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Volume 27 No. 10
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SBJ All-Access: Dealing From Strength

The sports marketplace remains vibrant -- valuations continue to soar, investment opportunities are plentiful and large amounts of capital are awaiting to be deployed across sports, media, tech and data. It’s the salad days of sports business. But at this year's SBJ Dealmakers in Sports conference at The Westin New York at Times Square, one commissioner sounded a clear warning sign that industry leaders should heed: Innovate quickly, as in now -- or risk being left behind.

 

SILVER STATE

Silver addressed myriad issues facing the NBA, such as China and an evolving media landscape
Silver addressed myriad issues facing the NBA, such as China and an evolving media landscape
Silver addressed myriad issues facing the NBA, such as China and an evolving media landscape
  • During his time at the helm of the NFLPaul Tagliabue had a number of leadership lessons, one of which was to keep innovating. "If it ain’t broke, fix it anyway.” That was clearly the message from NBA Commissioner Adam Silver, who in a one-on-one with SBJ Publisher & Executive Editor Abe Madkour yesterday offered a surprising shot about the future of the pay TV universe and implored the audience of industry execs to not stay bound to tried and true practices. Speaking in front of 250 people, including his former boss, David Stern, Silver mentioned a conversation he recently had with EA CEO Andrew Wilson, "He said to me, 'My sense is, we're going to see more change in the next five years than we saw over the last 40 years.' I truly believe that, and I think that we have no choice but to innovate right now. ... There are a lot of factors swirling around in terms of changes in habits, changes of habits by our viewers. Sort of different resonance from traditional cable brands, where we're a little bit on an island in terms of finding our NBA demographics. So we need to address these changes now."

  • To nobody's surprise, China came up early with Silver. "We have, in some ways, a uniquely American issue that we're dealing with in China. It's one that, as I look around the room, many people here do business in China. It's not an issue that is in any way unique to the NBA. ... It may be that this was inevitable, that ultimately, there was going to be a culture clash of a certain kind. ... By no means am I suggesting that we did everything right. It's just too early to understand what it is we should have done differently retrospectively or even in the next few months what it is that maybe we'll do differently." Silver noted he has not spoken directly with Yao Ming yet, but others at the league have. "He wears many hats in China but one of them is in essence as a representative of the government. I think everyone is being careful and diplomatic." He also noted NBA staffers in China are continuing to work, and that while games are not back on CCTV, they are being streamed on Tencent.

  • When asked what he needs to do better as commissioner, Silver said, "Slowing down sometimes. ... China's a good example that my instinct is to try to immediately fix a problem. Like who do I have to go meet with? Who can I go fly to see? Who can I go see? And I think sometimes I'm learning some wisdom of people I'm fortunate to have advised me that sometimes you've just got to give things time, and the best thing is to actually do nothing. So I think that comes with a little bit more maturity in the job."

 

NORTH SIDE STORY

Proskauer's Joe Leccese (l) interviewed Cubs Owner Tom Ricketts to kick off this year's conference
Proskauer's Joe Leccese (l) interviewed Cubs Owner Tom Ricketts to kick off this year's conference
Proskauer's Joe Leccese (l) interviewed Cubs Owner Tom Ricketts to kick off this year's conference
  • Cubs Owner Tom Ricketts opened up this year's conference and talked about a host of issues facing the club, Wrigley Field and MLB at large.

    • On pace of play: "The real issue that we're trying to get at to baseball -- and length of games is really important and you want to get games back under three hours if you can -- is the amount of action. When I walk around the park, no one says, 'Hey man, the game's too long.' But they do say let's get a few more balls in play. ... But the league's on top of it."

    • On launching Marquee Sports Network: "We had four different channels that showed our stuff. Sometimes you were on WGN. Sometimes you were on Comcast, which also had a separate channel for overflow. It was just a mess. I didn't know where to find our games. Now we're one channel. It's simple. It's straightforward. ... We've announced AT&T and DirecTV [carriage] deals. We're with MediacomCharter and few others. It's a great start."

    • On the MLB-MiLB dispute: "The messaging got away from us a little on that. What teams have generally decided is to stop doing the [Single-A] short season. ... Let them go to the instructional league. Let them go to the training facilities to work on player development for the summer as opposed to that extra short season. That's 30 teams out of 160, and then there's a handful of teams that just don't maintain their standards. ... So just take out the handful of teams that are just not investing in their ballparks and take out the 30 teams in short season and you're down to 120. If we do that, you take away a lot of 14 hour bus rides and we're treating players better. We'd like to tie that in with a raise for all the minor league players. To the extent that we have to lose some affiliates, I think that's just a part of the evolution of how we develop players."

