Why the NBA is betting big on Europe, while football struggles

0:04So I'm joined by Ben Morel, founder and president of M2C Sports Advisory. We were on stage yesterday as recording this in Madrid, the SportsPro Media Summit, talking a variety of things around European sports and the sports landscape here. Now, Ben, you've worked at the NBA for a couple of decades. You're at Six Nations and recently with League Un. We're going to touch upon a few different things on the state of those sports, akin to what we did on stage a little bit as well. But first up, what are you up to at the moment? Yeah, well, I'm enjoying a bit of freedom after 30 years in the corporate world.

0:37And as you say, with absolutely fantastic opportunities, fantastic sport, I thought that was maybe the right time for a period of time. We'll see how long that lasts. But to really be able to advise. And so I'm very happy to launch M2C Sports Advisory. And we're looking at different angles from capital investment, which I think is really interesting right now. and just how to best strategize your commercial and digital strategies. And I'm spending quite a lot of time on that. And yeah, nice launch after two months. So quite happy and really enjoying the freedom. Absolutely. So obviously one of the things that strikes me looking at, obviously your background, particularly more recently, is that connection with investment?

1:19Because CVC were backers of basically invested into rugby and then into Ligon's media offering. now looking taking a step back from all of that and whether it's in the advisory mindset or your previous roles how would you define or summarize what you see as the state of european european sports and particularly sports media well that's a large question hey so we've got time yeah we've got plenty of time uh well it's it's a fascinating because we you know the way i would summarize it there's a lot of interest especially with a lot of u.s you know sport investment in europe right now which is interesting uh i think there is a view that all the metrics in the u.s will very shortly come over to europe uh the question is how quick and how actually compatible those two models are but there's a lot of interest and yet at the same time the media world is fascinating because, you know, the competition is hard to read.

2:22You've got real serious competitors who are actually, at the same time they're competing, they're doing long-term partnerships where each other are distributing themselves. So really, how does that work? And I think fundamentally what is interesting is that the explosion of content that's available, whether it's sports or entertainment, is at an all-time high. but that also coincides with sort of you know screen time hitting a limit yeah we we can't really spend more time uh on our screen so there's what it means is there's a race for mindshare and attention and whether you're a broadcaster a rice holder you sort of all racing the same race Now, do you need help with one another?

3:13Who's helping? But we're all really, really into that raise for attention. And what is interesting is that, you know, there used to be like the one big property that I absolutely need that will make a difference to my subs. Well, there's so much content that you could argue, even for some premium rights, how much is it going to move the needle in that space of content? So it's a tricky time and time for level heads and professional and rigor oh i won't put i won't you won't need to say but sports has not been synonymous with that type of approach in previous uh previous instances but that that notion you made the your comment about the competitor mix and this dynamism there i was speaking to amazon on stage i didn't i i'd made the connection a few times and i made this point a few times about how they're acting as this major aggregator and so the zone is trying to play a bit of that aggregator role as well.

4:07But now they're being aggregated on Amazon. And then they've now got Sky Deutschland aggregated on their platform, who they're all competing for each other of rights in every market. It's a fascinating and makes everything all the more complex. And why would they bid against each other too hard? Yeah, well, I guess they don't. And that's part of the issue of the rights holders. And it's also shows how sometimes, especially it's impacting mostly the national football leagues because they're the ones to have to face sort of strong regulatory obligations in terms of how they can actually organize tenders etc whereas other major premium rights holder whether uefa or u.s sports league do not have to have the same sort of handcuffs on many aspects but it is extremely complex and so who will make the move and then who will be distributed by who.

5:00Fascinating. So let's talk a little bit about, say, football specifically, because I think that's the most, well, it's the number one sport in Europe by quite a way, and I think has the most volatility right now because you have this layer of investment that's gone into it, creating pressure, and also these investors that are looking at the marketplace as well. What do you see as kind of like the challenges and opportunities right now for some of these leagues and indeed people maybe looking at European football as an investment opportunity? Yeah, I think, I mean, football is obviously the number one sport by quite a large margin.

