UP513 The Bundle Live @ SPORTEL Monaco: F1 and Apple, Relevent's streamer pitch, D2C wtf?

0:00Richard:Hello, welcome to Unofficial Partner, the Sports Business Podcast. I'm Richard Gillis. And what you're about to hear is a recorded episode on stage last Monday at Sportel Monaco, which is the Sports Media and Technology Convention. Our session kicked off the week and we were given the task of second guessing the main conversation points of the week in sports media and tech marketplace. Joining me on stage were Murray Barnett, regular co-host of The Bundle and co-founder of 26 West Sport. Glenn Killane of EBU Sport. Louisa Clarke from Queensbury Promotions. And Peter Bellamy of Delta Tray. Big thank you to the organisers of Sportel and for everyone who came along and asked questions afterwards.

0:54Richard:we're going to get going we've only got 45 minutes and we've got a load to talk about the brief of this session as the bundle is our sport media podcast series so unofficial partners nice to see a couple of friendly listener faces in the audience already we talk about the sports media marketplace and this is a sort of extension of that before we get going i'm gonna get them just to say hello first of all to you but also to the people who would be listening on the podcast so they know whose voice is who glenn can you kick us off and we'll work that way down the line hi glenn clane executive director of sport at the european broadcasting union and we represent all of the public media organizations broadcasters across europe and we purchase sports rights on their behalf.

1:40Hi, I'm Louisa Clark. I'm the Chief Commercial Officer of Queensbury Promotions, otherwise known as Frank Warren's boxing business.

1:49Peter Bellamy:Hi all, Peter Bellamy, Chief Revenue Officer at

1:51Murray Barnett:Delta Trey. Murray Barney, founder of 26 West Sport. We specialise in advising people on all commercial aspects of sport.

2:00Richard:Right, and Murray, what Murray didn't say is the co-host of the Bundles. I've turned him into a journalist. He was a sort of civilian and now he works on the other side. So we're going to get going. So Murray, one of the questions we've got for the whole thing is to set up the week. And one of the questions we're sort of thinking about on the plane over was what will people be worried about? What are people thinking about and talking about on the way to Sportel? And I always see Sportel as a sort of proxy into the broader market. And as luck would have it, or was it luck or did I, you know, engineer it, Apple announced their Formula one deal on friday in america and that felt like a good place to start because it contains a lot of the themes that i think we're going to bump into over the next 40 minutes or so murray barnett can you just unpick your background is in formula one we should say is apple a good place for formula

2:51Murray Barnett:one in america well it's certainly a big call because obviously having left espn which is a sort of ubiquitous sports service of the us you know circa 60 million linear households uh obviously market leading OTT so it's a big call to go I think that Apple obviously with the F1 the movie sort of fully vested in the sport and it's been super successful for them but it's certainly a very big call and I'd be curious to know what what others think about it because you're swapping that extensive distribution on ESPN for I don't know 12 maybe 15 million paid subscribers for Apple in the US so you know it's a big risk on both sides obviously I hope that Apple can expand out their audience but at the same time taking that big reduction in visibility for the sport and you know without sort of going into too much detail it seems like they're going to put some races in front of the paywall but that will still require you to have an Apple you know a sort of freemium model to it but it's a big call.

3:58Richard:Can I just have a quick show of hands who is an Apple subscriber, Apple TV subscriber here? Okay, so about a quarter maybe of the audience, and you would say that this audience skews very heavily towards sort of being subscriber type people, particularly on the sports side, you would imagine, so that's quite interesting. Glenn, what do you think about that question about, just the, there's the scale question, I want to talk about what it does for Apple in a minute, but what was your sort of spidey sense when you saw this deal, because it is a big jump. And I'm wondering what the implications of that are.

4:33Yeah, Murray's far better qualified than I am to kind of talk about Formula One. I'm not an avid Formula One fan, but I am a fan of...

4:42Richard:The bloke in the fastest car normally wins, man. Yeah, generally, yeah. Not always. I wouldn't say that if there was a Formula One race in my back garden, I wouldn't go out and watch it. But I'm not a huge Formula One fan. But I'm a huge fan of their business and what they've done. Yeah. Massive. It's massive what they've done. They don't need me to say that. I'm also a fan of Apple and what they've done, strangely enough. It feels like ESPN weren't drowning Formula One with love on this one. And it feels like they made an attempt to retain the rights, but it was fairly half-hearted from what I can see.