    • On growing revenue: "We've opened several restaurants that are all doing very well. The hotel as well. From there, we started Marquee Development, and we're starting to help other people that are doing those sorts of projects around their stadiums because of the lessons we learned -- how to create an organic experience, incorporating corporate sponsorships, what programming works in open spaces. ... Around Wrigley, we've figured out what we should be doing on non-game days to program open spaces to make it feel more like a town square or community center than just a stadium. That's obviously what people want these days. The days of 'put your stadium in the middle surrounded by parking lots and have all the money drain in' -- that's over. People want a full-day experience."

 

 

THE BRADY MARKET

Fanatics' Michael Rubin (r) shared a panel with the NFL's Brain Rolapp to talk about a deal starting in 2020
Fanatics' Michael Rubin (r) shared a panel with the NFL's Brain Rolapp to talk about a deal starting in 2020
Fanatics' Michael Rubin (r) shared a panel with the NFL's Brain Rolapp to talk about a deal starting in 2020
  • Fanatics’ Michael Rubin talked of the company’s strong sales on Cyber Monday and noted that Patriots QB Tom Brady’s jersey was still the top-selling item of the day. He also noted the longtime, sustainable sales for Brady jerseys, but a lot of fans may soon find those jerseys out of style. If you read NBC Sports Boston’s Tom Curran’s column on Monday, you can see that this longtime astute Patriots observer believes we are watching the final few games of Brady in a New England jersey.

  • Despite the fact that Lamar Jackson’s jersey is the hottest seller right now, when retailers think about the Super Bowl, Rubin said they aren’t rooting for the Ravens. Rubin, on which teams would make for the hottest market: “Realistically, today, it would probably be San Francisco or Dallas on the NFC side. And it would certainly not be Baltimore on the AFC side. Baltimore is selling well because of how special Lamar Jackson is, but it's still not a big market from a business perspective. [On the AFC side], it would be New England or Kansas City.”

 

 

SIGN & DRIVE

Barstool's Erika Nardini was bullish on her outfit's recent deal with NASCAR
Barstool's Erika Nardini was bullish on her outfit's recent deal with NASCAR
Barstool's Erika Nardini was bullish on her outfit's recent deal with NASCAR
  • One of the biggest laughs of the day came when Erika Nardini talked about Barstool Sports’ relationship with NASCAR. Nardini: “The only leagues and companies that really come to us are, like, ‘Hey, our audience is dying. Can you help us?’” While the deal may have made for some strange bedfellows, it has proven impactful for both sides. Nardini: “They gave us access to everything and you could see with our personalities that they had the same experience as our fans, which is, they knew nothing about NASCAR. [And] it’s actually very cool. There's tension. There's drama. The drivers go through extreme stress in the course of a race. Those stories aren't widely recognized amongst our audience. So we started to talk about them and show them, and we drove the highest spike and ratings that NASCAR has seen in northeast markets. We then went ahead and invested our own money in a driver and a car for two races. We drove the No. 1 streaming event in NASCAR history, which is when our car was in the race. So that's been an awesome partnership, and a totally new demographic.”

 

 

HIGH-VALUE TARGETS

Alan Kestenbaum (l) talked alongside Islanders co-owner Jon Ledecky about team investment
Alan Kestenbaum (l) talked alongside Islanders co-owner Jon Ledecky about team investment
Alan Kestenbaum (l) talked alongside Islanders co-owner Jon Ledecky about team investment
  • There were several mentions on stage of the idea that the relative scarcity of opportunities for ownership of major pro sports teams is what is driving the value of those teams. But Stelco CEO Alan Kestenbaum, who is a Falcons limited partner, argued that while scarcity plays a role, the fundamentals of the business show that teams are “actually incredibly undervalued.” Kestenbaum, who targeted majority ownership of the Panthers before that team went to David Tepper, said, “When you look at it as a business, and football specifically, every team makes money. It's got scarcity value. It's got a CAGR over 12% over the last 20 years, even during the most vicious recession in anybody's lifetime. EBIDTA keeps growing, and fan involvement keeps growing. And then, on top of that, you layer on some of the media opportunities that are starting to unfold as … old media starts transitioning from traditional media to more streaming and things like that. The financial metrics applied to a business with the characteristics I just described make teams actually undervalued. Actually incredibly undervalued.”