5:36And you've got, obviously, the EPL, which is in its own world. And it will be very interesting to see La Liga, you know, the media rights. And I think they'll do well out of this. At the same time, you have the issue of France, France, which is a very peculiar market. You could question whether it's a market right now. But what is interesting in my view is that when I look at football, the national leagues are probably one of the only major rights holder not really looking at their product and looking at how to adapt. When you look at UEFA, there hasn't been a cycle where something has changed.

6:24I mean, sometimes not so radical, sometimes radical. What they've done with the league format as a fan, I had a bit of an issue with that league ranking when teams are not all playing against each other and how can they be better than my team because we haven't played each other. And at the same time, commercially and from a fan perspective it creates humongous amount of uncertainty unpredictability for longer in more markets so you know it's commercial genius and yet the national leagues you know they'll go from 20 teams to 18 reducing match day revenue and it hasn't really translated into any sort of major benefit but apart from that you know you you would think like there's a lot of predictability at the National League's level for some and you need to question your format and I don't think there's a consciousness of radicality of the change needed always.

7:25That dynamic you mentioned with UEFA I think and the Champions League and the Conference League and Europa League now makes it's an interesting dynamic I don't think we often as an industry collectively put them all together but obviously just because maybe you might see an increase in revenue for UEFA, that money might be coming from the pot that might have been going also to the national leagues in some instances. It is what it is. The UEFA Champions League is the main competitor of the national football leagues. So if there's all this tension, we're seeing various stats that show that media rights revenues in various markets are flat or dipping quite sizably.

8:05We'll talk about the French market specifically in a second. But But just where is the growth going to come from? You're talking to people who are looking at this marketplace as an investment opportunity. I talked to one investor recently and they're like, we'll just think because football is so strong as a cultural staple of these nations, they'll just find a way and we're going to back that. My personal opinion on that sort of investment philosophy is it comes with a little bit of risk. But do you see that is there any areas where the commercial growth is going to come? Is it through traditional means or is there some other new layer of revenue growth that might be coming around the corner?

8:45Yeah, well, you know, just looking at the French market, you could argue now is the time to actually invest in it because, you know, the only way is up. So bizarrely, that becomes even a further opportunity. But I really believe there's a tremendous amount of growth if both on the league and the club level, you really push towards the consumption of the live content. I think traditionally there's been a lot of sort of backseat position in terms of I just want my fixed revenue so I know how much I can spend. And usually if I get 100 centrally, I'll make sure to spend 110. but at least I know I'm going to get 100.

9:28So there was this sort of prioritization of sort of fixed revenue and what will happen is I believe that the future will need to be longer term deals with strong sort of commitments from the broadcasters, including financial guarantees, but on top a high level of variable in terms of really driving performance from the clubs as sellers. they're selling tickets every day to the most captive audience. Well, sell the damn, you know, TV subscription. And I think there's a massive amount of, you know, it's underdeveloped in terms of that revenue stream. So I believe longer term relationships, JV types of partnerships, variability.

10:12And the key question is then the clubs will need to adapt to variability of their revenue in how they manage their cost side. I mean, you talked about clubs and I think about all the different stakeholders that exist. And that's probably the trickiest part, I think, in any sport, but particularly in football. Let's talk a little bit about the French League in particular. You obviously led their commercial and media business for a couple of years there and went through all sorts of challenges and changes with what was thrown at you along the way. Just talk a bit about that experience. Yeah, I mean, it was for me, I had never had the opportunity, given my sort of international career, always worked at the NBA on the international front, but, you know, multi territory, then the Six Nations, but I never really had an opportunity to really contribute to the French sport industry directly and primarily.

11:04So this was a really privileged and honor to be able to do that. Now, conditions were extremely challenging, obviously, where you're in sort of commercial dispute and legal dispute with the main actor in the marketplace with no signs of being able to recover that relationship, at least for the time being. And I really hope that that will change over time. But there was great things to do because it is the number one sports spectacle by far in France. Stadiums are, you know, attendance are record high. Scoring is record high. You've got a team that won the Champions League. And at the same time, you know, our international revenues doubled over the last two years.