5:17It feels like a reasonably sensible play for Apple because it's not massively high risk because Formula One in the US is not top, top tier. Yeah. It's kind of mid-tier. Murray, would that be a fair way to describe it?

5:30Murray Barnett:Very much so. So there's an opportunity there. I mean, I think the risk is on the Formula One side, you know, in terms of you're losing that potential audience reach and what kind of marketing power Apple are going to put behind this now and really drive that part of, if you pardon the expression. So for me, there's a lot. I'm intrigued by this deal. I think it's going to be really interesting to watch how it goes. Apple have such scale in terms of the monetary power that they have behind them that they can really put a lot of marketing books behind this. I don't know if Formula One had a lot of options, though.

6:02This is what it looks like to me. And Apple seems like a good option. Are they the kind of company that would kind of come in for one cycle and then disappear? They don't feel like there's a reputational hit there that would be there as well. It feels like they're going to take this for quite a while and grow this and drive it in the U.S. market. So my main kind of emotion is one of I'm absolutely intrigued by how this is going to go. There's a fair amount of risk and jeopardy on the Formula One side, but I don't think they had a lot of options.

6:31Richard:There's also the money, I guess, is the question. So the reported or the numbers appear to be 140 million that Apple are paying. ESPN were at the, you can put me right, Murray, but about the 80, 90 million mark. So you've got, to your point, the very first line is it's a big check that they've taken. Pete, what did you think? Because I think within this, we did a bundle ahead of the earlier round, the Budapest, the heavy rumour was going to be announced earlier in the year. It seemed to be delayed because of the direct to consumer question in terms of the F1 TV bit of the equation. Given your day job, what's your sense of that and its role?

7:10Richard:Does it tell us anything about D2C?

7:13Peter Bellamy:Well, I think, I mean, that is the big question. I'm sure it did delay things because if you're a business like F1 and you've invested very, very heavily in building out that direct-to-consumer experience, both from a technology and a platform product point of view, but marketing and building up that customer base. It's a big call in a market where, although it's not in the top tier, it's still one of F1's biggest markets from a kind of fandom perspective if you look at the numbers on YouTube engagement. So it is a big call to step back from that. And I mean, I'm probably a little bit biased in my view of this because of what we do as a business, but it does feel like a bit of a shame to spend many years building something up for it to then potentially almost disappear.

7:58Peter Bellamy:I would always be a proponent of trying to find a way of getting that right kind of hybrid mix where there's an on-platform, off-platform kind of co-promotion exercise where a subset of that experience is within the Apple TV environment, but then it cross-promotes out to F1 TV, premium, et cetera. and I know it's complex because of the rights valuations, but I think that almost allows these sports properties to de-risk their strategy over not a three-year cycle or a five-year cycle, but kind of 10, 15 years, because you don't want to build it up, and then for it to be dormant, and then maybe be starting again, like you said, maybe one cycle further in, which is probably unlikely.

8:40Peter Bellamy:So it's interesting, but I think it'll be a shame if there isn't some way of pushing it. I mean, we run...

8:49Richard:Sorry, but it's also to say they make a lot of money from FI. I mean, it's about, was it 40 million they make? I don't know if that's a global figure or an American.

8:58Peter Bellamy:You know, I don't know that, but I have heard that stat. But they do make a lot of money from it. But look, it's hard. You know, they've clearly got a good revenue outcome from the tie-up. And that's the balance, again, that all these sports properties have. Do you take the media rights check and almost de-risk your business plan? or do you go direct to consumer, invest in marketing and see there's a longer term play there? So it'll be interesting. I mean, with MLS on Apple, as I say, we do the data and graphics. They've actually distributed via DirecTV and T-Mobile on top of the Apple TV deal.

9:33Peter Bellamy:So I don't know whether there's going to be a plan there as well.

