The UFL’s Scale-Up Era

0:04Congratulations! You made the varsity, the podcast. My name is John Aranda and I am Puck's sports correspondent and the host of this pod. And today, I sit down with Dany Garcia. Dany is a former Merrill Lynch executive who is a big investor in the UFL. That's the Spring Football League that was created last year after the XFL and the USFL merged. Anyway, Dani also owns Seven Bucks Productions, which produces everything from feature films to digital shorts. And I'm going to ask her about her investment strategy and how she sees a sports media market developing. We both attended the IMG Redbird Summit in the Cotswolds, which gave us some time to talk.

0:48But before I get to Dani Garcia, today is Wednesday, September 24th, and here's what I'm watching. I wrote a story in my private email on Monday about a plan that the University of Southern California and Netflix looked into to try and circumvent the Big Ten's media deals with Fox, CBS, and NBC. Quick story, their plan didn't work. The conference squashed it pretty quickly. But the fact that the idea got as far as it did speaks to Netflix's strategy when it comes to sports. And it shows how universities are trying to get really creative when it comes to raising revenue. And to be frank, it also underscores a certain naivete about how the sports media business works, at least on college campuses.

1:34First, the backstory. NBC holds all the rights to Notre Dame home football games. Anytime Notre Dame plays in South Bend, that game is carried on NBC or Peacock. If Notre Dame plays an away game, say like at Clemson, that game is on ESPN. Clemson is in the ACC and ESPN holds all those rights. In USC's case, all of the Trojans' home games are carried by one of the Big Ten media partners, Fox, CBS, or NBC. But what if USC took one of its non-conference home games and played it on a neutral field, like in Mexico City or Las Vegas? Those rights wouldn't be covered by the Big Ten's existing deals, would they?

2:16They're not home games. It's a neutral game. Well, right now, everyone involved in sports media is probably screaming into their iPhones. Of course, those games fall under the Big Ten contracts. Maryland can't just move a game from College Park to Baltimore and sell it to the highest bidder. So it didn't take long for the Big Ten to step in and stop these talks. Now, I'm told that the early talks would have paid both schools around$10 million each. Now that colleges are paying players, that figure can go a long way to convincing five-star players that come to the South Bend or LA. That's one aspect that caused these talks to go on much longer than they probably should have.

2:54Then there's a Netflix case. The streamer has no interest in getting a full season's worth of games. But if it can swoop in and get one of the top college football games, yeah, that's right up its alley. We all know by now, Netflix wants to bid on big events. And Notre Dame, USC, that's a big event. It could be the biggest non-conference rivalry in college football, certainly in the top five. And what I find particularly interesting is that if Netflix has to use a loophole, it will. Netflix executives are going to be creative in looking to pick up sports rights. These talks certainly are proof of that.

3:32Finally, there's the angle from the traditional media companies. Back in the day, they would have been really kind of amused by these talks. I mean, there's no chance this would move forward. But the TV networks, the traditional media companies, they're wary of Netflix. And on top of that, they're frustrated by colleges like USC. They're frustrated by college football schedules that saw USC open the season with two cupcakes that beat Missouri State by 60 points and Georgia Southern by 39 points. there aren't enough good games to go around, and now USC is trying to take its only good non-conference game out of the schedule?

4:11Look for the networks to use this as a way to push the conference and its teams to put better non-conference games on their schedules.

4:20Dany Garcia:Okay, now let's get to Danny Garcia. I'm here in the Cotswolds with Danny Garcia, and who is, I believe, do I have this right? the only female investor of a major sports league? Actually, I was the first female investor to have a majority or equal stake in a major professional sports league. So it's about 30 more words. That's kind of a little bit of a moment in time where I got to make history and put that mark And the league, of course, you started with the XFL, merged into the UFL, spring football. I've been covering, I love covering spring football because they all fail. Right. There's so much fodder for you.

5:12Exactly. And there's nothing better than something that fails. Right. To unpack.

5:17Dany Garcia:You get to unpack it. Exactly. So you look. But we're not failing. You looked at, you're not. Yeah. You looked at the landscape. You saw that almost everybody failed. Everybody tries spring football. I mean, the NFL is so popular, of course, so let's just do it in the spring. What did you see? Why was this a good investment for you? So what, you know, it had a few things. First of all, yes, I do have an incredible passion for football, as does my business partner, Dwayne Johnson. So that was one aspect. What really was very exciting to me was the fact that there were so many great players that still had game left, right?

