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WELCOME BACK!
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Welcome back to The Varsity, my new private email for Puck covering the conversation within the sports business industry, and the egos running the show. I’m John Ourand.
I’m writing this dispatch from Indianapolis, that shining city on a hill, where NBA All-Star weekend is about to start, and St. Elmo’s is already filling up. I’m less interested in the game than the Tech Summit, a day-long conference that draws the most influential executives in the sports business. The summit is all off-the-record, but the networking and gossiping outside of the sessions is the best in the business.
I’m wrapping up my third week at Puck, and one of the things I really like about working here is our ability to flood the zone and capture every nuance around the obsessions that dominate our world. Take the recently announced streaming service from Disney, Fox, and WBD—or Spulu, as it is becoming known. Dylan Byers broke news that former Apple executive Pete Distad is the frontrunner to lead the service; Julia Alexander provided a must-read analysis on how Spulu is really an R&D lab for executives, like Bob Iger, who are plotting their own streaming Trojan horses; and Eriq Gardner teased out a subtle antitrust wrinkle. Meanwhile, Matt Belloni dissected the deal with Lucas Shaw on his The Town podcast.
This is a reminder that The Varsity will be gratis for another couple weeks. Unlike all the other good things in life, however, this is not free. Sign up here to convert to a paid Puck membership (you can afford it) if you haven’t already. It will be the best way to support my work and access the writing and insights of my generationally talented colleagues, like those mentioned above.
Today, I’m focused on all the dish emanating from Indy as All-Star Weekend kicks off—what ESPN and WBD want, how Amazon is lurking in the deal chatter, etcetera. I also have some news on ESPN’s college football playoff dealbreaker, and insight into one insidious reason why those annual Super Bowl numbers keep going up. Hint: It has more to do with Nielsen’s methodology than TSwift.
Mentioned in the email: Taylor Swift, Caitlin Clark, Jerry Jones, Adam Silver, Roger Goodell, Mark Davis, Ted Leonsis, Andrew Marchand, Tom Brady, Jimmy Pitaro, the CFP, Bob Iger, Zaz, and many more…
Okay, let’s get started…
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That’s the average ticket price on TickPick for tonight’s matchup between Michigan and Iowa, the highest ever for a women’s basketball game, college or pro. Of course, Iowa’s all-world phenom Caitlin Clark needs just eight points to break the NCAA women’s career scoring record. |
The Varsity Player of the Week: Mark Davis |
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I never thought I’d ever honor the Raiders owner in these pages, especially after Davis fils broke the hearts of those insanely loyal and long-suffering Oakland fans by relocating his team to Vegas. But Davis was the de facto Super Bowl host, and his city is still receiving praise for an efficient, safe, and lucrative Super Bowl week. Sports business executives have long memories, and many are still scarred by the violence that broke out when Vegas hosted the NBA All-Star Game in 2007, some 17 years ago. The NFL was so pleased with the experience that it’s hard to find anyone in the industry who would bet against Vegas hosting the game again before the decade is out. |
Down to the J.V.: Ted Leonsis |
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It’s way too early to declare the Capitals-Mystics-Wizards owner’s planned move from downtown D.C. to Virginia completely dead, even though an influential Virginia politician used that very word to describe the situation. But it’s become abundantly clear that Leonsis’s proposed relocation will be dragged through the mud of local politics until it’s ultimately approved or denied. That’s not a good look for an owner who is trying to draw crowds to his D.C. arena to watch NHL and NBA teams that both are likely to miss the playoffs again. |
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The Starting Five: NBA All-Star Weekend Edition |
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- Notes on the ESPN/College Football Playoff deal: ESPN has agreed to pay $7.8 billion to broadcast the College Football Playoff over six years, as my friend and former work wife Andrew Marchand scooped on Tuesday. But the deal is not signed, and there’s a chance that ESPN could pull its offer in the next few months if the CFP organizational body doesn’t get its act together.
Of course, the always-maligned CFP committee has yet to finalize the new 12-team playoff structure. This process has only gotten more complicated as the PAC-12 has essentially become the PAC-2, with only poor Washington State and Oregon State left behind, and the Big Ten and SEC continually levitating above the NCAA to become their own veritable semiprofessional leagues. The playoff committee needs to figure out how to placate the conferences, ensure that the larger format is more inclusive, and allow everyone (the conferences, the schools, and their broadcast partner, chief among them) to make enough money so that they play nice—at least for now.