9:36Richard:Louisa, what do you think from looking at it from your seat at the moment? Obviously, you've had a very varied career in terms of your background, but you're now a well I'm putting you into a rights holder position what does it look like from your point of view because you've the thread and it's not a cliche to say that we're close to Monte Carlo and it's a risk reward type question isn't it in terms of the nature or the the sense of the sort of conservative versus ambitious radical end of things what did you think when you saw this I mean I suppose from Queensbury's perspective Queensbury was in that position it was with what was BT Sport and then TNT Sport I was on the flip of that managing that relationship and then now they moved to DAZN and actually when you're a rights holder at the end of the day it's about what are my options for homes yeah and who has the check that will allow me to have the ambition that I want to have and can deliver on it but I'm putting that aside I'm with Pete because my other thought is you cannot as a rights holder just rely on that working you have to keep going with your own brand build whether that's your own DC play because you carve out a set of rights for that or that you work in fan engagement and in other forms of content because you look everyone talks about Netflix Dragos 5 you can do other things that don't have to sit on that same broadcaster platform to keep your brand building and growing in case it doesn't work in case some it is or it doesn't meet your ambition or it doesn't meet the plan but i i have hope for the apple situation because i actually think that when you look at it they're trying to look at all the different touch points they have with customers and say how can we use that in a more integrated planned way than just putting the live event on the platform and hoping people tune in yeah yeah yeah i guess there's a question from there in terms of what what i quite often when we sit and talk about these things you jump on what does it mean type you know for everyone else and there is a bit of it that's very specific and then there's a bit of it that you think okay well there's there is some universal stuff that because other you know it iterates doesn't it the market we're looking at this is a deal that people will look and study and say what does it mean for me what do you think it means mary well i think you're absolutely right

12:02Murray Barnett:i think everybody's going to be looking and saying is this something where apple are all of a sudden in the sports business albeit that they've done mls and mlb and a few other things but i think this is kind of unique it's a moment in time because f1 the movie most successful apple film ever that involved a long two three year engagement with apple senior management in terms of building a real understanding of what f1 wanted and what apple needed in terms of constructing the film and i think part of that is about a culture fit and i think that you know to glenn's point they kind of felt a lot more and i'm speculating but they felt a lot more affinity with apple and what apple were trying to do and what apple were willing to offer and you know it's a five-year deal as well which gives a long runway for them to be able to actually make it work and i'm sure that during that time you'll see f1 the movie too which will be another big way to sort of cross-pollinate an audience between sort of the fiction and the and the fact if you like so it kind of feels like um that fascinating thing about yes it's the money but it's also about a partner that shares the same vision that you have um and like you know from sort of the mood music i've heard i agree i don't think it was super competitive but at the same time i think that apple said all the right things and they really understood formula one and that's probably one of the big factors in making the deal happen because if you actually look at the numbers if you if you take the conceit that dc is worth 40 million and espn was close to 100 million that's almost a like for like so it must have been more than just the money it must have been also a feeling that they had a shared vision for the sport so i'm going to put a couple of counters on and i'm going to jump us from this try and build a bridge to some other stories that we're

13:54Richard:seeing at the moment but i think i can see echoes here there's a question here i guess the provocation would be what the legacy relationship might be with espn a big broadcaster we see in liguen in France. We'll talk about that in a minute. But so there's a couple of questions in my head. One about the Apple film, whether that's real or a PR story. Because I see Netflix, people say, well, it should have been Netflix. Netflix, Drive to Survive, they make that link. But Netflix have got the F1 audience, presumably. They don't need to buy the rights for F1 because they've done all the... Netflix has done that job for them.

14:27Glenn, what do you think about that jump and going from

14:31Richard:one to the other? They're leaving the biggest broadcaster in the world, ESPN. Is there going going to be any long memories there do they come back cap in hand because mls is not a great case study for apple as i understand it yeah no i mean i i'm look there's it depends on the on the product you're talking about but i'm a big proponent of don't leave a solid partnership behind um you know if you're if you're getting some incremental gains from it for me the apple piece must have been underpinned by huge commitments on you know kind of marketing and all of the stuff that louisa talked about in terms of getting them into the apple ecosystem at every every touch point and the people of formula one are very smart people um and i don't believe that they would have kind of made that leap even if you know i don't think this is about the 140 million or whatever it happens to be i think this is about a much bigger longer term play um i mean i think the league one example that you mentioned, Richard, is a classic case.

