UP543 Business Moment of the Year: Inside the 25th Sport Industry Award Judging Room

27:32and within any private equity fund like every any private equity house there are a bunch of funds that have different return requirements so two investors can invest in in the same deal and have slightly different or significantly different return profiles so you know when you think about kind of some of the sports opportunities and the money that's available they don't all want the same things even if they're from the same house we had richard scudamore on here last year to I'm trying to plug into my inner scooter board. How's that going? It's not going very well. But he would turn around and go, it's something that's failed in its form and it's rehashing.

28:15Are you quoting it? No. Alan just gave a really lovely technical. Yeah, yeah. I think there's a whole load of things. And I'm just trying to say that actually, can you look at this and go, this is the business moment of the year is someone sorting their shit out yeah yeah basically and

28:37Richard:also to the i mean contents of it the bundle of things within it so you've got rugby atp tennis wta volleyball legoon so again i get it again i think you're right there's a sort of there's the financial engineering aspect to it but there's also it doesn't it's not exciting anyone i don't think certainly how alan just explained it wasn't exciting the financial nerds in the room are excited by it yes i'm sure there's still got to be though that as you say they're sorting their out but the sports that they've invested in have also got to sort their house out and this is the disconnect so often which is yes exactly some houses are ready yeah and need to do that before well, then the private equity comes in, great, off you go, very aligned, everyone, all stakeholders' expectations are managed.

29:30I don't think that's happened necessarily for CBC previously. And as you say, that's going to be different for each sport. It's sort of the poster boy. It's a bit like the PIF conversation in that, again, it's trying to sort of establish whether or not this is a trend, this is how things are going to be, this is how the framing is going to be copied, or this is just, as you say, it's gone from messy to tidy. If you look at the sports industry, stepping back and compare it to some other industries, it's at its early stage of professionalisation. And some of this private money coming into the industry is helping drive that professionalisation.

30:04So it's putting in stronger commercial teams, investing in that capability. And it's catching up with consumer brands and other businesses that have been doing some of these things for a longer period of time. So private equity firms and that kind of professionalisation are helping drive that professionalisation agenda as part of their value creation strategies. Do we know that this is not transformational, this is a repackaging? Yes. I think we're judging what are the industry-changing events. I would put this lower down. Okay. I agree. That would be for me. That's what I was trying to get to.

30:39I was trying to get to that. I was trying to say to you. save Sean some editing yeah yeah uh okay right that's not gonna win right next one we have Red

30:53Richard:Bull buys Newcastle Falcons Red Bull's acquisition of Newcastle a 39 million pound debt play brackets highlights the brand's continued strategy of embedding itself deeply into sports properties not just sponsorship but structural involvement so Brett given your rugby background what did Do you think when you saw this happen again, it was one of those headlines that caught the eye? Yeah, look, I definitely think it was a welcome move. It's obviously a well-known events media company. We know what their core business was originally and so on, but they're very much an events company. You'd hope they'll bring some innovation into that club.

31:30They've certainly brought some stability into it. It's attracted, not it, but the premise has attracted some other investors with Dyson and so on in recent times. But again, they've got to be attractive to their fans, and that's what you hope Red Bull can create. And maybe some of that's contagious to other teams and the league, the premiership as a whole. So definitely welcome, but you've got to wait and see what that means. Is it a sponsorship or is it a fundamental change of how you market to your fans? And that's the side of Red Bull they should be looking for and that's the side of Red Bull that's going to make a difference to the Prem and to that club.

32:05I was trying to work out what's in it for Red Bull.

32:09Richard:I can see from Newcastle's perspective. perspective and i think it's a it's interesting seeing eddie hearn i think today talking you know he's done the set up his agency henry pollock as his client so he's talking bully and he mentions red bull as a sort of sign of potential but i'm wondering what it was from red bull's perspective yeah i've got a i've got a slide that i use with investors that are thinking about buying a football club but it applies here and it's sort of what is a what is a football club what does it mean to you Is it a consumer business? Are you interested in engaging with some consumers and selling shirts?

