 Paralympics in Tokyo, plus I’m anxious to see which major brands step up in the New Year to support the world’s greatest athletes.

Executive: I am a huge fan of Akio Toyoda (above), the president of Toyota, and will be following every move he makes over the next two years. He and Toyota have made a huge commitment to the Paralympics and Para sports. He stated earlier this year that, “Toyota is a mobility company, not just a make-a-better-car company.” I love the message that he is sending to corporate leaders and to sports business professionals worldwide.

Photo: ap images

Alison Overholt

Editor-in-Chief, ESPN The Magazine

Story: [It is] a microcosm of an industry story — following consumer response to the explosion of streaming options. There are many who feel we’re already at the “too many options” tipping point. I’m confident ESPN+ is best in class, yet as the field continues to grow and we see how fans and audiences respond, there will be much for all of us to learn.

Executive: Lisa Borders (above). She’s left sports and gone on to be the first-ever CEO of Times Up. I’m very curious to see what she’ll do as the leader of a social movement that looks to become an institution, with aspirations to be a systemic game changer for women across industries and at all levels. And I’m simultaneously interested in what Adam Silver and the NBA organization will do in terms of naming a replacement for Borders atop the WNBA, and whether that will signal a strategy shift for the organization as they head into a season following the players’ choice to opt out of their CBA.

Photo: getty images

Debbie Yow

Athletic director, North Carolina State University

Story: Alston case. Nothing else compares to its potential impact on the fabric of collegiate athletics.

Executive: Commissioner [John] Swofford (above) and the soon-to-be ACC Network. Looking forward to it beginning in August.

 

Photo: ap images

Kenneth Shropshire

CEO, Global Sports Institute, Arizona State University

Story: The ongoing impact of the USA Gymnastics tragedy. Between that, domestic violence and coaching abuse in a more generic sense … these sports business ultra dark side examples are ramping to disturbing levels. My hope is that there will be more stories on the efforts to end all; my fear is that the revelations will continue. We need to do more to combat what is being revealed.

Executives: There are two for me: The first is Oliver Luck (above) as the CEO and commissioner of the XFL. This and any new professional football efforts, but especially the impact of Luck’s football savvy leadership with a marketing-powered entity. The second is Diahann Billings-Burford as the CEO of RISE. Much like Luck she comes in with an amazing background and resources. Can she harness the power of the organization to use sport to combat racism in America?

This week, writers Bill King, Daniel Kaplan, Eric Fisher and Ben Fischer discuss the year ahead: What and who they’re watching as 2019 comes out of the gates.