NCAA Faces Legal Risks Despite NIL Settlement; DAZN's Global Soccer Push

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0:35Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg Business of Sports. We explore the big money issues in the world of sports. I'm Michael Barr along with Damian Sassauer and Vanessa Perdomo. Coming up, we'll hear from Peter Oliver. He's the CEO of Growth Markets at DAZN. That platform has been streaming the rights to every single game of the FIFA Club World Cup globally. We'll hear about the big opportunity this is for DAZN and what it could mean for sports on streaming platforms. It's the first time there's been a single streaming platform running a competition of this scale.

1:16And we think it will actually become the most streamed sporting event yet because of the popularity of soccer internationally. We'll also hear from none other than Magic Johnson. That's right, I said Magic Johnson. He's the latest guest on the deal with Alex Rodriguez and Jason Kelly. All that and more is ahead on the Bloomberg Business of Sports. But first, last week a federal judge approved the NCAA's nearly$3 billion settlement with student-athletes, but there are still other hurdles to clear. Joining us to discuss is Bloomberg senior antitrust reporter Katie Arcieri. Katie, welcome to the Bloomberg Business of Sports.

1:53Female athletes have appealed a landmark NCAA settlement saying it violates federal anti-discrimination law. Tell us more about that. Thanks so much for having me. Yes, this was a big court approval, a huge win for NCAA,$2.8 billion in past damages expected to be paid out to 400 ,000 athletes, former and current. But the NCAA is actually facing a big legal threat right now. Just days after this approved, this court approved this deal, female athlete objectors basically said that they were going to appeal this deal to the Ninth Circuit. And they're saying that this deal just completely ignores Title IX and that it is going to exacerbate inequities in in sports for the foreseeable future.

2:45Katie, I mean, Michael, also, we got to talk about the fact that this story, we've now tried to have it in the show a couple of times and it keeps changing. Katie, why is it that there's so much to this settlement and to this deal that it keeps getting appealed and it keeps having this living organism as it is? Yes, this is the story that really keeps on giving. I've been covering litigation against NCAA for the past two years. It's been a huge punching bag from an antitrust standpoint. The power of the NCAA really was shattered with the Supreme Court decision back in 2021. And that really loosened NCAA's hold on compensation for athletes.

3:33So the NCAA has been battling suit after suit after suit and losing in federal court. But this is a settlement that NC2A has put together last year. They wanted to get a huge consolidated class action NIL suit out of the way. This was a freight train coming right at them. And they put this$2.8 billion deal together. Still, it's still in many ways, at least a lot of antitrust lawyers and scholars have said that it still violates antitrust law. It sets a cap on athlete compensation, about up to 22 percent of the average revenue generated by schools and conferences can be distributed. So the cap is estimated to be like 20.5 million dollars per school.

4:22But antitrust lawyers have argued that that's still an illegal cap on compensation in violation of antitrust law. Replacing a cap of zero to a 22 percent cap is still a cap. So we may actually see suits coming out, you know, about that, you know, in the coming days. So this is something that has been very controversial. Also, we've seen a lot of concern about roster limits. So the NCAA in its deal is limiting the number of spots on team rosters. So that really basically their idea was they don't want to have an Ohio State with, you know, several, you know, a bench of huge, huge bench of talent and then maybe a smaller school not having that bench.

5:01But some students will be losing their spots on a roster, and they've worked hard all their life to get to this point. And it's a concern for many objectors saying, hey, we don't want to lose our spots and we shouldn't have to. Well, and that's – I want to expand more about what you were saying about the 22 percent cap. Let's take that in itself right there. 22 percent of Ohio State's revenue is much better than 22 percent of Mudville University. And my point is, the smaller you are, you're going to be messed up. This is a big concern. It's that this revenue sharing model that goes into effect July 1 is really going to exacerbate inequities between smaller schools and bigger schools.

5:48If you're a big Ohio State or Alabama, you have a massive budget, you can throw money at the best talent. And why wouldn't that athlete come to your school to be part of that and take advantage of that opportunity. But that's going to really disadvantage some of the smaller schools that may have one really, really good team and maybe not so great other teams. So, you know, we're seeing, there is a concern that this is going to kind of create an uneven playing field and smaller schools are going to be at risk. Hey, isn't it already an uneven playing field though? I mean, when you look at the Big Ten conference football programs as opposed to even ACC programs, I mean, it's already pretty uneven.