32:43Is it a B2B business? Are we, you know, the Wrexham story? Is it an entertainment vehicle and we're interested in that side of the business? Or is it a sports team? Are you interested in winning? And that's quite a useful framing slide with investors because it gets out, you know, how they're thinking about this. And so if you, I don't know, if you were to use this with Red Bull, there's an element of them thinking about this as a B2C type business or part of their B2C strategy and engaging with consumers in a different way. You know, other investors would think about this differently. I mean, they're walking, I mean, the parallel is Formula One, Red Bull team.

33:26They must feel they can manage professional sports teams in a successful way, create the saliency they want in the market. and be an example in some way and actually really stand out and make someone successful. That's what they've done elsewhere. That's what they'll want to do here. That will be good for the Prem, as I say. Yeah, I agree. I think it's a really interesting move. They know sport and it's not new for them. Distressed asset, they can do something pretty good with it, I think. Soccer clubs. They sold more season tickets in the first 24 hours of announcing than the whole of last season, buying access to a big geographical regional fan base.

34:02and it is good for Penn Rugby. It's been tricky times, a bit of an inflection point. Is it landmark, groundbreaking? But it's good. But incredibly welcome at a time when people's confidence in the print, given a couple of clubs that were exiting and so on. This has reconsolidated hope that there's more than a pulse. I feel like a bunch of investors getting in thinking this is the lowest it's going to get and we can pull through in this place because of their general all-round desire for live entertainment and sport and that there is scarcity and therefore this might be good be seen as good value yeah in the space i don't mean i don't know back to the cvc question about the sort of centralization of stuff inside red bull hq whether that's what happens across their football formula one doesn't quite doesn't quite happen it doesn't know how separate they are yeah i there's i don't think they are brought together in that sort of way it feels like they are treated very separately and dealt with very separately and the rugby question about where it is now you've had the r360 moment where people you know again it's a sort of live moment almost shaking the the sort of foundations a bit kicking the tire seeing what's Then you have a response from the official body, which is a sort of defensive, offensive type position.

35:28What's rugby in terms of it as a sport that people think, OK, it's really going to go up or decline? I think if all the sporting ships are going to run, I don't know whether that's a metaphor you can use, I don't even know if it's a metaphor. Let's go with it. Yeah, let's go with it. If sport is going to grow, and obviously rugby will grow as part of it, what I would say is that rugby needs to find its audience, which it still seems to not wanting to commit to finding a new fan base and a new audience. I believe rugby will grow because sport is going to grow and the product's pretty good actually on the pitch at the moment.

36:06But unless they really commit to finding a new audience, I think it's going to be a bit of a struggle. A rising tide lifts all ships. There we go. What you are. There we go. That's why you're here. And what's stopping that from happening? Why? And by the new audience, you mean geographical or do you mean... You're talking demographic. Yes, that's what I'm talking about. It's both, though, by the way. It's entrenched where it's always been and growing slowly where it should be. The US, Japan, although there's been obviously some progress since the World Cup there and so on. But big geographies with big populations and big GDPs need to play rugby in at the moment.

36:44there's only you know france uk and then it starts falling away to smaller smaller economies and so on broadcast markets the top five in the world you know they don't sit where rugby is other than the uk and france even france in top five i'd say but yeah one i think we've just come off the back of like an amazing six nations the product has been fantastic some amazing games a lot of jeopardy you know anyone could win any any game that's what you want in a sporting product and it and it is everyone talks about it it's the water cooler kind of conversation around the office and then the six nations stops and and rugby drops out of the kind of the general public consciousness so how does rugby better capture that interest in the water cooler around the EY office yes which has a certain group of demographic that attends are expected to be the watercolour conversation.

