Is the Next Great American Sports League… Lacrosse?

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1:05Congratulations! You made the varsity podcast. My name is John Arand and I am Puck's sports correspondent and the host of this pod. Well, the Premier Lacrosse League is about to start its eighth season this week. And any new league that gets beyond two seasons is considered a wild success. So I rang up Paul Rabel, who launched a league back in 2018, to recount the highs and lows of launching a league and tell us what to expect going forward. But before we get to Paul, today is Wednesday, May 6, and here's what I'm watching. College basketball. I'm not kidding. Last week, Amazon announced a cool deal to carry three Duke games next season.

1:46One with Gonzaga, one with UConn, and one with Michigan. Or so we thought. Turns out the Big Ten is fighting Michigan's inclusion, believing that it has the rights to the Duke-Michigan game. Amazon cut its deal with Duke and the ACC, which thinks that it has the rights to the game. Now, this is a big deal because Fox has been consistent about keeping Big Ten games off of streaming services. When NBC looked to sell the Big Ten football championship game to Amazon, Fox swooped in and took the rights back for themselves. It appears the same thought process is at play here. I'd love to make a prediction, but it's still way too early to handicap what's going to happen.

2:24Okay, let's get to Paul Rabel. Thank you for coming back to the pod. I love having you on the pod because it's not easy to launch a sports league. In fact, one of the easiest things to do in our business is to say that you're going to launch a sports league. And one of the hardest things to do is actually have the sports league last for as long as yours is. It's going into its, I think, eighth season now. And I just want to get a state of the PLL, of the Premier Lacrosse League. And I kind of want to back into that a little bit. You and I were texting each other over the weekend. You were in Miami at the Formula One race.

3:12And Formula One almost, they're trying to grow in the U.S. market too. And it's such a scene there. What did you learn from, as being the president of the PLL, what did you learn going to Miami over the weekend? Well, first of all, I love being on the show. John, thanks for having me again. I listen to your podcast religiously. So hello to everyone who has decided to listen to me again. I would say like, you know, the amazing thing about building a sports league from scratch is that you can act as if you're a chemist and take attempt to take the best of all of the big sports league successes and jam it into a picture that might work for, in our case, lacrosse.

4:00The hard part about it is you're fighting for relevance. And that's just not only from an attention standpoint, from a commercial, from an attendance. And in a lot of ways, if you're going to be successful, you also have to function as a governor for the game, meaning it's not enough for us to just grow the PLL and the WL. We have to work hand in glove with our governing body, with the global governing body, with LA28 coming up, with college lacrosse, which faces its own challenges, and certainly youth lacrosse and the coaching development at the younger divisions. And that ultimately feeds up because pro sports are top down.

4:40But really, if you look at the big four, they're able to capitalize on top down and bottom up. So this weekend I was texting you because I was like, oh, let's do this podcast in person. Are you going to be down in Miami? Shocking you're not. You seem to be at every major sporting event, John. And we were there because of our largest... America's a sporting guest, yes. There you go. You were in Vegas for WrestleMania, and I wanted to desperately switch roles with you. So our largest shareholder, Joe Tsai, decided to host the board for our quarterly board meeting. And so we did it down in Miami, which was a nice contrast to be in a major global environment and feel where we're aiming as an emerging league and then sit in our boardroom with our team and talk about business fundamentals, which I'm sure you'll hit on.

5:34When I think about Formula One and my studying of that property, I think it was in 2011, there were about 22 million average global viewers per race. Today, it's north of 70 million. It's up 50 % alone in the US over the last five years. The paddocks this weekend looked like a music festival crossed with Fashion Week if Fashion Week had better logistics and worse parking. It sells out every year. I've heard about 75 % of the attendees were part of some hospitality. So they really commercialize the event quite well. And they kick off tens of millions of dollars in EBITDA. I can't give the exact number.

6:21And a lot of that to me has been a byproduct of a global game that penetrated the American market. another one, take English football, have been doing the same over the last 10 years through the arcs of storytelling. And many of us know and have watched and have seen the success post Netflix's Drive to Survive. So falling in love with sport is one thing, falling in love with characters is the other. And that's what I felt with F1 as I continue to think through the weekend's success. So how do you, I just want to get a sense of how do you view the, where the PLL is right now? I mean, you described it as an emerging league, like in business terms, are you, are you out of the startup phase?

7:13Are you into sort of phase two? Like, As you step back and take a look at what you've built, the eighth season, as I said, is starting just this week. Where are you? There was a statistic that I read when we were launching the PLL in 2018 that since the year 2000, or since 1990, 200 sports leagues had started with a 1 % success rate that was based on the ability to sustain beyond three years. And so you sort of look at that arbitrary study and go, okay, three years gets you out of this emergent startup. And then you take on Doc O 'Connor, who's a board member, came in personally before he started Arctos and started Arctos and then Arctos invested in our Series C.