5:55Dany Garcia:Game left to be on the field, to show dynamic play. I was so intrigued by the fact that, you know, in this investment thesis, every play matters. Because these athletes still have something to prove. So they have a chip on their shoulder. So there's a cultural difference. The other thing was because it was a league, I would be in a position of control to do the amount of storytelling that I wanted to do. So, you know, for Duane and I, if you look at our 30-some career, definitely dating myself, everything we've done has led us up to the moment for the acquisition of the XFL. It was here we could focus on digital, we could tell stories, we could build IP, we could work on brands.

6:42Dany Garcia:We were so and still are so audience-centric, so we're very fan-centric. And it felt like the perfect place. Actually, when Vince had done the 2.0 version, because technically we're the 3.0 version, I was like, dang, why didn't he ask me? Not that why would he, but I'm like, he knows me. Why not? And then look what happens a few months later with COVID. And I was very, very adamant about that. I wanted to take a swing at acquiring the property. So what I hear is that you have an experience in storytelling. You have an experience in building fan bases. and what I'm trying to extrapolate from that is what did other people do wrong?

7:25Dany Garcia:You know what? It's so easy to do, right? And who knows? We could be doing things wrong as we're in year three. But I would say what we did differently was the ownership approach, right? So this wasn't an ego play. This wasn't a play specifically for metrics. This was a universe IP brand play. So we had a much longer runway. We had incredibly well-capitalized partners, right? Redbird went in with us, Jerry Cardinal, and Redbird came in and enjoyed us. And their viewpoint was, okay, we know this is a five-year, five-year-plus run to profitability. So it wasn't like, okay, we're going to sell tickets and we should be profitable next year.

8:08Dany Garcia:We had the capital to make that long-term investment. Obviously, Disney took a stake. They were a partner right from the beginning. So that was a huge difference for us. With the USFL merger into the UFL, now all of a sudden at the table is Fox. So you've surrounded a property that has been in a very difficult spot with capital, with institutional execution, big broadcast partners, and then now most recently with a crazy and brilliant entrepreneur with Micropoli. The neat thing about being a startup, and I consider UFL, of course, to be a startup. Fair. We are. Yeah. NFL forever, football forever.

8:51Dany Garcia:We are a startup. The NFL can't make a mistake. If the NFL makes a mistake, it takes a long time to undo that mistake. Right. You can make a mistake and change. You can change in season. Absolutely. In game. In game. Absolutely. We can have a rule that we love. We can take that rule back. The NFL can take that rule. We can say, you know, we should bring that rule back. and then I'm speaking of the kickoff and then bring it back. The flexibility is actually paramount. And especially when you are a startup because the ownership and flexibility, in building the brand, you're also working hard to build the culture.

9:26Dany Garcia:So we can do things to make sure that our athletes are feeling this culture, like having everyone headquartered in Arlington. Yes, and the mistakes are a little bit more quiet. So what's a mistake that you made that you were able to sort of get over really quickly? Maybe not super quickly, but definitely getting over would be, you know, where we were able to make venue choices. So the size of our venues for a number of our properties are just too large. Spring football has a certain size. You know, we're somewhere from 17 ,000 to 20 ,000 fans. 10 ,000 to 20 ,000. Right in there is just really a beautiful, sweet spot.

10:03Dany Garcia:And that was, it's a mistake, but it was also a matter of this is what was available, right? So this is available at that time. As we transitioned into merger, we dropped or put to the side, lightened up some of our branding marketing work. And that was a mistake. And now we're in this year, in this iteration, bringing that back in an even stronger way. Let's think, I'm trying to think of, I'm sure there's so many others, but those are the big ones that are, Those are the macro ones that are really in front of us and that we're changing. What was super important to you? You said you're in year three coming up.

10:46Dany Garcia:How do you measure success? A few things. On the outside, you'd measure fan engagement, ticket sales, et cetera. But that actually has to come on top of the quality of football. So for me personally and for my colleagues, I think all of us on the UFL side, especially on the football ops is, did we get a property that was excellent? So that when you're watching, whether you're watching the NFL or you're watching the UFL, what you're seeing on the field is dynamic and meaningful and engaging. And we have built on that year after year after year. And of course, the symptom of that is seeing where our athletes, how they're traveling up to the NFL and having success.

11:29Dany Garcia:because I think we have more pressure than, let's say, whether it's lacrosse or rugby. We have more pressure because of the size of what American football is to keep that product at the highest standard possible. And also so that our athletes, if they are transitioning to the NFL, they're playing those those downs demand the most of them right so they're continuing to develop um so that's really really important to me um it's important to me that we are innovative we're innovative for the athletes benefit we're innovative for their health those are really key indicators and now which i think we will continue to and we will always continue to invest on we're very excited with what we've done now it's really about the fandom and our local communities and getting in there even closer.