 

 

UNION JUNCTION

Ahmad Nassar (l) and Eric Winston talked about the NFLPA's new OneTeam venture
Ahmad Nassar (l) and Eric Winston talked about the NFLPA's new OneTeam venture
Ahmad Nassar (l) and Eric Winston talked about the NFLPA's new OneTeam venture
  • The last NFL player lockout was in 2011, and the current CBA is set to expire after next season. That creates a worrisome situation for the NFLPA, because so few of today’s players were even in the league back then. Union leaders thought they might have a hard sell when it came to convincing players to prepare for a work stoppage. But that wasn’t the case, said NFLPA President Eric Winston. “What’s amazing is those stories and how that’s lived on in the locker room,” said Winston. “It’s been really passed down from player generation to player generation, so when we’ve gone into the locker room and told them, ‘Hey, this is what you need to do,’ they completely get it.”

  • When it comes to figuring out what success will look like in the first year of the OneTeam Partners joint venture with the MLBPA and RedBird Capital, the NFLPA's Ahmad Nassar, who will now lead OneTeam, said he’s thought about advice he got from Fanatics' Michael Rubin. “The first time I ever met him,” Nassar said, “He told me, 'you can do one or two big things as a business every year. Otherwise, you’re going to do nothing.'” For OneTeam, that has meant prioritizing “what could be a hundred-plus things on our list.” The bottom line for Nassar: “If we add a few players' associations formally; if we do a couple of big deals, particularly in the video games space, because it’s ripe for that; and if we make an investment or two on the startup side, that’s a good year.”

 

 

LAX ATTITUDE

  • NBC Sports' David Preschlack talked about the success of the Premier Lacrosse League's debut in 2019, particularly what he learned about the upstart league's performance on the NBC Sports Gold streaming platform. "They completely surpassed our expectations relative to NBC Sports Gold. I mean, we set a number during the course of the negotiation and we blew right through it. And, and I will tell you, I think it has a lot to do with how Paul and Mike Rabil run their business. I mean, Mike is really the business guy and Paul is not only one of the best players ever to play, he's a content guy and he's a new media guy and he's a digital guy."

 

 

SEEN & HEARD

  • With the event coming the day after the must-attend March of Dimes luncheon at the Hilton in Times Square, Dealmakers had a number of bold-face names sitting in attendance during the one day event. Before going on stage for his interview, Silver walked over and tapped David Stern on the knee to greet his former boss, who sat in the last row against the wall, while also greeting John Kosner, Stern’s partner in Micromanagement Ventures.

  • Stern also watched a panel featuring Zack Weinerfounder of Overtime, which is one of the companies in which Stern has invested.

  • Four former SBJ Champions of Sports Business took in the full day, as Teall Capital’s Ben Sutton, Proskauer’s Howard Ganz, The Switch’s Joe Cohen and Lagardère Sports’ Donald Dell sat in the sessions and networked with colleagues.

  • Proskauer’s Joe Leccese and Brad Ruskin chatted up Silver outside the speakers room.

  • Snap's Anmol Malhotra played host for a cocktail reception at the social media platform's offices near Times Square on Tuesday night for conference speakers and a few special invitees from the March of Dimes event earlier in the day. Among those in attendance at the elegant space were the Cubs' Tom Ricketts, Turnkey Search's Rick Allesandri and Len Perna, Teall Capital's Ben Sutton and Wes Day, Octagon's Dan Cohen, Evolution Media Capital's Alan Gold, W Partners' Wally Hayward, ESPN's Burke Magnus, the NFLPA's Ahmad Nassar and Eric Winston, LHB Sports' Lee Berke and The Montag Group's Sandy Montag.

 

THE PLACE TO BE

  • The annual March of Dimes Charity Luncheon on Tuesday was again a who’s who of those in sports business, with more than 1,000 industry leaders in attendance. The event, fueled by the leadership of its chair, CBS Sports’ Sean McManus, started at 11:30am and ended by 2:00pm and honored Gold Medal-winning U.S. skier Lindsey Vonn, NFL Giants Chair & Exec VP Steve Tisch and former MLBer CC Sabathia. Last reported, it raised around $1 million.

  • The line of the day was clearly by Tisch. Showing off his sense of humor, Tisch noted the team’s record by saying in front of a table of NFL execs, including Roger Goodell, who was there to accept the Corporate Leadership Award: “I know you are having second thoughts about giving an owner of a 2-10 football team a Sports Leadership Award. But look, you couldn’t have known -- just like the NFL doesn’t know what pass interference is.”

 

SOCIAL ANIMALS

 

UP NEXT

  • SBJ is back in New York next week for our annual Learfield IMG College Intercollegiate Athletics Forum from Dec. 11-12 at the Crowne Plaza Times Square ManhattanCheck out details here. We'll also host our inaugural New Voices Under 30 event next Thursday night, which will honor young, diverse and impactful leaders, entrepreneurs, risk-takers and disrupters who are reimagining the sports experience and the way business is done.