6:29Yeah, this is going to really formalize things, going to really set up the rules in a way that that kind of allows colleges to participate or not. Well, Katie, Katie, now remind me, didn't President Trump rescind Biden's proclamation on Title IX and revenue sharing? I mean, I thought there was an agency fact sheet, some non-Biden document that was issued by the Department of Education and appears that, you know, I guess Trump's response to that is that it does. I guess the administration does not view revenue sharing as within the scope of Title IX. Talk to us a little bit about that. I mean, where does Trump in the current administration stand on Title IX?

7:03Yeah, that's a good question. I mean, the Trump administration has, you know, been seeking kind of removals of chipping away at Title IX and also, you know, funding for transgender athletes and that kind of thing. I'll have to get back to you on a little bit more about exactly what his stance is on that. But as what we know right now is that the judge pretty much punted this issue. She did hear objections to Title IX in this in this particular settlement. But, you know, we definitely she definitely is is is kind of has been accused of sidestepping the issue as a whole. Katie, do you think the way that Title IX is written as a protection of, you know, equality throughout educational programs, federal education programs, do you think that that should be linked to revenue sharing and the money aspect of this?

7:51Look, I mean, the settlement, it suggests that the schools would have paid male athletes over 90 % of their revenue over the past six years, as though Title IX didn't apply. And I think they're saying is that if Nike wants to do that, that's their choice. But if you're a school or a conference acting on the school's behalf, that they're violating the law. And so they want, they can either pay the athletes proportionally or they can return all of the federal funds, but they can't do both. When are we going to see, is this ever going to be over, Katie? I mean, there's so much going on here. And I mean, you said it before, the 22 percent is still that people are arguing that that cap is still illegal.

8:28So is the reality that the only thing that will be able to really change this is a collective bargaining agreement like we see in professional sports? Well, this is a this is a settlement that was not collectively bargained. I think that's something that is a big concern because they're saying a lot of the plaintiff's attorneys are saying, look, these athletes are treated like employees. They should be they are they they act like employees. They should be paid like employees. That's exactly what the NCAA doesn't want. And there are two bills floating around in Congress right now that basically explicitly kind of say that.

9:04And that's, you know, the NCAA doesn't want to have, you know, its schools playing paying employment taxes, dealing with labor laws. They just don't want that headache. So Charlie Baker, he wants a federal framework for NIL. They want uniformity across the states. They don't want to deal with rules state by state where some have permissive laws and others don't when it comes to NIL. And they want to avoid all these antitrust challenges. So they want liability, antitrust liability. They want a shield. Well, you mentioned NCAA President Charlie Baker, and I believe he is on the record as having said that his organization currently has nearly$300 million ready to distribute once it gets the court's permission.

9:44So I guess my question is, what's it going to take for that money to get unlocked and released? You know, I mean, what's the timeline in your opinion? I mean, if everything goes right or everything goes wrong, I mean, is money going to flow or are we just going to be in this period of stasis in perpetuity? So it's the revenue sharing is going to go full steam ahead on July 1. That's not the problem. It's the pausing of the back pay, the$2.8 billion that we're talking about, that is going to be this appeal is going to be kind of locking up until it's exhausted. So the revenue sharing is good to go.

10:15They're moving ahead. The NCAA has said to me in a statement that, you know, we are moving full steam ahead, that the judge, you know, had heard these objections about the Title IX and has overruled them. And so as far as they're concerned, you know, they're moving ahead and they're they're they're not going to let this stop them. Yeah. But the two point eight million, I guess I understand that the two eighty five is just a percentage of the two point eight that, you know, is back pay or for damages. But, you know, how long can can that sit here? I mean, like I mean, could it sit there for years?

10:46I mean, I mean, what are your thoughts on that? Well, we're going to see more appeals. That's the thing is that, you know, VP mentioned the other day that she thought, you know, asked about the Title IX appeal. and look where we are now. So we're going to see more and more that that can actually, that will kind of stop the back pay from being allocated. As to when it's going to stop, I don't know. But I anticipate, you know, opt-out plaintiffs suing, individuals continuing to sue. I expect the suits that are already in play that have nothing to do with the settlement to move forward. You know, there are teams from back in the 1980s that are suing the NCAA over NIL saying, hey, you built your image on and your powerhouse organization on our names, and we haven't been paid.