37:41Say the acquisition of£39 million in debt for the Newcastle Falcons is a better deal than the £500 million for an NBA franchise. I thought so long,£50 million was the end of the film. That's true. There's one topic that this brings up that we haven't discussed is the idea of the closed leagues and ending relegation. This was pre-any announcement, but it was largely rumoured at the time and then post the announcement we've seen James Dyson's investment into Bath so it does raise that issue which is a prickly topic with fans, fans love the drama and jeopardy of We're Spurs fans, we'll be happy in a couple of weeks time But then it points to the US model and that being a better environment for investors because you remove the yeah there's a flaw to the and also there's that growth by scarcity that I think is important in sport at the moment, you know if you look at the NFL they do it brilliantly, you know limit the amount of games, 17 weeks of regular season, yeah then you can drive growth and if you're looking at the debt sitting around Prem Rugby, the threat of R360, investors waiting because rugby is a much loved game and there's loads of potential I think you've got to go closely league yeah yeah yeah so red bulls come in at the right time do we think it's the business moment and presumably they knew that it was going to be closed is your point was it yeah i think it was

39:16Richard:widely kind of rumored around that period that yeah so we would next up we have genius sports acquires legend for 1.2 billion dollars strengthens its position across data betting and fan engagement infrastructure data continues to underpin the entire sports business model reinforces the importance of owning the tech stack it's a phrase i like using and don't know anything about behind sport expands capabilities across betting media and performance insights i mean sean get probably twice a day someone an ai thing saying promising to reinvigorate our tech stack which uh come and knock yourself out right and here it is who wants to who wants to sort of have a go at this legend and genius a little bit like the CIA portus in that it's vertical integration and and ownership of the value value chain and and that driving a structural advantage so it's a very similar kind of obviously different parts of the ecosystem but thematically it feels quite similar yeah yeah is it about i mean is it about genius trying to get out of the betting and into fan engagement is that what's happening here are they are they sort of seeing that yeah i think it i think it's about greater only it's it's giving them ownership of of the fan decision at the at the point of decision rather than just the data behind it so it's kind of the full end-to-end value chain piece that that gives them a structural advantage and helps create a moat against their competitors.

40:54The NFL is a major shareholder in Genius, I count. Okay. You are accused. I'm accused myself. Well, and I said before, hands up, I'm definitely not an expert in this space, but agree similar to the CAA Porter's piece, consolidation or integration or whatever you want to call it to become full service as an agency in a space that is arguably growing, very important, massive on the fan engagement side data etc it this felt like quite a big moment to me yeah yeah yeah i think it's it's not just about adding EBITDA or scale it's it's really helping you know it's it's driving up the multiple of the business it's it's helping diversify so they're becoming a slightly different business as a result yeah i think i think so yeah yeah i suppose the the questions of there's a regulated question in all of this and and or you know the regulator or whether the the market in general allows them to sit across the the ecosystem like that that's what i was going to ask because to your point on the conflict around full service agency advising on strategy then delivering that yeah how does this apply to this situation in that you've got your fingers in all pies of the chain, regulatory, competition-wise.

42:18I guess it's an opt-in thing, though, is there's data and people opting in and engaging more, whether it be through gaming or through betting or the combination of the two, which is obviously, you know. Yeah. It just reiterates that the value of sport now sits on the fringes of the data and all the various elements around it and the integration seemed like a very sensible thing to do we will move on we are going to trot through to the overlap and mark goldbridge acquire bundesliga

42:53Richard:rights in the uk the bundesliga has experimented with distributing rights and content through influencer-led and alternative media platforms rather than traditional broadcasters challenges traditional rights distribution models prioritizes reach and engagement over pure rights fees and meets younger audiences where they already are okay so let's small but mighty yeah small but interesting not sure defining cultural moment yes i think there's a yeah okay let's go around what what's your again it was a sort of it creates a lot of noise back to our sort of job whether or not it is the moment but let's go around what did we think initially when you heard about this This question about revenue versus reach and how rights holders address that and Bundesliga thinking about that rights unbundling and maximising both sides of that revenue reach equation.