7:58And Doc said by far and away in his close to 30 years in the sports and entertainment business, the hardest thing to do is secure media rights deal. So when we did that with ESPN four years ago, coming out of our three-year NBC deal, you go, okay, maybe we made it. And the last one I'd look at is Jeff Bezos on Amazon's 25th anniversary. He said something along the lines of we're a 25 year startup. And I say that because, I don't know, as a founder led league, we will always have that startup insurgent mentality. And it's how we're able to grow really. You know, Mike and I are in sales meetings.

8:38We pick up the phone and call ticket holders. You know, we travel the country to pitch agencies and brands. You know, we work hand in glove with ESPN and Disney around, you know, our most recent deal, which was kicking off this summer. Nothing beneath us. And I would say, like most founders, nothing above us either. We're really speculative. So when I think about then, okay, the mentality to the numbers. Last year, our seventh year, year over year, our broadcast was up 43%. We hit a peak, an all-time peak at 822 ,000 viewers on an ABC broadcast. Our average ABC and ESPN, ESPN2 linear viewership was at around 277 ,000.

9:24So I say that because, John, you know the media environment better than anyone. And it's not easy to get as an emerging discipline with participation levels the way lacrosse is in America compared to call it soccer, basketball, or football. So we're really proud of that growth. Our audience across digital grew 25%. Our ticket sales for championship game, we're up almost 40 % to 45%. Our youth business is up about 100%. And that's not only getting sticks in hands and goals on field, but new participants to the game and coaches education courses. And then we have a nice merchandise business. So, you know, the board meeting went well.

10:07That said, our model is a challenge at times in that we, RAC Corp, wholly owned and operated. That means we carry the freight of player wages to venue costs to everything from marketing down the line. But it has enabled us to build IP perhaps faster than our predecessor did in pro lacrosse and certainly faster than the other major leagues did pre-computers, pre-internet, of course, have to caveat that. And then we've created a bunch of commercial value around our teams such that when we decide to sell teams, will be a lot further along down the asking price than if we launched that way. When you reference building IP, walk me through it.

11:01What does that mean for a league? Well, for us, yeah, it's a strange position given that the IP of the major four leagues have been around for up to 100 plus years. But if you think about the New York Knicks, who are beginning the second round of the NBA playoffs, that IP brings a level of elevated, prestigious brand to the marketplace to where if you think about the revenue generation coming from three prime areas, media, tickets, and sponsorship, and that would add merchandise. That's a cool place to be if you're a fan and we're serving fans. And that takes a long time to establish intellectual property like that, that you own and that you operate.

11:52And so if you're taking, you know, take the PLL that launched in 2019. You know, we built our brands from scratch. Hypothetically meant nothing in our first season. And we didn't have cities attached to our original six teams because we were traveling. And then when we moved over to ESPN, we tied our then eight teams to eight home markets. So we started to ingratiate ourselves in Utah with the Archers and in Boston with the Canons and New York with the Atlas. And now with the WL, our most recent effort to build a brand. Well, you've got to mention the Whipsnakes, the Maryland Whipsnakes. Come on.

12:29Good check down. I know, I know, I know, I know. I almost called them the Purple Eagles to get the invite. but the Maryland Whipsnakes. I would have gotten you on this pod a whole lot sooner. Well, I'll tell you what. So when you think about the Maryland Whipsnakes, we're the only professional team, sports team, that occupies Maryland in the name. That was always a head scratcher. I was born in Maryland, and obviously lacrosse at one point was Maryland's state sport, team sport now, I think. And it's one of the markets where it's grown the quickest, like opposite of New York. But you look at the Baltimore Ravens.

13:07I grew up with the Commanders and the Capitals and at the time the Bullets, now the Wizards. And then you have the Nationals and Orioles. And why hasn't anyone taken over Maryland? So one, I love that to be able to be first there. And then two, and you might correct me if I'm wrong there. And there might have been a major league baseball club or something of that nature that's no longer with us. But number two, when we thought about our territories before selling teams, which is still the stage that we're in, we have one called the Maryland Whipsnakes, another called the Carolina Chaos, and then another called the California Redwoods intentionally.

13:47because we might sell to an ownership group in the Bay Area. We might sell to an ownership group in LA for California. We might sell the Whipsnakes to a Washington DC consortium or a Baltimore group or split the team and have two. So there's agility that went into those decisions. I know you know this, the official state sport, not team sport, the state sport of Maryland. Jousting? How can it be jousting? I mean, come on. I don't know. It's gotta be lacrosse. Crab cakes and lacrosse. That's what Maryland's known for. It's lunch, John. You know, why pour salt on the wound? That's exactly right.