11:51You had a great title sponsorship with McDonald's with, you know, sizable support. You know, our betting products have done extremely well. so brand new branding and graphics and new positioning obviously the domestic tender has been extremely difficult and that led to you know a choice that had to be made two years ago of coming back to that do we go with the fixed guarantee model or are we looking at a d2c that my team had been preparing for many months as the sort of it's probably going to have to be launched, where you would have all games. But what was interesting in our approach on the DTC at that time is we wanted to be associating ourselves with a catalogue of content that would be totally complementary to Ligue 1 so that we could justify a 12-month offering.

12:43So, you know, the discussions with Discovery was with Eurosport and Tour de France and Olympics, all the properties that are at or US Tennis Open, we could actually have something that makes sense while the league was not in play. And with all the Warner and HBO catalog to justify that as a sort of family proposition that would be at a price that would appealing enough, you know, above 25 euros a month, but justifiable. Obviously that didn't happen and the sort of fixed approach and guarantee was taken and we were ready for that scenario too. but with the early exit of the zone and then they had to reconsider the DTC with sort of a situation that was probably not the same as two years ago.

13:34So they had to start with a lower price point and now it's a question of how do you, you know, they've launched successfully, great editorial support. They are distributed everywhere except in our place and, you know, they're above their expectation which is great but now they need to increase the price and increase the subscribers at the same time. So year two is the real tester. Year two and year three are always the real test in these situations. Why do you think, I don't know how close you were to this, but why do you think the DAZN situation played out that way? I have a theory which I'll hypothesize and you can see if this sounds reasonable.

14:19obviously you have the layers of piracy that's super prevalent have been in the french market for some time but the zone came into that market fairly unknown and then coming in straight and asking for a hefty price tag not like outlandish like i think a reasonable price for what they're offering but a price tag from consumers who didn't know their brand very well and that almost And without that familiarity and brand positivity, perhaps, behind the DAZN brand in that market, made it even harder for new customers or people that have never heard of the brand before to say, hey, instead of going to the trusted incumbent platforms I rely upon, come to this random new business that people can't even say the name of.

15:07and that made it difficult for them to get the momentum and the subscription, yeah, the subscription momentum they needed to buy into this for the longer term. Do you think that's part of the mix or is that not that? Yeah, it's a multi-dimensional question on that one. What I would say is, first of all, all this was very, very late. And so the amount of preparation, marketing plans were extremely limited. And there was a high level of focus on just making sure it works. As in the service works. As in the service works, make sure that that is – and there was – the league put a lot of support into making sure that all the production that was handled by the league was spot on, et cetera.

15:56So I think timing was an issue or a constraint. But what I think what people don't realize is that those discussions, late discussions, you know, there was a sort of five-year agreement with the zone. But our clubs wanted a two-year opt-out. so uh and that was you know obviously i think it brought a bit of security for the zone but at the same time i i you know i think that sort of created some some sort of weird behavior uh an approach where you're trying to make sure that you recover your investment over a two-year period for a new entrant that's unheard of and i believe that that sort of explained why the price uh structure that they decided, you know, with no discount to start with.

16:49What was the reason that the clubs wanted that up there? Well, they're hoping that maybe someone else will come back to the table, basically. Unclear to me. Because obviously, you know, you would probably want to, you know, if it didn't work out, then, well, who would be interested if it didn't work out in the first place? And two years is very, very short. But what, you know, on the piracy, actually, you know, piracy was monitored for years between us and our broadcasters. We were actually on the same sort of, you know, lobby group with Canal Plus and working very closely together on piracy and the marketplace.

17:31And that was under control. I think what mostly explained the explosion in piracy was the pricing and the fans boycotting the zone, which created a very negative spiraling of the situation that got out of hand. You know, after a few match days, it's hard to recover, even if you start then promoting it. Well, people have made the jump. I think now with the new pricing, the new DTC, the Zone playing a major part actually in distributing it, a lot of people are coming back to legal ways of doing it, which I think is an important win. But it's now a more intense battle than it used to be. Yeah, it feels like they still will need at some stage to reopen those opportunities to get more visibility and subcontinent media rights deals with other partners.