Nothing happens quickly in college athletics, but the committee better not assume that ESPN will wait around. I’m hearing that the network will not only be spending a lot more on NBA rights, but also that its executives have prioritized maintaining UFC rights, too. (Those negotiations kick off in the fall.) Jimmy Pitaro is also looking at MLB rights. All in all, that’s a lot of cash outlay, and the CFP would be wise to accept the deal quickly while it has a bird in hand. Indeed, they need look no further than the Pac-12’s too-cute rejection of an early ESPN bid to recall just how quickly it can all fall apart.
- A Zaz-Spulu pickle: I was surprised to see that WBD’s truTV, the network that no one watches outside of the first weekend of March Madness, would be part of the forthcoming Spulu sports streaming service. Should the outlet really be considered a sports channel if it only carries a handful of NCAA tournament games each spring?
Well, WBD executives have been asking its league partners to identify sports programming that could land on truTV, particularly during the week. “It’s a concerted effort,” one league executive told me. When I called WBD, a source reminded me that truTV is hosting three alternate telecasts this week—one with an NHL game, and two around NBA All-Star weekend festivities. TruTV has also simulcast a couple of NBA games.
When it starts carrying NASCAR next year, truTV and Max will simulcast qualifying and practice sessions. These moves hardly turn truTV into a true sports channel, but it does provide David Zaslav another place to put sports programming beyond TBS and TNT. And it also may make the channel more valuable in future bundling negotiations, especially in an era when subprime networks are going away.
- More Super Bowl numbers: Here’s a quick prediction: Next year’s Super Bowl will set another U.S. TV viewership record. That’s because Nielsen is going to once again change the way it counts viewers in a way that benefits the networks.
In reality, this season’s remarkable ratings had little to do with Travis and Taylor. Instead, the bump had more to do with the inclusion of out-of-home viewing, which has allowed Nielsen to count people watching at bars and restaurants or a friend’s house since 2020. For big events like the Super Bowl or Thanksgiving Day games, out-of-home can add around 20 percent to the overall number. My sources say this methodology can increase regular NFL Sunday ratings by more than 10 percent.
Thus far, however, Nielsen has only rolled out its out-of-home measurement to two-thirds of the country. By the time of next year’s Super Bowl, in New Orleans, Nielsen will have covered the other third as well. Many people will credit newbie Fox analyst Tom Brady for the bump, or the appearance of Aaron Rodgers and the Jets in the game (just kidding…), but it all comes down to measurement rollout.
- A bit more on the HS&E/Fox deal: Over the last two years, the biggest money brokers in sports have evangelized about the financial opportunities surrounding insurgent women’s leagues. And, indeed, we’ve seen a lot of investment in the space, from the growth of NWSL franchise fees to the expanded broadcast TV platforms to the recent ESPN deal (although the reported near-billion-dollar deal figure is hyperbole). Anyway, that’s why I was intrigued but not surprised by the news that Horizon Sports & Experiences and Fox Sports partnered to launch an early-season basketball tournament in New York, featuring some of the best-known women’s college teams in the country. It’s a relatively small deal, but it’s yet more evidence of the increased level of interest from investors.
HS&E co-C.E.O. David Levy told me that he’s concocted an investment thesis around women’s basketball, soccer, and volleyball. “You’re going to see investment from advertisers, from private equity companies and media companies,” Levy said. “That’s the trifecta, right? You have private equity investing in franchises and stadiums. And you have networks that are now putting these sports front and center.” We’ll see if private equity and big media continue to view women’s sports as a long-term growth area.
- The Sunday Ticket dish: During my entire week in Vegas, exactly one person brought up the Sunday Ticket class action suit against the NFL that’s winding its way through the courts. That shocked me, especially given that the decision could have huge ramifications on how the NFL handles its media business. I asked Puck’s resident legal expert, Eriq Gardner, for an update on the case, which is scheduled to go to trial on June 6. Eriq thinks the case will settle before then, “but it’s not a surefire prediction. It’s like 65 percent settlement, 35 percent trial.”
The reasons Eriq believes it will settle: 1) Roger Goodell and Jerry Jones are on the witness list. “Does the league really want to be put under oath in a public courtroom?” he mused. 2) “If the plaintiffs win, it’s possible the NFL couldn’t prevent teams from licensing out-of-market streams of their own games. Obviously, that blows up the entire model, which is one of the things the NFL is arguing.”