43:46So I think it's clever. I think it helps them access a younger demographic that you don't traditionally get through the broadcasters and the way that rights have traditionally been sold. So I think it's an interesting development. Yeah, yeah, yeah. Yeah, I would agree. I think football's got the luxury of being able to take a little bit of risk and experiment in this space, similar to what the Premier League are doing in Singapore, diversifying your portfolio of rights and slicing and dicing to suit that fragmented audience base and platforms. So I think this is innovative. I think others will do it.

44:27and the reach and revenue conundrum that just continues to go round the circles for many rights holders. But ultimately, if you're going to take your content to meet fans elsewhere where they live, I think that's got to be something that big rights holders should be looking at. Yeah, yeah, yeah. It's interesting when you talk about rugby and innovation, the lack of, it feels like the sort of thing they could and should be doing. And this also, actually, this is more what Brett was saying, is that it's about the accessibility and the inclusivity of being able to watch. And, you know, this is, you know, free-to-air stuff and, you know, everyone can take part in and that kind of just spreads the world.

45:05So there's that, you know, whereas we see a lot of sports growth in that scarcity space, there's room for come one, come all. So, you know, that innovation in getting the product to the audience. Sure. I think a lot of sports are doing this without having packaged it in this way as a segment of their rights. But I think we're all experimenting with the creators and influencers on YouTube and YouTube shows and even broadcast, live broadcast via famous YouTube like Carzee in Brazil or whatever. It's something that we're all doing. I think it's innovative that made the statement that we're carving out some of our rights in that way and experimenting.

45:45In some way, all of us are doing that. Do we know if there was anyone else in the picture for it? So what would be really interesting on this one is the decision was made up against someone potentially paying for the rights. Or not. Yeah. I don't know. Or therefore, we know we're only going to get or not going to get. So why don't we use this? No, I agree. I think it just... What's the trade-off? What was the opportunity cost? You're never sitting there with the different option. And I don't know if we can use some form of researchy thing that people have. Well, I think we had Simon Daniel on the podcast, and he obviously did the deal and one of the questions was exactly that.

46:24I think if Sky wanted Friday night Bundesliga they'd have bought Friday night Bundesliga. If the money was there, come to the last word. So it gave them a certain flexibility. It was like a free hit in many ways. Yes, yeah. I love the consciousness of the decision. If someone was sitting like, oh, you know, we've got Sky offering this over here but this, this is really smart and a clever move. Then that elevates it for me a little bit. I think money exchange fans. They didn't do it, you know, for nothing. I mean, you can sort of see this happening as a, okay, you can have these. It happened in rugby, actually, didn't it?

46:54What was the guy, the chaser guy in France? He was like a, he had rights. Tim Cocker. I think it's an evolution, though, of how rights are going in terms of, you know, don't give all your rights away to your main broadcast partner just because that's what you've always done. If they only want the premium 20 matches or, you know, from a World Netball point of view, certainly we've been grappling with this reach revenue. world netball needs revenue and they have a very strong dc platform that's grown organically with little marketing so as you're looking ahead to your world cup cycles you know if sky aren't going to come to the table in new zealand or uk and if super sport aren't coming to the table then give them your finals or semi-finals or follow your team but take everything else back and put it on your own platforms or at least somewhere else where your fans are living yeah to make sure you are reaching those fans, but also that you are monetising your fans as much as you can and not leaving money on the table.

