Alex Abrams’ Post

🤖 Something a bit different this week -- through a partnership with the MBA Sports Business Alliance, an organization near and dear to my heart, we have a special guest author this week. The ultra-talented Olivia Harris, a former product manager and current MBA at the University of Michigan - Stephen M. Ross School of Business (Go Blue!), took the helm for this week’s newsletter and dove into one of the biggest, most complex topics impacting our world right now: AI. Since the launch of ChatGPT in 2022, AI has dominated the headlines and business discussions. But what tangible impact can it have in the near future? With major technological breakthroughs like this, there is a lot of noise and conjecture, and it is a product person's job is to find the signals in the noise. As both a product person and sports lover, Olivia uses this week's SBP to explore a key question: how can AI actually impact the experience of a sport fan? She deftly addresses how AI is (and is not) revolutionizing three critical aspects of the fan experience: Betting, Retail, and Viewing. Check her work out below! 👇

🏒 📺 The Dallas Stars are the latest team to break the mold and leave the traditional regional sports network apparatus, announcing this week they are terminating their agreement with Diamond Sports Group-owned Bally Sports Southwest before it ends next year. In its place, the Stars are partnering with media company A Parent Media Co. Inc. (APMC) on a seven-year deal to offer its games for free to local fans in Texas, Louisiana, Arkansas and Oklahoma via a FAST (free ad-supported television) channel called VICTORY+ Unlike a number of the complex elements in the streaming/media space, a FAST channel is quite straight forward: viewers can watch content on virtually any device — i.e., TV, tablet, phone, computer — at no cost, with the only tradeoff being that the viewer most times does not control the content and has to watch commercials. It’s a page out of the original television model, but with updated technology. The Stars, like many other clubs in the National Hockey League (NHL), National Basketball Association (NBA), and Major League Baseball (MLB), are faced with a challenging decision when what to do about their local TV rights. The current RSN model is quickly shifting, and there is not an obvious replacement. This presents a question of opting for reach or revenue. Most of the clubs gave up reach for revenue in the traditional RSN model. While RSNs historically reached a smaller segment of the clubs’ DMA (for example, the Stars estimated that 60% of the local Dallas-Fort Worth market (~1.9 million of the 3.1 million television households) was unable to watch its RSN, the clubs were rewarded with eight-to-nine-figure annual payouts from the RSNs that amounted to anywhere between 12-23% of overall revenue. In this free streaming model, they will sacrifice upfront money by going with a free channel but hope to make some of it back in advertising dollars and ancillary revenue streams (i.e., merchandise, sponsorships) that come with attracting more fans and earning goodwill. Plus, the Stars reportedly received a minimum guarantee from APMC that serves to de-risk the deal somewhat. Other clubs have tried this free channel idea, but the Stars’ setup is unique in that it is streaming only and with a partner that has experience in FAST channels and digital content (APMC runs Dude Perfect’s streaming service). These two elements are likely to help attract a younger, more digital savvy fanbase as the Stars seek to grow the fanbase. This partnership feels like the next evolution in the move away from RSNs, and I would expect other clubs to look hard at this option. The concept of going free and also providing a digital native medium that appeals to younger audiences is quite compelling. Interested in learning more (and seeing an Entourage gif)? Check out Sports Business Playbook to get smarter in 5 minutes on the biggest business stories in sports 👇 https://lnkd.in/gqkRbgXQ

🏈 The National Football League (NFL) made headlines for all of the wrong reasons just before July 4th, when a jury ruled against the league in a class action lawsuit that its NFL Sunday Ticket package violated antitrust law. The NFL sells its out-of-market games as a collective package. The 1961 Sports Broadcasting Act gave all professional leagues, including the NFL, an antitrust exemption to do a league-wide deals and negotiate collectively instead of by team with broadcast partners. In the modern media environment, fans can watch their local teams in market and the national exclusive games (i.e., Sunday Night Football), but they will need to purchase Sunday Ticket to watch those out of market games. The lawsuit alleges that the NFL violated its antitrust exemption by collectively splitting off out-of-market games and creating a standalone product well above market rate with a satellite service (DIRECTV) and now a streaming service (YouTube TV) that are not attainable on linear TV. Through a series of missteps by the NFL and some legitimate questions about the model, the jury ruled in favor of the plaintiffs. The case didn’t get a lot of publicity while it was happening, but the damages number sure did. Initially set at $4.7 billion, the figure ballooned to $14 billion because of the ability to “treble” damages in antitrust cases. This is obviously a monster number, and if you’re reading only the headlines, you’d think that David has dealt a major blow to Goliath. While this is a setback and it is surprising the league did not try to settle along the way, the NFL is going to attempt to get the verdict thrown out in late July and then escalate to higher appeals courts (including the Supreme Court potentially) if it fails. Based upon prior litigation, this would imply they believe they can win. The NFL is likely looking to score a knockout punch here because it wants to protect its “all for one, one for all” business model that has gotten it to where it is today. Losing this suit would likely require a restructuring of the media rights model and have far reaching implications on how the teams interact with each other/do business together. Making a definitive statement entrenches that model and bolsters the NFL's biggest moat. In this week's SBP, we're back to the courtroom! You'll learn: - How the NFL’s media deals operate - What happened in this case and where it goes from here - Why I think the NFL is fighting this so hard 👇 https://lnkd.in/gUADWCAB