11:28You know, antitrust lawyers have said sometimes these cases have been brought too late. There's a four-year federal statute that says you can't bring – it has to be brought within the four-year timeframe of when the injury occurred. And so a lot of those suits may fall by the wayside. But NT2A, bottom line, has to be ready for its next threat, next legal threat. You are too kind. And, you know, I want to give kind of what Vanessa was saying to get more into how the salsages made on this show. We had recorded an interview earlier before this news broke. And what was supposed to happen at the time of this taping is that I'll get some, you know, goodbyes from, you know, Boo, Pookie, and Geezer.

12:10And that was supposed to be the end of the show. But that all changed with this breaking story. And Katie, you were so kind to come back on and talk with us. We really do appreciate it. Thank you so much for having me. I really appreciate it. Our thanks to Katie Arcieri for joining us. She is a senior antitrust reporter with Bloomberg. Up next, we turn to the FIFA Club World Cup getting underway this weekend and the global streaming platform that you can use to catch every game. For Damian Sassauer and Vanessa Bernomo, I'm Michael Barr. You're listening to the Bloomberg Business of Sports, Bloomberg Radio Around the World.

12:50This is Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Michael Barr. The FIFA World Cup is this weekend and DAZN is streaming every game across the globe for free. Our own Vanessa Perdomo got a chance to speak with CEO of Growth Markets at DAZN. Pete Oliver, let's take a listen to their conversation. So I'm joined by Pete Oliver, CEO of Growth Markets at DAZN. Pete, thanks for joining the Bloomberg Business of Sports Business of Soccer special. Thanks so much. Pleasure to be here. Thank you for having me.

13:28So Club World Cup is kicking off this weekend. Super excited for it. DAZN has the global rights for it. Tell us all about how to find it, where the games are, because there's also TV partnerships as well, right? There are. I mean, this is quite unique and a bit of a first for a streaming platform. So DAZN will be streaming every single game for free. And DAZN is available worldwide. So whether you're in the US, Europe, the Middle East, you'll be able to download the DAZN app and watch all 63 games for free. and it's the first time there's been a single streaming platform running a competition of this scale and we think it will actually become the most streamed sporting event yet because of the popularity of soccer internationally but you're absolutely right we've also worked with local broadcast partners so here in the US we're working with TNT and Univision who have got a selection of games not all of the games but a selection of games and that's really helping you know extend the audience, make people aware of the tournament, and, you know, promoting FIFA and DAZN overall.

14:38So just over 20 games will be available on those two broadcasters for US customers as well. And DAZN is typically a subscription-based, you know, platform, right? So why make these games free for everyone? Yeah, we started, we've traditionally been a pay TV platform with subscription and pay-per-view, but around a year ago we started experimenting and with free content. And in Europe, we've run a number of events for free. And we think it's a very good model for an event like this because we can bring in a huge new audience to our platform and introduce our brand to a lot of new sports fans. Obviously, we ask people to register, so we do get some details.

15:17We get their email address and in the future can sell them a paid subscription. And for an event like this, we've had a very big opportunity on advertising and sponsorship. So by making the event free, we're able to really, really increase the reach for brands. I should say we have got a paid version of the products as well. So the free product is very good, but if you want to have HDR picture quality, less ads, you can upgrade for a small fee and pay for a premium version of the Club World Cup. But we do expect most people will watch it for free. And that's really going to build the DAZN brand and the DAZN installed user base around the world.

15:53How does less ads work for a live sporting event? so it's a great question because obviously we have breaks uh where there will be some ads um so for a soccer game actually you don't really have um much break in play so you've got half time but apart from that it's a pretty continuous match and we will be removing sort of in play advertising for people who pay a small fee so during the game there will be some in play advertising not a huge amount but some and if you pay you won't see that and recently we were at an event together and you had talked about this being one of the catalysts for growing the brand in the U.S.

16:30specifically because here known more as a boxing platform right so why was this the tournament why this tournament do you think is going to help extend the brand reach overall for soccer and for overall for the brand yeah and that's I mean great question I mean I think you know first of all for the U.S. we have historically here been a combat sports platform whereas if you look in Europe and Japan we're very well known as you know a leading multi-sport provider with a lot of soccer baseball and so on in those countries and so for us having a tournament that's hosted in the US we think is very powerful it's in the time zone it will be you know across 11 different US cities people are going to be very aware it's happening so for us that's you know a good tournament to grow our brand in the states and also we are soccer experts we have all of the big leagues in Europe so you know in Italy we have Serie A the Bundesliga in Germany La Liga in Spain and so our production teams are very expert in that kind of coverage so we feel we can give a you know really great experience for viewers I should say beyond the US soccer or as I would call it living in the UK football is the biggest sport in the world you know it's it's loved in South America, it's loved across Europe, the Middle East.