14:28Wedding Crashers, Crab Cakes and Lacrosse. It was a real miss, that film, because it's generating so much of the box office. Although, a great lacrosse shout out as I watch back the social network, one of Aaron Sorkin's screenplays and David Fincher directed it. Iconic film. It was the lacrosse player that took one of the Winklevoss' girlfriends in high school. I don't know. Lacrosse got a pretty decent name in that film. They're like, oh, yeah, you lost your girlfriend to a lacrosse player. Damn. I was like, oh, yeah. Yeah, here we go. Hey, you referenced the idea of selling the California Redwoods to somebody in San Francisco or wherever.

15:15Right now, PLL, like almost every single new league, is a single-end entity league. You own all the teams. Is that a next stage of growth? Is that a goal? Well, obviously it's a goal, but what would the timetable be for that? It's a good question. It wasn't always the destination necessarily. We were really venturing out on a limb in 2019 as sort of like the first of the modern emerging sports leagues. And you referenced it a little bit at the top when we launched the PLL. The difference between our league and many emerging leagues, I have to say this, is that we are the tier one property of the discipline.

16:03And I was sitting for dinner with Clara Wu Sai, Joe's wife, when we were in Miami, who also, you know, she runs Liberty and she's supporting us strategically with the WLL. And we were talking about the WNBA's latest CBA and Unrivaled and he's about live golf and the news that was covering the headlines last week. I told her like as much as I love being in the sports business, it would be really hard for me to run a tier two league just because all of the stakes that we that we're talking about, John, that many of your guests talk about on your show has to do with the element of scarcity in sports, which is tied to having the best players in the world on screen at any given moment, creating an appointment watching television.

16:47So if you take out that middle layer of best in the world, it becomes optional and the valuation methodology shifts. So for us, it's, you know, the entry has always been great. We're the tier one property. If you're interested in lacrosse or you like the lacrosse fan demographic or you're interested in new sports, boom, we're for you. The challenge is audience dev, which is what we've been investing in pretty seriously. When we think about team sales, that's an example of how we could potentially pursue audience dev. because our league, as I gave you those stats, continues to grow year over year.

17:21But I think a chip on the shoulder of a lot of founders is impatience. And you layer that with the current climate of team sales is more of a market signal than anything else. When sophisticated capital starts moving towards an asset class, that tells you something about where the market thinks value is headed. And when it comes to especially a post-AI world where the analog experience, getting people in a community together is becoming more and more appetizing. When you own that global IP that we discussed, you have some enterprise value in that market, tickets, merchandise, sponsorship, media, revenue.

17:58You have tonnage. You're playing over the course of three to six months a year. Now, all of a sudden, you become the golden class of that analog world. And so we fit into that place of timing. So much like when we launched in 2019 and made predictions that cable will be usurped by streaming in way of totality of annual viewership and advertising within the next five years, which, by the way, got us in the room with Tracy Dolgan, who was advising Rain at the time, who made our first investment. I think we're looking at a similar opportunity and where it might be a little early as we continue to see growth trends and you sort of say, hold on to optimize value for shareholders.

18:41We have the Olympics in 2028 forthcoming, so big top of the funnel activation. And we're talking more seriously about when it might be right to begin that process.

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20:04The stat you just came out with went in one ear and out the other. What did you say? 95 % of sports leagues that have launched. What was their percentage? 99. Sports league. 99. 99%. 99. I think a lot of people listening to this pod, their jaw's going to drop and they're going to scratch your head. me not so much I get pitched on these things all the time and they're they're usually people that are you know they're passion projects they're somebody who happens to really like a sport and just thinks the sport needs to get out there and I'm talking to one of the greatest lacrosse players in in in history it's lacrosse is a passion to you how do you get how do you get away from that sort of like, you know, people who are overly passionate about stuff, sometimes it's so much dumb money goes after that.

20:57And you're able to sort of dispassionately step back and say, you know, this is how we move forward with the PLL. Do you have a kitchen cabinet of people that help you with that? I'm actually quite fascinated by that. Yeah. Well, you know my brother, Mike, who's our co-founder and CEO. And so being in the bunker with your brother is really helpful. Having your largest shareholder feel as connected to lacrosse as anything in his life in Joe Psy is a huge, huge reason why we're here today. And if you know anything about the mortality rate of startup sports leagues, like we've discussed, it's either a testament to the people are a sign that none of us have fully come to our senses, probably both.