🏃♀️🏒 🏀 🏐 💰 I may be starting to sound like a broken record, but it's hard to overstate the growth of women's sports. Women’s sports is projected to cross $1 billion in global revenue this year (up 300% since 2021), and 20+ different teams are playing their first games in the women’s sports landscape in 2024 — showcasing the proliferation of interest and opportunity. As I wrote last week, this ascension is not going unnoticed, and it's attracting major investment. What's interesting is that in addition to the investments in the more mature leagues (albeit still nascent in the broader sports landscape) like the WNBA (Women's National Basketball Association) and the National Women's Soccer League (NWSL), we are also seeing a move further downstream to even earlier stage opportunities. Here are three early stage women’s sports leagues making some noise in the US: PWHL: The Professional Women’s Hockey League (PWHL) just capped off its inaugural season. Backed by a single prominent investor who unified disparate leagues, the league hopes to capitalize on the rising popularity/youth participation of hockey in the U.S. and tap into the rabid Canadian market. The league’s first season delivered solid results, including drawing nearly 500,000 fans, breaking several women’s hockey attendance records, and signing over 40 corporate sponsors. Unrivaled Basketball: Unrivaled is a new 3-on-3 women’s basketball league created by two WNBA stars -- Breanna Stewart and Napheesa Collier -- that will launch in 2025 and run during the W offseason. The goal is to give players a viable domestic league to play in instead of having to go abroad, and the expectation is that Unrivaled can carve out its place in a crowded sports ecosystem by combining the momentum that the W has developed with a “big game” strategy that takes 30 of the best players and puts them in a fun new competition format. With high profile athletes (Alex Morgan, Carmelo Anthony) and major sports business executives (former ESPN president John Skipper) as investors, the league hopes to quickly drive revenue through media rights and sponsorships. Two women’s volleyball leagues that are launching — PVF and LOVB: These two leagues are launching within a year of each other to attempt to give the U.S. a true professional league. Both see the growth at the youth level (up 15% in the last two decades), the huge interest in college matches, and the lack of a male competitor league as huge investment positives. Each has raised significant capital into the nine figures. It’s unlikely that the two leagues can coexist for long, but either one or a merged version of the two should find success in my opinion. In this week's SBP, we look at each of these leagues through the investment lens and what’s driving the investment decisions. You’ll learn the following about each: - Who is on the cap table - The likely investment thesis - Initial results To read on, click the link in the first comment!

🏀 The WNBA (Women's National Basketball Association) is in the midst of its biggest season ever, and we’re now getting a deeper sense of how the league is performing off the court. Sportico released its first ever WNBA valuations this week, sizing up the 12 clubs by perceived market value based upon a mix of factors like revenues, market, real estate ownership, and more. Some quick hits on the valuations: Highest valued team: $140 million (Las Vegas Aces) Lowest valued team: $55 million (Atlanta Dream WNBA) Average valuation: $96 million Average revenue (2023): $13.2 million Average revenue multiple (valuation / revenue): 7.3x My three key takeaways from the valuations: Number 1: The revenue multiples are pretty reasonable despite being a growth league - This 7.3x average looks pretty solid compared to the other pro leagues, and even better when paired with another US growth league in the MLS (9.6x). - Plus, based upon Sportico's analysis of the projected 2024 revenues, the W’s multiple is actually expected to drop even further to 5.5x. Number 2: Ownership of facilities matters - What these teams own in addition to the club and brand is a big factor. One such example is the owned real estate around an arena or a practice facility. - The two top teams, the Las Vegas Aces and Seattle Storm, both have immaculate new practice facilities/team offices, the Phoenix Mercury (no. 4) are building one, and the two new expansion teams will both have owned facilities. Number 3: The most inflated multiple belongs to the Indiana Fever due to one very specific person - The Fever have a multiple (9.9x) roughly 2 points higher than the next closest team (the Aces — 7.9x). They rank as the sixth highest valued team despite finishing second to last in 2023 revenue. - Enter: the Caitlin Clark effect. The club’s revenues will likely jump in 2024 and beyond which should bring this multiple down, but it demonstrates how important she is and that the club’s valuation is primarily tied to her stardom. - It’s hard to think of another player who has almost single handedly lifted up a small market club in such a short time like this. LeBron in Cleveland is the only other that comes to mind and I don’t think even he reaches this. The report is packed with insights, and it set off a great series of discussions around the sports business about the W’s past, present, and, most importantly, it’s future. If you're interested in learning more about about what’s driving the WNBA’s valuations, the bull/bear investment case for the W, and my ultimate opinion on an investment in the W, check out this week's SBP 👇