15:31And there are many other examples, rugby and Sky and things like that in the UK, where those kind of things, it's been a fairly solitary lesson where you take the money without a kind of a long-term plan beyond the money. And I don't think this is one of them. I think Apple are in for the long haul here. I don't think this is a bill, but they may have to, as Murray said, grow an audience from virtually zero on Apple now over the next number of years. So they could be back to kind of square one, but there's obviously a vision there behind that. But it's very different. League One is a very different situation.

16:09Murray Barnett:When you think about the League One thing, obviously League One is arguably the key thing in France, right? Rugby, arguably third, fourth sport. So right up there in the UK. And I think when you look at F1 in the US, it's pretty low risk for Apple, right? They're not having to write the billion-dollar check to the NFL or to the NBA or others. So I think they're looking at it and saying, you know what, it's worth taking the risk. In the bigger scheme of things, this isn't a big financial risk for us. The sort of premium audience that F1 has in the States is small but very important, skews heavily towards an Apple-type subscriber.

16:50Murray Barnett:So there's a good cultural fit there as well. But again, it's just not a big risk.

16:55Richard:Pete, I mentioned Ligue 1. We're in France, I say Ligue 1. My French is spectacularly bad, but Ligue 1 is about as far as I'll go. So don't push me any further on the French. Take us inside. What have we learned from this? Because again, people in the room and listening will know the history of how we got here. But where are we now? And what have we learned about... Again, it comes back to, I guess, the D2C question, doesn't it?

17:18Peter Bellamy:Yeah, I mean, with Ligue 1 or Ligue 1, whichever way you want to say it, they actually, I mean, where they, I think, have done a very good job is that it's not like they launched the service this summer for this season. Actually, my previous role at Endeavor, I worked with them on the initial deal where that was three, four years ago. So they wanted to get ahead of it. They wanted to have a couple of seasons of understanding what the product should be, how they needed to build the kind of marketing muscle and all that around the service. and obviously I think probably have had to fast track a bit quicker than maybe they were thinking on domestic.

17:56Peter Bellamy:But those kind of two, three seasons really gave them the grounding for having a good launch. And look, I think from our perspective, it was about and continues to be about delivering a slick but very stable experience, a lot of live content, but also they've been, I think, quite dynamic because of the situation to not just have a pure play direct consumer. service with us you know they have distribution partnerships with with orange with sfr and various others to try and build up that overall customer base and and we've worked hard to try and authenticate to allow that as i say kind of platform to platform experience so look i think they've done a good job in in in how they've done that i think there's a lot more we can do with them to further enhance the experience because look the biggest benefit and said it we've all said it for years the biggest benefit for sports properties in having a direct consumer platform is really you will deliver the best possible experience for the user because it is a genre specific experience where you can invest in the look and the feel the content the rewards etc and you can do that better than arguably i think any of the big streamers any big broadcasters because by the very nature they have a much wider portfolio of content and they're trying to build into the experience so i think they just we've got to keep doubling down on that i think you could also argue

19:22Murray Barnett:that uh they let disown make the mistake they learned from disown's mistakes right so when you look at the pricing strategy that disown had and so on they've come in with a very different price point taking a much more longer term view of it and you know they had the benefit of the knowledge of the mistakes that disown had made to be able to make a good first entry into it and i think generally speaking it's been very well received you know the pricing of it the quality of it what's on offer and they spun it out very quickly which i think is great no i think i mean i think

19:52Peter Bellamy:it's spot on and actually you know the publicly released stats but if you look at the the revenue the subscription numbers they've been putting out there you know a really high proportion of that a season pass subscribers as well which i think bodes well because i think again we all know it but in this business you know that acquisition costs to get someone into a monthly subscription and then leave versus getting a full 12 months out of those users is absolutely crucial for the business model. So I think that's quite a healthy sign as well. There's also something that happens when you're a sport on a broadcaster's platform when we were at Fabian Sport.