12:23I love talking to you, Danny, because it's obvious you're passionate about football. You like football. I love football. But you're an investor. You're investing in this. What's sort of the long-range plan for you? What's the sort of get-out strategy?

12:36Dany Garcia:You know, I would say on this property, this property has a legacy play to it, and the execution, or I would say the capital event, that are multiple and not clear right now because there's so much, you know, if you would have spoken to me maybe a year or two ago, I would say, oh, okay, well, we'll get it to a space and maybe then we'll spin off and self-franchise, et cetera. But the control of the league for the benefit of the league and the benefit of the athletes really shows me so much. I mean, I'm so interested in it. I think there's a lot of value. I tend to run my businesses differently than many individuals do.

13:15Dany Garcia:and sort of the mindset that I bring into sports, to me and my beliefs, gives us leverage opportunities for capital appreciation, you know, taking advantage of things to really build intrinsic value. So I am at this point, and of course I've got great partners, big partners as well, who will weigh on this. But we're really, I would say, very much focused on where this league is now, keeping this league together and growing it in a way and building that intrinsic value. Now, I've always thought that for spring football to succeed, it needs a level of NFL buy-in. Does it? I think the, well, first of all, you have to have the affinity and the adjacency.

13:55Dany Garcia:And luckily, we have an amazing relationship with the NFL, which we started right from the beginning. I mean, the, let's see, I think we had acquired the XFL and immediately we were having conversations because there are relationships that are existing, right? Redbird Capital and Jerry Cardinal was already in partnership with the NFL. So it was a natural extension for us. So we share innovation. We have partnerships for development. We have partnerships. We have our athletes can move up and down as far as what are they doing in the offseason. We have a lot of integration. The NFL does look to us to say, can you test this?

14:35Dany Garcia:Let's look at this together. Let's look at this, whether it's technology or safety. Let's look at this together. We will run it. And usually we're very aligned. Sometimes we're suggesting to them, hey, let's do this. But that is very important because the ecosystem of football is too important to be divided up. It is just too important. The dichotomy I see with your league is I live in D.C. So the DC market is for, if you go to, if you attend the games, it's great. It's a young fan base. It's a small, relatively small stadium. It's at Audi Field. Right. It's great. So the beer snake goes through and it is, and I'm trying to buttress that against some of the TV numbers that have come out that, you know, let's just say it hasn't gotten any, as much traction.

15:30Right.

15:31Dany Garcia:as I would have thought. Right, right. Absolutely. Well, you know, first of all, it's a completely safe. By the way, thank you for taking that. I didn't actually ask a question. You took it and ran with it. Oh, sorry. Wait, get to the question. No, no, no, no. I didn't have a question. I just made a statement. I didn't know. I was stuck. I didn't know where that was going. I'm here for you. Thank you, Danny. Very good. Well, you know, what it draws me to is to this conversation about really important conversation about the ratings and what's happening there. So the, you know, when you and I just did a panel here and we talked about the fans, leaving space for the fans to talk to you and having the flexibility to say, what are they saying?

16:10Dany Garcia:So a property like the UFL, even though it's a legacy football, has the demand to work in groundswell organically, right? It has to work organically. So there's multiple levels that have to happen. There has to be support on the social side. What is the alternate broadcast? The level of innovation that we were able to do with the XFL initially, we had a very deep buy-in with ESPN, the way they were broadcasting the game. I mean, there was just so much going on. I know my nephews, who are huge gamers, loved the broadcast because they were like, oh, my God, this is just like when we play Madden.

16:53Dany Garcia:You know, the game opened up for them. So we had to move a little bit away from that after the merger and finding our footing and sort of getting parity between, you know, whether it's Fox broadcast or ABC, ESPN broadcast. And now that's coming back together because that product, that universe build out, which is not just what you see on linear, but is everything that surrounds it trickles all the way back in to what happens at the stadium. And then to follow up on that is the investment in the experience of the stadium, like the experiential aspect of it. So changes in venues, getting smarter there, getting in the local community more, making that investment.

17:38Dany Garcia:That's actually what we're very much focused on in this year. Let me take a quick break, come back. I still have a couple more UFL questions, believe it or not.

17:55Danny, we've established, it's been well established. You're a football fan and you're passionate.

18:01Dany Garcia:Who'd you grow up with? Who's your team? Oh, the pain. Not then, but I grew up with the Giants. I'm still a huge Giants fan. And I'm, you know, I'm just like, can we get these games? And I will say, by the way, Hard Knocks did not do anything for the Giants. I'm a huge Giants fan. And I grew up in New Jersey. I was in New York all the time. So I'm Giants, Yankees, New York Rangers. Yeah, I've got that trifecta. I'm on that side. The worst teams in American sports. Danny, I thought I liked you. My goodness. Terrible. One thing that you referenced earlier on is just the storytelling around it. And that's something that you've spent your career doing.