18:22I just want to ask for people that haven't worked in sports to the level that you have probably don't appreciate the different stakeholders and all these people pulling in different directions in sports I was part of a governing body in the UK for a while and learned pretty quickly about how everyone's pulling in different directions you had the investment side with CVC you had clubs you had the league you had broadcasters all pulling in different directions just how difficult was that to navigate that. I can't even imagine how complex. Yeah, I mean, it's a funny thing because at Six Nations, it wasn't easy.

18:57But in comparison, it was. Football is football. And I obviously knew how complex those environments are. And you just need to deal with it. And I think that you need to have this backbone and vision. And my approach to it is I'll be a straight talker, whatever the circumstances are. I will raise the issues that maybe not everyone wants to hear. so that you bring that rigor, professional integrity, and so you can be relied upon. And at one point, if you believe that you no longer have the conditions to really succeed, then you need to be ready to do something else. And that's what happened. But I have a very talented staff at the league.

19:43We were on the podium of leagues on all digital engagement. so you know where you know we say there's a big five but there's really a big four and Ligue 1 is five but you know looking backwards at the six rather than trying to catch up on the fourth but we were really overperforming on a lot of metrics but you know governance is complex and I do believe that they are improving and I think you know investments and investors who obviously have a clear sort of vision behind it is helping, but slowly. I mean, just to wrap up on this point, I'd say that Ligon was, let's say, the story, many aspects of last year in terms of within the sports media side to see what was going to happen and how that journey would play out.

20:31And it looks like they've got good momentum, at least with subscriptions. Where that gets to, as you said, is anyone's, we'll see. But there is more to come. I've been hearing about a lot of other leagues. I mean, the Austrian league was very close to going direct to consumer themselves because of the challenges of getting a deal done. There's Belgian market. There's a lot of volatility there as well. I think you're going to see a lot more of these types of situations play out, sadly, across European football. I'd be remiss to not ask you your view on the NBA situation. I spoke to the Amazon and NBA about their global deal, which I think is a pretty significant deal.

21:09In my head, it's more significant, I think, than perhaps some people have given it sort of credit for because Amazon does have, or Prime Video, does have a pretty significant global audience now. And some of the numbers they shared on stage for visibility, it sounds like it's really working for them from terms of reach. So just what's your view on with the NBA? I mean, now has, I think the number was something like 15 % of players come from Europe. And then you've got this old prospect of their new league. they're looking to launch? Are they seeking investment for now? Just generally, what do you think the, I guess the opportunity for the NBA really is in Europe specifically?

21:48Because obviously you were leading that for so many years now. Yeah, I mean, I was there 20 years and, you know, for eight years as the MD for the EMEA region. So I can tell you that that topic is not new and the NBA has been looking at it several times very precisely. And it didn't happen for many different reasons, mostly because it wasn't the right time for the NBA to make such a move. There were other priorities. But I believe now that having done that 11-year deal, they've got long-term visibility. And it's all about preparing what the NBA is going to look like for the next round. And I believe that having a strong, supported, operated league in Europe where you've got the talent, you've got the brands, you've got the, I believe, the business potential.

22:46I mean, indoor sport entertainment is so under index in Europe that I believe that if it's well run, if it's supported by the right sort of geographical markets and media markets, basketball should be the clear number two sport. And, you know, basketball is not a US sport. It's a global sport where the dominant league globally is in the US. But there's no reason why, you know, basketball is number one in China. Europe should be number two economically. So I believe that now is the time because it is a priority now for the NBA. There's, I think, still a lot of things to be ironed out. It's a very complex montage, but I believe it's going to happen.

23:35They're extremely serious about it. And I think there's a lot of serious people that are also seriously looking at it. There seems to be a lot of serious names being dropped and talked about. And I am enjoying the fact that the NBA is quite comfortably talking about it in public rather than trying to do it all behind closed doors, which sometimes is typically the way that things do play out in this industry. I talked to the RAINN group on stage. I talked to George, who obviously was your counterpart at the NBA, about these plans. I talked yesterday with Matt as well about that. My thing that I'm stuck on a bit is that they talked a lot about the stars that have come out of the market.