20:29If you're a sport, you're fighting for scheduling to get the uplift off the back of another event. and actually like pete says it's hard to have quite specific engagement with your consumer you don't really know who they are you see a viewing figure but you have no relationship with them because you're not in control of any pricing you're not in control of any marketing they might let you have one of your athletes in a campaign but not not maybe your top five that you would like it's really about that relationship with the broadcaster as to how much they will push you when you're at their behest and the upside is that you can get a really big number of viewership but you have a lot less exposure in a way because you're one of many especially if you're in the mid-tier

21:17Richard:can i ask just a question on that because it's interesting the you quite often hear the phrase the home of the home of boxing the home of rugby the home of you know formula one how much of it do you need to make that claim do you think because it's quite a it's a useful marketing yes sort of term yes but I'm you then I mean I'm looking at I talked the other day about TNT and you know trying to work out what they are the home of or are you a sort of compendium of stuff in the beginning when it was BT Sport it was important to say exclusive home of the Champions League because you're entering in once you're in I think it becomes less important because what you what you can have is a pack if you get the right pack if you're on amazon and you pick the boxing day pack for premier league you can as long as you've got enough you don't i it's not my belief personally that you need to be the home of in every shape and form you have to have enough of what you think is attractive for your base to have the claim that says it's worth paying us which is what you're kind of seeing in and some of the netflix moves in boxing it's quite specific because you don't need to have all of boxing you can have a little bit of it if it meets your demographic need and also boxing i always say i think is sort of it's been at the front of lots of media type trends and conversations and with the creator one at the moment boxing is absolutely the sharp end of it and again it's sort of what it says about netflix what netflix wants from sport and it have you got a sense of what netflix wants i have got a sense i've got a sense that they in certain markets in particular where they need more acquisition it's doing a job for them it's doing the job of if you're in the states and you pay for pay-per-view it's 80 dollars for a pay-per-view so if it's within your netflix subscription and you are not a netflix subscriber that's a nice acquisition tool for a moment in time and they're using those kind of influencer fighters youtube fighters in the start to bridge the gap between entertainment and sport yeah and actually they have a lot of content on the platform that is sport documentary based which i think is a really good thing for rights holders that actually you don't just look at the live you look at the shoulder content as well that can attract people into your sport and get that to as many platforms as possible.

23:49Richard:So they're not really into the tonnage? I don't think they need to be right now. It doesn't mean they won't be, but I don't think they feel the need if they use it as an acquisition driver. I think what's quite interesting, just to follow up on what you're saying there, is this kind of hybrid model that's developing. I think the Brazilians have been at it for years where rights are kind of shared around different broadcasters, CASE TV, you all know that example where where you can kind of cohabitate within you know 20 years ago it was all about absolute exclusivity you know everybody you know sky had to have everything then there was some legislative changes that you know kind of imposed kind of sharing things around a bit more but i think actually there's something quite interesting happening now where exclusivity isn't the be all and end all that broadcasters streamers just need enough and that actually it's really useful to to kind of pull other strings in the market to try and get profile.

24:43I wonder, might that be something that actually Formula One and Apple may do in the US, where they might use other outlets to try and get profile for the sport in the US. But I'm seeing an increasing trend there where, you know, my part of the forest, which is the free-to-air space, where we're able to kind of play a role in rights that we wouldn't have played a role in before, cohabitating quite a lot with pay operators because we can provide profile and it's not just tv we've got a lot of strong free-to-air platforms in domestic markets with domestic localized languages and all that kind of stuff so you know it's you know the the exclusivity piece is quite is quite interesting and i think you know creators are one part of it um but i think there's other there's other angles as well such as free-to-air

25:27Peter Bellamy:yeah i mean just one point i'll add to that is i think the big question is is how much content is needed for it to be compelling for a big audience, right? And I think if you look at the US market especially, it is a bit of a nightmare as a fan of a particular sport to if you want to consume an awful lot of one of the league sports to be able to have all of these different touch points. I think, and you know this in the boxing world, the challenge that boxing's had is that it's event by event, whereas you compare it to like UFC, they would say their biggest advantage in how they've built that property over the last 15, 20 years is that they've centralised it, they have more of a repeatable schedule, which then means that you can drive these monthly annualised passes, etc.

26:11Peter Bellamy:So I do feel that...