21:45But you have to have a little bit of your rationality when you go tackle these things. And, you know, look at Phil Antritz, who really helped push Don Garber and the crafts at the ranch, however many decades ago, if you look at the Fertitta brothers and their belief in Dana White's pitch to buy the UFC for for$2 million. You know, there are stories in time, even in the NFL and the NBA and their emerging decades. You have to have that emotion. So we certainly have that. And then I alluded to my brother. You've also got to have the business and the projections to back it. And the element of luck I hit the two times, right?

22:27Where media is today, we wouldn't have been able to raise money and start the league in the early 2000s because we would have been shut down by any network provider who we were looking to cut a deal with because their linear inventory was spoken for. So streaming opened up unlimited inventory, so to speak. And then I had mentioned sort of today's day and age and where technology has taken us and how there's going to be a revert back to the analog experience. So, you know, I think it's a combination of that founder grit a little bit of luck and irrational passion. I also want to go back to something that you said with regards to the F1 race that you were at and drive to survive as being something that quite literally everybody involved with sports credits for helping the F1 to gain more popularity in the States.

23:27And that's something that, you know, mostly sort of, they're trying to tap into their own drive to survive. For PLL going into this season, what are some of the storylines that you think are going to really emerge and bring in casual sports fans or sports fans that may or may not be lacrosse fans? What's out there right now? Yeah. You know, John, it turns out that people don't fall in love with carbon fiber and aerodynamics. They fall in love with characters. That's what we learned from Drive to Survive. And so when we think about the way that we storytell this year on air for our live broadcasts, and then in our continued development of scripted and unscripted film and television.

24:19You really have to hit both. The live broadcast, as we alluded to, is now in our third deal, but our second with ESPN. And it's a major media rights deal that included an investment that was separate from the deal. And our intention is to elevate the production and make things, you know, John, I may have told you this when we were together at the champ series, but as I've spent more time in our business, I think our closest lookalike is the NHL versus the other four major leagues. And the reason is, is maybe threefold. One, participation levels are very similar at the youth level, which means that number two, most of the fans that are in these arenas and supporting their NHL clubs didn't play lacrosse, but that some point along the line, they've either found their favorite player.

25:13They find community in it or they find entertainment in it. And then number three, the game costs money to play and it's difficult to follow from a rule standpoint. Add track the puck. Lacrosse costs money to play an equipment sport, also like golf. It's difficult to understand the rules if you're new and it's challenging to follow the ball. So we're looking more at what the NHL has done. And once you start digging in more, you find historical trends and modern trends. A historical one was when Eisner and Disney off the success of Mighty Ducks, I think he did$130 million in the box office, they got the Anaheim Mighty Ducks.

25:56And they used to bring the team to Disneyland to do activations. They were challenged because the NHL was a trade association. They don't have that challenge in this modern day with us as much because we're wholly owned and we can do some unique things like that. So that's an example of Disney. And from an ESPN standpoint, we want to be able to try player tracking and ball tracking and rules animations and bring the cameras lower to the field. Like one of the things we talked about in our production meeting earlier today was how quickly can we get from game cam one to the sideline every broadcast.

26:36and also instead of showing warm-ups in slow motion and panning the venue like every broadcast does let's like bust the door down in the locker room and see what the guys are doing right before they go out i think wwe does a good job of that um so that's that's how we're going to consider opening it up um from a from a espn and viewership perspective and then from shows look if you haven't seen fate of a sport i got to promote that it's on espn plus and disney plus It was our documentary that got into Tribeca Film Fest and ESPN ended up licensing it in 2022. And then I alluded to some other projects we're working on.

27:14Do you have buy-in from the players? Do the players want to get in and do that as well? Because when you mentioned the NHL, I think about certain things like the Winter Classic or the Outdoor Series. It's been really good for the NHL. But they've also been able to bring in Alex Ovechkin, Ovi, or Sidney Crosby, or certain superstars that, you know, I always use my wife as an example, who's not really a sports fan at all. She's heard of Alex Ovechkin. She knows exactly who that is. And is that in PLL right now? yeah i mean that's a a great push because i i listened to um your podcast with gary bettman when you guys talked about heated rivalry and and so the the kind of segue is is spot on john and that they've had two major sort of off nhl ice moments they've had heated rivalry and then they had the olympics many analysts are directly attributing the post-winter olympics success I think the first eight games on ESPN and TNT following the Olympics averaged over 600 ,000 viewers.

28:26And it was about a quarter, 25 % over the pre-Olympic season average. So they did a great job of capitalizing on that. And it's not just sitting around the hoop and trying to grab a reb after the Olympics. They did four nations leading into it and got a little bit lucky with the USA Canada final on NBC. but they still had that moment where the league showed to shareholders and fans how they can drum up attention to the Olympics around their players. The other thing I would say related to heated rivalry, I think the data is less clear around the impact, but I did see ticket sales numbers in Montreal and Boston.