24:18So there's clearly, as you just pointed out, all the reasons why this is such a strong market for it. But given there's EuroLeague, given there's, again, that existing domestic or national competitions, how do you think that would – the viability of them being able to come into market? And we've just talked about media rights and the challenges there. For them to be able to deliver that value to investors, I think they could succeed. But to deliver against American investor expectations, I just feel like that might be a challenge. Yeah, it's always intriguing when somebody tells you the price, but you're not sure what the product is.

24:55But it's probably a good commercial tech hack. They know what they're doing. But in all seriousness, I believe that there's a fantastic opportunity. And the reason why is the EuroLeague has been there for a long time and has shown some success, has shown some progress. But it hasn't really acted as the, you know, aspirational competition that drives growth of European basketball. You could argue that the national leagues are in real difficulty right now. And I believe that if the NBA can really be the top of the pyramid of European basketball, and you've got then space for other existing competition to really then create a much stronger upward vacuum aspiration, then that will benefit the entire sport in the ecosystem.

25:51And that's, I think, what FIBA is understanding as well. And so to have FIBA and NBA seeing that vision, sharing that vision, and really wanting to integrate everybody as part of the proposition makes a lot of sense. But you have to, you know, I think fundamentally the NBA is right to focus on real strong media markets to really sort of be that accelerator for basketball. And I believe that, you know, basketball is far beyond sport. It has its own culture. It has its fashionability. It has its lifestyle. So in terms of commerciality, if you do it right and you give it time to make it right, honestly, the sky's the limit.

26:34So I think it's going to happen and it's the right thing for the sport. Yeah, I think you make some good points there. I'm really intrigued to see because, as you pointed out, that basketball culture thing is such a big part of the dynamic of it all. How much that, I mean, if this all plays out the way that they want it to and it looks like it will, how that will transfer into the European version of what they're doing, that's going to be quite exciting. Yes, I mean, I think that's where there's a lot of details to be found now in that what's the model, what is centralized, what is not centralized?

27:03is there a cap? How do you do a cap? There can't be a draft because you need to respect the academies of the club. So, and how does it work between, you know, if you sell the central revenues, well, how does it work with the existing MBA relationships? Is it going to be different? Is it going to be the same? Is it going to be a mixture? And, you know, what will be, you know, the team perimeter? What is the central perimeter? It's fundamental questions. Yeah. And quite fascinating. And will there be a central outfitter, not a central one? Will there be multiple? There's so many models. It's a fascinating project.

27:42Yeah, it really is. And one thing that struck me with that one, and we'll wrap on this point, is that none of the existing MBA owners can invest into this, which I just thought that was an interesting layer. I think it was part of their statutes that that's the case. But I thought that was an interesting quirk here because I could just imagine they've got a lot of billionaires on tap there. It wouldn't be as difficult to get someone to invest in this. And who know what they're doing. Yeah, they know how to operate. I remember having that issue when I was in charge of the region because bizarrely when people were seeing how important the internationalization of the NBA was already, we were basically with that law incentivizing our owners to invest in EPL clubs rather than European basketball.

28:30And you're like, well, we're basically making sure that football stays miles, miles, miles ahead of basketball. And you could argue that with very little investment, you could really help, for instance, the UK to really have a structured league, which they've constantly been struggling with. And so, you know, it's weird that there hasn't been the sort of exception that in a sort of secondary national league, it's okay. Yeah. Yeah. But we'll have to wait and see. To get a point. Weirdly, the CEO of the current London team just added me on LinkedIn yesterday, which I thought was the most bizarre, random thing that popped out of this conversation.

29:10But look, Ben, really great to talk to you again and to get your views on things, which as we've covered already, there is a lot going on in this industry. And you know what? I'm all here for it because it's a lot of fun to commentate and talk about. But that's all we've got time for today. Thanks, Ben. Thanks for joining us.

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