💰 Industry shaping news happened over the past week, as the NCAA board of governors and the Power Five conferences have approved a historic settlement that, pending legal review and judge approval, will end “amateurism” as we know it and usher in a new era of college athletics where student athletes are paid by the schools. There are still way more questions than answers and a lot to figure out, but the one fundamental thing that has been agreed upon with this settlement: the notion of “amateurism,” the much maligned, 100+ year bedrock of the current college sports system that has long been guarded by the NCAA and other college administrators, is dead. In its place, there is a framework for $2.8 billion in backpay to former athletes for lost compensation plus a revenue sharing agreement on up to $20 million per year for future players. If approved, this new framework would be implemented by 2025. 🧠 My three takeaways from the deal: - This proposed system is a net positive, but it will only deepen the chasm between the “have’s and the “have not’s.” - The settlement doesn’t provide a real solution for NIL collectives, and they are unfortunately going to continue to operate mostly as is, for now. - Private Equity is going to fill the void for these schools in need of salary cap funding, and it likely paves the way for the privatization of athletic departments 🔥There is still much to be sorted out with this new system. I have three burning questions about the deal. Time will tell how these shake out. - Does this new world run afoul of Title IX? - Will student athletes keep going and push to be student athletes? - Will Congress finally step in and create a national standard? Interested in learning more? Check out this week's Sports Business Playbook 👇 https://lnkd.in/gESavwcc

🏈 The Draft has been completed, the National Football League (NFL) schedule has been released, and rookies have reported to mini-camp. Eager fans can get their favorite rookie's jersey on NFL Shop. Well, except for one player. Marvin Harrison Jr., star wide receiver out of Ohio State, no. 4 overall pick by the Arizona Cardinals, and son of NFL Hall of Famer Marvin Harrison, has not signed the NFL Players Association's group licensing agreement (GLA), which means his NIL cannot appear on group licensed items like jerseys, memorabilia, or video games (i.e., Madden), to name a few. What's a GLA? - GLAs have been around for 50+ years and are meant to protect players while ensuring they get a cut of the revenue. If a brand wants to use six or more players for their advertising or product, they need a GLA. This is ubiquitous across all sports, and the NFL has 80+ GLA partners at this point. Players can make between $30,000 to several million dollars based upon how big of a fanbase they have. This GLA is normally noncontroversial and is signed by rookies during the NFL Combine. Why is MHJ doing this? - MHJ was a star on the field at Ohio State, and that allowed him to build a significant NIL portfolio off the field. He had an existing deal with Fanatics that reportedly paid him $1 million or more per year. - MHJ has done his whole pre-Draft process differently, and he’s likely now looking to use the GLA as leverage to try to bring Fanatics back to the table. What does it mean for the broader sports licensing landscape? - The type of hardball that MHJ is playing is not going to work for every major college player entering the pros, but it’s a potential roadmap for the high end stars whose games translate well to the NFL. - Despite all of the criticisms of NIL, this is a good example of the positive aspects of the concept. It has leveled the playing field in the business to player relationship, and it has enabled the marquee players to develop leverage in college that they can carry forward as they begin their pro careers. Most importantly, though, it has conditioned the players to be more aware of their value and the agency they have in this process. Check out this week's SBP to learn more! 👇 https://lnkd.in/gRRyrxBy