47:55And in netball's case, as a good example, because we talk about football and the NFL and the NBA a lot and rugby, in netball's case, is there a sort of infrastructure of Mark Goldbridge overlap type people to have that conversation with? Yeah, there is, definitely. I mean, you put netball in a very niche sport bracket, and so you look at other niche sports hockey for example squash and you know certainly i've been banging the drum internally around the shift in tier one sports rights will be okay always but non-tier one sports you know they're not going to have money tossed out to them by broad cost it's like they've been used to and when you've got a really passionate fan base then you should be monetizing them directly don't obsess around you know how many eyeballs and new audiences if you've got a passionate fan base monetize them first and foremost because they should be showing up they should be paying and they'll know where to find you and squash have managed to do that you know over a long period of time they've developed squash tv they're turning profit and they're covering all their production costs for their global tour so i think again it you know it's very easy to just talk about the big sports who do have some luxury in terms of you know let's try this and experiment here yeah i think really it does come down to the fact that actually you know what are you trying to achieve and revenue versus reach ultimately comes down to a revenue question for a lot of the smaller sports but yeah i think i think in all sports now that creates a led piece working with influencers there is a they're all part of the ecosystem and need to be as is youtube you know whether that's channeling them into then your own platform or elsewhere yeah yeah i think the i think the risk for the tier ones here is it sort of chips away at that historical assumption that live equals paywall.

49:42So it's got to be done in a careful way that you don't start embedding in the consumer's mind that I can get live premium sporting events for free because that undermines the long-term revenue model. So it has to be done in a break sort of considered... Except in the US, but yeah. Because NFL is based on freeway programming in the States, so it's rich and revenue. Yeah, so it's a different market. It's a different market, but yeah. It's also a sort of, you know, the network thing is interesting, the value in the pyramid is what you're saying, isn't it, in terms of that committed group and how you then sort of...

50:17It's almost, you know, you've got a thriving participation base, but it's not coming through up to the top. Yeah. So it's a bit like something like CrossFit or High Rocks or whatever, you know, they're just, it's almost like a cult around it. Exactly. People who like it absolutely love it. Will pay for it, absolutely. And it doesn't need a TV entertainment, sport entertainment sort of product at that end. No. in the same way maybe i don't know right okay we are gonna i think we're on to the last one before

50:45Richard:we make a decision and it is f1 the loopy the fit the f1 film reflects the sport's ongoing push into entertainment and cultural relevance it extends formula one beyond sport into mainstream entertainment ip builds on the success of docu-series storytelling models and drives new audience acquisition, especially in the US. Okay, so a few things in here. Obviously it was up for an Oscar, so it was who's seen it? Have you seen it? Yeah, I've seen it. It's part of my research. Any good? Yeah, I enjoyed it. I did. It's quite a formulaic sports movie. It ticked all the right boxes. Very Hollywood. But I think you can, again, overthink it, which is what Unofficial Partner does best.

51:37it's who we are I'm actually trying to find what tomatoes would have got I looked that up as part of the research so I think I'm going to say it's like high 90s I think the audience rates it higher than the critics they're the ultimate I enjoyed it have you seen it? I haven't but I am a bit of a snot so I wouldn't you don't watch TV you refuse to watch TV you're reading on shakespeare i think you should watch it i think if you're talking in this context if you're talking about its impact on the sport on the industry relative to drive to survive

52:14Richard:yeah i wouldn't say it matches that so when i saw this i thought okay my head went to man united as the crown that storyline so you've got this sort of fictionalizing sport which i think is an interesting trend and is this real in terms of moments is this a sort of pr thing rather than is there substance here my debate was always not the film itself the film was watchable a bit like days of thunder actually it seemed like a rerun of tom cruise and nicole kidman back in the in the day a little bit but it was the naming of it formula one the movie is unabashed product placement sports market it could have been called yeah the Lego movie well you don't really or Barbie or what it's it's in that ilk of we're not ashamed we're not going to hide this this is a promotional film for Formula 1 and I thought that might be a security deal but it actually wasn't I don't know what you do next Formula 1 the movie 2 yeah Formula 2 whereas you know every given Sunday which is obviously an NFL film is not NFL the film but the excitement in the NFL, whether it be Jerry Maguire or whatever, there are other films that push other properties in a way that's not quite as direct so it's that debate with me but it seems like there is no debate with the audience, they just buy into it Yeah, but to your point though They've got the partners in as well It was a clever Well this is an example I think maybe first if it's kind where they have truly collaborated with the sports governing body rights holder which I think Jerry Bruckenheimer said that we're not producing this we're not making this film unless we are as authentic as we possibly can be and you know Lewis Hamilton through the year you could see Brad Pitt at the races and you know they were sort of building that story it linked very nicely to the sort of American rights auction at that point which obviously Apple then bit on and whether how solid the connection to to this is I think yeah some really clever interesting bits I can see some absolutely terrible films being made if this is a major trend yeah but it's not you though is it it's not you because you've mentioned a couple of films Brett but you know look at Bended by Beckham done completely outside of Brett that had a huge impact on that football participation Bended by Beckham is produced by David Beckham that's a different movie I think and I think this is another asset they've just roasted another asset Yeah.