17:51You know, it is it is actually the most popular sport in the world. And as a result, we'll be able to bring in a very, very large global audience. Do you think that the global audience is going to outweigh the audience here in the US? Well, that's an interesting question. I think, I think in the US, we will get a very significant audience. You know, in the 10s of millions of people, I think we'll watch this tournament. But if we take the sort of global footprint, we think it will be much more in the hundreds of millions. And that's because of the sheer scale of fans you have in countries in South America, Europe, the Middle East and so on.

18:27So we think it'll be very significant for us in the US, but on a global scale, probably even bigger. So you mentioned hundreds of millions of viewers there. And I know that one of the things that you guys are looking at to be the most streamed sporting event, you know, in the history of streaming. Is that because you're looking at all 60 of those games globally that you think will reach that over 100 million mark that is held right now by what Jake Paul and Mike Tyson fight? Yes, I think, I mean, I think over the whole tournament, we'll easily see over 100 million individual people watching it or streaming it.

19:04To give you a sense, if I take a soccer club like Real Madrid, they've got over half a billion fans worldwide, a huge, huge audience. The clubs in South America, typically tens of millions of people are following River Plate, Boca Juniors. So these teams have huge, huge followings. And as a result, we think the cumulative number will be very high. In terms of the single biggest stream match, clearly that will be towards the end. The semifinals are the final, I would predict, depending on the teams. And we think that would be a very significant number. But we'll have to see how we get on and which teams make it.

19:40It'll be a bit dependent on the teams that get there. And as we're talking about the global aspect of it all, then how does that work, you know, in terms of continuously growing that as well? I know you guys have a partnership with Saudi Pro League. Is that going to continue to extend as well? yeah we've got a number of big leagues we work with um and for instance you know having global highlights having access to the big european leagues where we can get interviews news you know on the ground footage all of that will kind of go into our global service um there are a number of other things we're working on at the moment for global rights uh beyond what we currently have and again over the summer i think you'll see a few more announcements from us about other soccer rights and other sports rights that we'll be making available worldwide.

20:31Yeah. One of the things, you know, that has recently come out about the Club World Cup is that ticket sales aren't going as well as, you know, originally thought. Does that give you any sort of concern for the viewership aspect of it? Well, I think there's a few things on ticket sales. The first thing I would say is I would fully expect the very big teams to sell out. So if Chelsea come and do a preseason tour in the US, not even in a competition like this. They sell out all of the stadiums straight away. Real Madrid will sell out. The big South American teams will sell out. So I think when we get to the stadiums, we're going to see them a lot busier than maybe people are saying they will be.

21:11Clearly, some fixtures may feature teams that are less famous, less popular, and we'll see how they get on. But I think, first of all, I think we will see stadiums filling up a lot more. and people do often make late decisions on these things. But from an audience point of view on streaming, we are very confident on it. We can see trends when we look on Google for how many people are searching for this tournament worldwide. That is growing really, really well at the moment. We've already seen a very large number of customers register for the DAZN app, so they're ready to watch it. And we're very confident the audiences will be big because of the popularity of soccer worldwide.

21:50Do you think that there's some sort of partnership between you and FIFA and the clubs themselves that you want to make extra content around maybe those teams who aren't as popular? Is there plans for that? Are you already doing that? Yeah, we're already on the case. So we've already made a short documentary for each team about who they are. You'll be seen as we go into the tournament. We'll be pushing that with FIFA on a lot of our social media channels. and there are some really exciting teams you know in the tournament that people may not be fully familiar with so you know as an example Al-Hilal who are coming from the Middle East have been champions out there for years and years and have some of the best players in the world particularly from South America playing for them so I think I think fans are going to discover a lot of new players and a bit like a national team World Cup there will be new stars that come out of this players who score a lot of goals goalkeepers who make incredible saves and that's all part of part of the the sort of intrigue of bringing these teams together yeah heck yeah give it on for the goalkeepers there because i love that i was a goalkeeper and we don't get enough love i don't think and our highlights are just good um and you talked there about you know a little bit about social media and stuff and recently announced a partnership with tiktok how does that work you know in terms of are people going to be able to share you know because with rights on social media that's a little bit tricky with sharing highlights and things like that?