A reason it could go to trial: The range of potential outcomes is extraordinary, which makes it harder for both sides to agree on what constitutes a fair middle ground for settlement. “The plaintiffs estimate $6 billion in damages, but what most people miss is that if you win an antitrust case, the damages can be tripled,” Eriq told me.
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![The Mysteries of Indianapolis](https://images.scalero.io/email_assets/3940/WMJCSDB2QJHK9SAQNACL0Y1FBB7MLV17Y4V9NWKPSTE4IKQFXZLMQJUSJP0PYLMP.png) |
The Mysteries of Indianapolis |
All the dish and dealflow talk emanating from the heartland as All-Star weekend sets in: the NBA rights permutations, the Diamond deal, and much more. |
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What could possibly be more romantic than Indianapolis in February? Probably anything, which is why this year’s NBA All-Star weekend—normally one of the more raucous boondoggle events on the annual sports executive whistle-stop tour, particularly the recent iteration in Chicago a few years back—is going to be all about business. Most of the shop talk in the forthcoming days will revolve around the league’s upcoming national rights deal and what Adam Silver might do.
But while executives from all the interested media companies will be in Indianapolis this weekend, I anticipate that there will be little actual movement on this front. The NBA, of course, is talking with all comers, but it hasn’t even entered its exclusive negotiating window with current partners ESPN and WBD, which starts next month and runs through April 22.
Here’s what we know so far: ESPN and WBD want to renew. Amazon is pushing for a package that includes a significant number of playoff games. NBC is preparing an aggressive bid, as well. Sources have told me that Netflix, despite an initial meeting, has not shown any interest in a live-game package. CBS and Fox have not engaged. The wildcards are Apple and YouTube, which have limitless budgets and are looking to build out their sports portfolio.
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ESPN will almost certainly keep the NBA’s main package, including the NBA Finals. Many like to point to Disney C.E.O. Bob Iger’s courtside patronage of the Clippers and Knicks as a leading indicator of his personal investment in making a deal come together. But the reality is that the forthcoming ESPN streaming plans rely profoundly on an NBA relationship. Meanwhile, Amazon also looks like a shoo-in to claim a package that includes exclusive, early-round playoff series. The big question is whether the NBA creates three or four packages: If three, NBC will battle WBD for the second-tier package currently held by the latter. If it goes with four, NBC and WBD will be considered the frontrunners, with Apple and YouTube on the outside looking in.
But the bigger story in Indianapolis this weekend involves the operator of the Bally Sports regional sports networks—the bankrupt Diamond Sports. Creditors are coming up with a debtor-in-possession (D.I.P.) financing plan to help Diamond emerge from bankruptcy. Securing that D.I.P. financing, though, means Diamond has to work out deals with leagues and distributors. It’s unlikely that Diamond will secure a rights deal with MLB, which does not want to give up teams’ streaming rights. The two sides are no closer now than they were when Diamond entered bankruptcy protection last March. (Diamond, however, is talking with the NBA and NHL about securing long-term deals for those rights.)
At the same time, Diamond also has to negotiate carriage deals with pay TV distributors. Its deal with Charter is up at the end of this month, its deal with Comcast runs into the spring, and its deal with DirecTV ends in the late summer. On one hand, Charter has gained a reputation for playing hardball in these types of negotiations—recall that it took Disney channels, including ESPN, dark for nearly two weeks last fall during a rancorous affiliate negotiation. But distribution executives are wary about any deal that fatally harms RSN companies like Diamond, fearing that local broadcast affiliates will step in, buy the rights, and demand better (i.e., more expensive) deals from pay TV distributors.
While there are still a ton of questions around Diamond’s RSN business, there is some movement, and we should start to get more clarity next month. By the end of March, Diamond will detail specific plans for the bankruptcy court around how it will be able to stand on its own once it emerges from bankruptcy.
Diamond executives insist they have a plan to move forward. The key is whether they can convince leagues and distributors to do more than just kick the can a little farther down the road. Diamond needs to convince them all to sign long-term deals. Six weeks from now, we’ll know if they were successful.
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FOUR STORIES WE’RE TALKING ABOUT
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The Age of Biden
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Suddenly, it’s open season for the POTUS age question.
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DYLAN BYERS
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Sturm und Drang
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Diving into the $240 million deal with Puig.
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RACHEL STRUGATZ
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Klein of Arabia
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Why are the Senate and Saudis both after Michael Klein?
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WILLIAM D. COHAN
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