54:44It's a sort of extension of... That's what a writer's job is, isn't it? It's to create another asset to sell your products and to sell your wares and to drive fan engagement. So how much money did Formula One put into it themselves? Do we know? Versus the producer, versus the... Interesting. Yeah, we actually had that. Ian Holmes from Formula One was one of the producers. Yeah, we had that conversation because I did watch it with my husband and we were then talking about the business side of it in terms of how is it structured around the drivers appearing in it? Did they just get straightforward appearance fees or is it box office revenue, Lewis Hamilton producer versus...

55:21He was a producer, so he was giving us tillers. How does that all work, getting all the stakeholders aligned? But I do think other sports have copied Drive to Survive with varying degrees of success. So if you're doing a copy and paste job, you need to consider again why you're doing it and who's it for. without it being a sort of pancake bit of a flop at the box office. Yeah, I think you saw that proliferation of kind of drive to survive, copycat, you know, full swing and stuff, which didn't have the originality of drive to survive and became a bit formulaic. For me, one of the more interesting bits of this is how it speaks to Apple's sports strategy and then the broader kind of question of how streamers are playing in the sports space.

56:07and it was interesting that Apple did the MLS deal a couple of years ago and it was supposed to be a 10-year deal and then they exited that quite quickly. So maybe it seems like there's a bit of a fail-fast mentality at Apple as they think about what their strategy is around sport. So is it just a continuation of Apple's experimentation in sport and seeing how that brings fans and consumers into their ecosystem? So they'll be doing the analysis of the... That's how you have to judge it. I mean, you can judge it on the film, but actually it's raison d 'etre, is to drive audience for Formula One races in America in particular, which is probably sitting around 800 ,000 audience at the moment per race, other than Vegas in America, which has an audience of 4 million, because that's the big event.

56:55Again, NFL's average audience is 17 million, but that probably sits it around basketball and Major League Baseball. So let's see what happens with the film. Has that created and driven a bigger audience? it was very educational I thought if you weren't into Formula One it was designed to bring you into it a Formula One enthusiast would have just watched because he's an enthusiast or she but it was definitely it felt like it was pitched to the right it was definitely pitched to bring you in and it probably did let's see what their audiences are on the stage I think also you're right again it links to timing specific sport and I think there was a big latent audience for Formula One in that younger demographic whereas there perhaps isn't for other sports and obviously removing the helmets and bringing out the personalities but the the technical piece as you say it's quite interesting and i you know i was watching it with my daughter who's 13 who's never watched f1 but she loves sport and afterwards i mean she stopped playing monopoly to really properly watch it and then afterwards it's like that was really cool both from a what she learned point of view but she I mean she's not going to sit down and watch Formula 1 but she was interested in it as a sport for the first time and we had a conversation about it 633 million taken at the box office I'd say that's quite successful that's a box office I think we're just at that point now where we say pick a winner, so how do we do it?

58:22let's get rid of a few remind me of the voting process we sometimes do a top three to just wheedle things down

58:34Richard:okay so i'm going to fade that out we're just getting to the point there where we had to make a decision so i hope you enjoyed that little insight into the conversation and a big thank you to our judging panel brett gosper alan noble fiona harold and nick keller the man himself chairman of sport industry group and hopefully we might see you on april the 30th in battersea for the big announcement see you there

59:02Thank you.