23:14Well, I mean, again, as part of making this, you know, widely available, we will be, through our social media channels, publishing highlights throughout the tournament. We're working with a number of partners to distribute those and, you know, drive awareness of them. So the big social media platforms, including TikTok, who we recently announced a bit of a strategic partnership with around this tournament, but also more traditional publishing groups We'll be providing with highlights and clips, you know, really to drive the excitement and to drive people back to watch the live games on the DAZN platform as well.

23:47So we're a very digital company and we've always thought about sport both on our platform, but extended onto social platforms to reach fans wherever they're consuming. P, as we wrap up here, is there any sort of bar or metrics you're looking at that you have now for fans in the US for, you know, that you want to have growth at the end of this tournament that you're looking at metric wise? yes for us i mean it's very important how many new registered customers we get who download our app and experience it for the first time um obviously the audience figures for for the for the games themselves are important and as you asked earlier you know we will have follow-on content so for us uh retaining people into the app uh is important as well and we just think this is a massive opportunity for to zone to to be installed on more smart tvs more mobile phones and for fans to see, you know, what we can do, because we're quite unique as the, you know, a sports app that is purely dedicated, sorry, a streaming app that is purely dedicated to sport.

24:53But yes, we'll look at the numbers at the end, and hopefully we'll have significantly more customers registered with us than before when we started. That was the CEO of Growth Markets for DAZN, Pete Oliver, speaking with our own Vanessa Perdomo. Up next, the latest episode of The deal with Alex Rodriguez and Jason Kelly is out and features none other than NBA legend and entrepreneur Magic Johnson. We'll talk with Jason about the show and hear a little of their conversation next. I'm Michael Barr. You are listening to the Bloomberg Business of Sports from Bloomberg Radio around the world.

25:33This is Bloomberg Business of Sports from Bloomberg Radio. Thanks for joining us on the Bloomberg Business of Sports, where we explore the big money issues in the world of sports. I'm Michael Barr, along with Damian Sassauer and Vanessa Perdomo. The latest edition of The Deal with Alex Rodriguez and Jason Kelly is out, and it features NBA legend Magic Johnson. And here now to talk to us about their conversation, our friend of the show, Bloomberg Originals chief correspondent Jason Kelly. Jason, welcome to the Bloomberg Business of Sports. I love you, man. Great to be here. Always good to get my favorite hype man, Michael Barr, on the way.

26:17Well, you had a conversation with Irving Magic Johnson, and you guys talked about a lot, lots of business of sports. What did you talk about? Yeah, so, I mean, this was a really special one for both Alex and myself. I would argue even more special for Alex because he credits Magic. He did it on stage. We filmed this at the Milken Institute Global Conference out in Beverly Hills just a month or so ago. He basically said straight up, Alex did, that Alex does not become what he is today. He's not an owner of the Minnesota Timberwolves and Lynx, were it not for the advice he got from Magic Johnson.

26:56And, you know, Magic really set the template for so many athletes who came after him, male and female, in terms of building empires after they leave the court of the field. That's right. I mean, we know about Magic's legacy on the court. So tell us a little bit about the business endeavors that Magic is. I mean, we know some of the high profile. He owns the Dodgers and the commanders. Talk to us about, you know, how he got his start. You know, like talk to us about some of his his finest moments in business. Yeah, I mean, his big breakthrough, and this is one of the lessons he taught Alex, and Alex has talked about it since I've gotten to know Alex in the past few years.

27:34Alex always points back to Magic. And Magic's advice to Alex, which he has really employed, which both of them employed, is basically a lot of people want to meet you and they're open to being in business with you if you're willing to do the work and to follow up and to really execute. And that's what he did. And the main thing that that magic really saw was opportunities in communities that he was familiar with, you know, in, you know, downtown Los Angeles and beyond, you know, parts of cities that were largely ignored. And so that's where his movie theater chain started and showed immediate success in terms of getting an audience and being profitable.

28:17And he used that same playbook to convince Howard Schultz, the founder and longtime CEO of Starbucks, to allow Magic to be a franchisee and to open more than 150 locations, again, in urban cores. And that proved to be, not surprisingly, a really good business for Starbucks. And by the way, a really good business for Magic Johnson. See, Vanessa, you can do this because you're a sports figure and you just need to get some more coin. And you too. That's a couple billion dollars, I think. I mean, it's to me, it's I see the bridge from a lot of sports figures now today moving into different business ventures, whether it's involving private equity or whatever.