🏀 📺 We've got ourselves a showdown in the National Basketball Association (NBA), and it's not the playoffs. After not reaching a deal during its exclusive negotiating period, Warner Bros. Discovery - parent company of Turner (Turner Broadcasting System, Inc) - is in danger of losing the NBA media rights it's held for nearly 40 years to NBCUniversal, as NBC has come in with a significant offer of $2.5 billion, nearly 120% over the current agreement. The agreement puts WBD in a Catch-22. Keeping the rights would surely mean overpaying (reports are saying they'd need to come in at $2.8 billion to have a shot), and the company is already in challenging financial times. But, if it loses the rights, it drastically weakens its cable business due to being unable to maintain its carriage rights, which are among the highest out there ($3/subscriber) and generates $2.56 billion annually for the company. Decisions, decisions. In this week’s SBP, you’ll learn (with the assistance of some memes): - How the NBA is carving up its new media rights package - The “tale of the tape” between WBD and NBC - The outcomes of either scenario (and NBC's ultimate angle) - What I think the NBA will do - The ramifications this broader deal will have on the industry as a whole Check it out below! 👇 https://lnkd.in/gtizrPdY

A special Sports Business Playbook this week, as this edition marks one year since launching. What started as a small experiment to give myself a creative outlet during a time of professional challenge/frustration has evolved into a weekly publication with a growing readership base that has become a deep source of pride for me. My goal with SBP has remained the same since Day 1: to help readers get a look behind the curtain to understand the “why” and the “so what” of the biggest business stories in sports in a fun, insightful manner. I hope you have found these newsletters as enjoyable to read as they have been for me to research and write. Thank you for all of the support, and I look forward to continuing to pop into your inboxes each Thursday with some knowledge and fun. To that end, this week's SBP is about an innovative jersey patch sponsorship deal. The WNBA (Women's National Basketball Association)’s Phoenix Mercury announced a jersey patch partnership with venture capital firm Cleveland Avenue. In addition to being the most lucrative jersey patch deal in the WNBA at around $3 million per year (putting it on par with some of the smaller NBA teams — women’s sports 📈), the unique partnership will feature the logo of a different company in Cleveland Avenue’s portfolio each season. Partake Foods, a Black-owned, women-led natural food company, will be the brand featured this season, and it will then rotate to other companies in subsequent years. Many are rightfully focusing on the revenue of the deal and the new watermark set for this sponsorship category. In addition though, this could lead to further innovation with jersey patch deals that capture more interest and tell a better story than the traditional models. In this week’s SBP, you’ll learn: -How jersey patch deals and what both parties get out of them -The recent innovations in jersey patch sponsorship -Possible opportunities for applying this rotating concept and beyond Check it out! 👇 https://lnkd.in/gAYQSuNe

🏀 The WNBA (Women's National Basketball Association) draft on Monday was massive. It drew 2.5 million viewers (for context, a WNBA game has not drawn more than 1 million viewers since 2008) and featured the game's biggest star -- Caitlin Clark -- going first overall to the Indiana Fever. This excitement turned to anger for many when they saw how much the superstar would be making in her first year: a very pedestrian $76k. Others said she she will make it up in endorsements and/or should have taken the $3 million that Ice Cube offered her to participate in the BIG3 . There is some value to these points. The outcry is justified given it shows how the historical underinvestment and lack of media attention have held the league back. And it is correct she will make a ton of money via endorsements (including a reported ~$20 million endorsement deal with Nike + her own signature shoe), and could make a higher salary in a novelty league like the Big3. But, these arguments miss the broader point. Yes, she's wildly underpaid, but that salary is all she's legally allowed to make (not including personal endorsements) under the league's current collective bargaining agreement, which is negotiated between the league and the players' union. No, comparing her salary to National Basketball Association (NBA) rookies doesn't make sense given the W is a separate league that is 50 years younger and generates 2% of the NBA's total annual revenue ($200 million vs. $10 billion). No, she can't be given equity in a team due to the CBA, and she also shouldn't be so shortsighted to just take the first lucrative contract that comes her way for a marketing stunt like the Big3. All of that being said, come 2025 when the new media rights deal for the W and a new CBA are both up for renegotiation, Clark's superstardom will be at the forefront of both conversations. From these negotations, we will hopefully see some tangible progress that benefits the players as a whole. This is the paradox of Caitlin Clark. Her arrival on the scene is shining a bright light on the structural inequities that have plagued women's sports for so long while also giving us hope that she will be one of the change agents that carries women's basketball into its next iteration -- an economically viable, high growth product. In this week’s SBP, you’ll learn: - How leagues’ CBAs work and what they mean for the players - How Caitlin Clark and the current players can change the trajectory of women’s basketball - Three things you can do today to grow the women’s game Learn more below 👇 https://lnkd.in/g4TMHbqr