18:45Dany Garcia:You're very good at that. How do you do that with the league? The league is actually, I couldn't ask for a more ripe property than something like our league. First of all, when you look at the league, you have to go down to the athlete, right? The most important individual. And when I say I'm audience first, I'm also athlete first. I'm a professional bodybuilder. I turned pro when I was 42. I was an athlete all through high school and college. I know with that mindset. that I know what happens there. I know what these individuals, how they should be treated and who they need. But each one of them, if not for the league, would literally be sitting at home right now doing something completely different.

19:31Dany Garcia:So the importance and the impact of what they're doing, how they're playing, who they are, what our league provides, each one of them, you can mine something so beautiful because the reason they're there could change their life, change their family's lives. So if you're now as a storyteller, now this is me just talking as a producer, as a producer, if I'm starting right there, the ability to have a primary story on a character, I have each member of the team, right? So we go down to 52, 53 members of our team. I can start there. I can start with our coaches. There's the same story with our coaches.

20:14Dany Garcia:Or our coaches have legacied in the NFL, and here they are because of the love of the game. So your source material is amazing to just begin with. Now you start to look at the adjacency of this is what I'm very excited about. So you look at adjacency around the NFL. Look at, for example, I love Sportish, you know, that on Instagram, which is very female-driven. But they talk about, you know, who got engaged and this is what's happening in the NFL and Taylor Swift. It's just so, so smart. But when you look at adjacency around the UFL, where it's not the glamorous, glorious storytelling of, you know, these athletes and their massive crown tracks and their marrying movie stars and singers.

21:00Dany Garcia:But these are real people and they're being impacted by what they do. And what they do is impacting the lives of their family. you've got a lot of relatability to America there. So when I look at this, you put all that and then you put dynamic gameplay, you put technology, insight, access to the coaches, to the play calling, access to a player. We let them breathe a few minutes and then we're right there talking to them. The fact that my players are also really accustomed now to being brands, so they're very comfortable. They're like done and they're looking for the sideline reporter. They know what they're doing.

21:40Dany Garcia:They're knowing the value of both. There's just so much there. What is needed is investment, which is what we're having this year, and a touch more manpower. It's not trying to find the stories. It's actually just beginning to share and develop the stories. And so I guess my question, there are obvious places where you share these stories. I mean, everybody has social feeds now, multiple social feeds. You still have streamers. You have television networks for something that's a little bit more produced. How do you view each of those? I mean, actually not each of those, but like rank them. Like is like a hard knocks type of show like the pinnacle or is that?

22:22Dany Garcia:That's a, you know, it's a good question because I'm a little underdeveloped. So I think I would be answering and developing at the same time. Well, you made me laugh because you brought up, the first thing you brought up as NFL adjacent was an Instagram site. Yeah, sportish. Oh my gosh, love. I would say I'm very interested in YouTube. I would just say right there. I'm very, very interested in the intentionality of YouTube because our league has a lot of developmental instructional aspects to it. Like there is, there's so much more to mine there with our league. definitely TikTok is very important for us having assets there of course always an Instagram presence but the short form the TikTok aspect of it I would say we did a documentary on ESPN with the XFL I like a premium product just it's just the credibility play it's almost like taking the brand and being like, okay, I do want the marquee longer format, uh, docu-series type, but then what's really going to matter is actually going to be more grassroots.

23:35Dany Garcia:So it's going to be accessible content that makes you want to create content and moments that are spoken that makes you want to respond to it. And our athletes, you know, one of the things I'm excited for and would like to see more of is our athletes literally engaging more with our fans, like making sure we have that channel open and there's back and forth. And our fans are feeling like, because fans feel like this, you know, fans and NFL know that, you know, they put on their stuff and they're like, we can help you win this game, right? 12th man, we know that. Our fans have the opportunity to say, we can help you have a successful league.

24:10Dany Garcia:We can help you athlete get into another stage or stay here and have success. And that, you know, refining that, that's a cultural, that's a marketing, that's a tonal sort of space. That's really where I'm looking for us to land and then deploy in the right. And that's going to be more of a digital platform, which is really accessible. Yeah. I'm not surprised at all to hear you answer that way because when you - Oh, that's good. You could have answered. I should have. Yeah. What are you doing here? So what you're saying is I validate you. That was a good answer, Danny. Well, when you reference the high-end, like the ESPN documentary, we were talking before coming on air about that's exactly top-down.

24:53And if UFL is going to work, it's about the grassroots. It's about really digging into social media and going at those local levels.